DWP announce Welfare to Work tender – ‘demanding’ role for procurement

One of the reasons for carrying on writing over the holidays is that actually a lot tends to happen just before Christmas, particularly in terms of the public sector.  That is, if nothing else, because lots of public sector workers will have personal objectives that have 'end of 2010' as the due date for a 'deliverable' such as 'issue report'.  So we've seen a number of interesting announcements this week, and we'll try and catch up with them over the holiday period.

A good example is the launch by DWP (Department of Work & Pensions) of the Welfare to Work tender.  We reported here on their selection of framework suppliers, and the interesting list of the big firms who had and hadn't made it onto what was in effect a preferred supplier list.  Today DWP launch the actual competitive tenders for the Work Programme - 40 contract packages, with the objective of helping unemployed people into work,  being tendered to the 35 framework providers.

While Chris Grayling, the Minister, is pushing it to say that this "will also be the first major move into a system of payment by results for the public sector" (the previous welfare to work contracts, as with many others in the public sector, were based at least partially on payment by results), there are a number of innovative angles to this.  For instance, the 'hardest to help' welfare recipients, such as the long term sick, will attract a premium payment to providers if they can get them into a sustainable job.  So that should help overcome providers 'gaming' the system; without this, the temptation is to put your efforts into finding work for folk who are basically already  highly employable!

As we said before, the success of this initiative will have a huge impact on the social and economic health of the nation, on the next election, and on the personal well-being of millions of people.  It is hard to think of a more important initiative in the UK today, and procurement / supplier management is right at the heart of it.  If the private and third sector suppliers don't succeed and deliver results, the whole thing falls.

"The most demanding, significant and far reaching procurement I've been involved with in my 25 years", as a senior DWP procurement executive said to me recently.

On a related note, DWP have done a lot of work to stimulate the market and introduce new providers in this area, as we commented in our last post.  It was therefore interesting to see another of this week's announcements;

The OFT (Office of Fair Trading) today announced a study into commissioning and competition in the provision of public services, designed to help government buyers promote competition in markets in order to realise better value for money....It will look at commissioning across a range of public services including health, education, welfare and justice to identify examples of best practice of competitive procurement and to consider the impact of related issues such as payment by results, the role of small and medium sized enterprises and the third sector, and delivery through the mutual model. Where possible, the OFT will also draw parallels with examples of competitive commissioning of private services and will make international comparisons.

Sounds fascinating on a number of counts, and I will be very interested to see if they review how DWP have gone about market development compared to other sectors, such as Health, where it is harder to see any planned or active market approach from central Government, or even a sense of what the desired end state might look like from a market perspective.

More to come on DWP, Health and OFT in 2011 I'm sure.

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