Fit for Life – and creating contract incentives in a public sector context

The death of Baroness Thatcher has drawn attention to one of the changes she drove – the greater involvement of the private sector in the business of government, including delivery of services to the citizen that had previously been the preserve of public sector employees.

That trend continues today. We’ve written about private prisons, about the Work Programme with private and third sector firms helping get people into jobs, and the potential quasi-privatisation of military procurement and logistics.  Another interesting example was being discussed in the media last week, and it makes a good case study, illustrating why many of us find complex public sector procurement as interesting as anything in the private sector.

The Fit for Life scheme is a programme to help people who hold jobs, but are classified as long-term sick, as they cannot work because of long-term health problems (mental or physical). It helps them receive tailored treatment more quickly than they might otherwise, with a view to getting them back into work sooner than would happen without external intervention. The plan now is to get the private sector to run this scheme, and a tendering process will select appropriate suppliers.

The challenge is this. How do you incentivise the supplier from a contractual point of view? You need some targets and metrics, otherwise there would be an outcry about taxpayers money being wasted if a supplier failed to help anybody back to work.

On the other hand, you can imagine the news paper headlines if people are “forced” back to work when they’re not ready .  “Man collapsed into tank of chocolate / liquid nitrogen / pig slurry after being told he was fit enough to go back to work” type headlines would not be good for anyone.

So do you measure supplier actions rather than results? Or do you target a percentage of people back into work, but with another target that those people shouldn’t go sick again within x months of returning?  Or do you carry out random quality checks to get a second opinion (expensive in itself) on what your contractor is doing, with severe penalties if the supplier is doing the wrong things?

I’m sure you can think of issues here, and some possible ways of mitigating the risk. (Do comment if you have a brainwave)!  But the point really is to illustrate the challenges faced by public procurement in these complex areas. It’s a good example of another side of government procurement, beyond the somewhat tedious arguments about centralising stationery spend, and into areas where our professional staff - and the private sector - are dealing with real policy issues. Issues that matter to the government, taxpayers, the citizen, and directly affect the lives of thousands of people.

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Voices (2)

  1. Dan:

    Minimal payment upfront, bonuses for getting people back into work, with clawback of these where it was mistaken with compensation for the poor sod who was forced into work too soon. Incentivise them to get it right, but make sure these are outweighed by the disincentives for getting it wrong – that way they won’t just be making mistakes all the way to the bank, and the people who really have suffered are compensated.

  2. Sam Unkim:

    It’s interesting that much of the outsourcing in the NHS is driven by outsourced managers.

    “Lets get KPMG in to look a patient transport” 6 months later KPMG report says outsource Patient Transport. Job done

    Patient Meals, I.T., Car parking, Onsite security, Document storage, Printing, Post Room, Portering, Estates, etc. all outsourced at the behest of management consultants..

    Ongoing contract management = Nil

    I didn’t speak up then, now their coming for me ( apologies to Martin Niemöller )

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