Approach 7: Contestability and Market management

June 2025 teaching template, slide 73

Approach 7 Contestability and Market management

Creating conditions for best value and outcomes within financial constraints.

June 2025 teaching template, slide 74

Approach 7: Market Management

Introduction: Uses commissioning tools to balance cost, resilience, and provider diversity for best value.

How to move toward: Map needs and supply, align procurement strategies, and ensure ongoing engagement.

What to do: Collaborate with providers, manage performance data, and foster innovation.

What not to do: Don’t let commissioning become narrow, repetitive, or overly process-driven.

Risks and issues: Can marginalise co-design or context if dominated by procurement logic.

Commissioning skills and structure: Requires technical strength combined with flexibility, systems thinking, and bridge-building.

June 2023 adult social care pre-reading, approach 7

Strategic Commissioning Approach 7. Market management

Creating conditions for best value and outcomes within financial constraints.

Introduction to this approach

This approach links with the ‘commissioning process’ aspect of commissioning, and is about using commissioning tools to drive best value outcomes given financial constraints. It begins from the perspective that the best way to deliver good results for the community is through plurality and a good mix of providers, vying with each other robustly but collaboratively – and that this shows up both in:

• Market making, where the council's role is to understand, map and develop the range of commercial and VCSE providers so that local needs are met; and
• Carefully structured procurement and management process (often tightly specified and let to a single provider, sometimes more broad-based and let on multiple lots or to a single consortium or alliance) to choose the most economic, efficient and effective provider.

In both, commissioning is focused on understanding community need in the big picture and in requirements, and ensuring that there is enough capability, capacity, knowledge and appetite to provide that best value is assured. Despite fair cost of care requirements (and ambivalence about workforce costs), this still means achieving an optimum price, and despite increasingly collaborative arrangements, this still means maintaining the credible threat of alternative providers, based on the ability to measure whether delivery units are achieving the results they committed to, and ultimately the removal of the delivery unit and/or their management if not (sometimes referred to as ‘contestability’).

Commissioning is focused upon encouraging providers through effective partnership, sharing strategic insights and future plans. In this way providers can mould themselves to the future needs of the community. User feedback is regarded as a key ingredient in assessing the performance of the providers into the future. Such an approach underpins all successful commissioning and is perhaps simplest and best where there is a focus on cost reduction and market resilience. Needs are relatively well understood and specified, and there is no strong ideological push to either insourcing or outsourcing; there can be a relatively neutral view of sourcing opportunities.

This approach, at best, balances the need for good value with long-term resilience and the need for competition, with the ability to put long-term contracts in place to generate real continuity and security of provision.

How to move towards this approach

A strong understanding of needs (including from citizens and frontline practice), of contractual routes for delivery, procurement and contract management, and learning approaches are all needed for this approach. Councils must consider how to integrate this into the necessary ‘plate spinning’ most active social care commissioners have to undertake, managing various different pieces of work at different stages simultaneously while trying to support coherence between them.

What to do, and what not to do, when you are pursuing this approach

Councils need to make sure that ‘commissioning’ is not seen as just a narrow function within social care, but that all relevant technical experts (procurement, legal, finance etc), and partners and citizens – as well as providers and potential providers – see themselves as an active part of the process.

It is important that commissioners do not get so stuck in the process that they are simply recommissioning without seeing the bigger picture. Allocation of time and resources must be managed so that ‘commissioning’, that is, strategic procurement, does not take all of the focus, and contract management, learning, insight, and partnership working are all invested in.

The ultimate goal of this approach is really well-specified services drawing from an engaged, active, innovative supply side.

Specific risks and issues

There is a significant risk of getting caught in narrowing down the definition of commissioning to competitive procurement, so ensure that co-design and shared learning and collaboration play their role.

There is also a risk of commissioning services in isolation, so consider using colleagues’ expertise to support partnership-led commissioning, and focus on market and context shaping and the knock-on implications of commissioning decisions.

Considerations for commissioning skills and structure

To be most effective, the commissioning function is likely to work across internal and external boundaries, engaging in a lot of partnership working and co-commissioning. Commissioners therefore need to combine technical excellence with an openness to see themselves as enablers, not owners. This could include commissioners working as a whole-council function or even wider, but certainly as a bridge-builder as well as a technical expert. At the same time, they need to be able to draw clear boundaries and not be seduced into trying to ‘fix everything’ through commissioning.

Commissioners in this model need to demonstrate expertise, experience, and ability and eagerness to learn. They need to draw their credibility from clearly understanding what good technical process and expertise can guarantee, and from being able to estimate and engage with the uncertainty beyond that.

Examples of this approach in practice

• A council commissioned a ‘rich picture’ infographic of their adult social care commissioning services, intending to use this as a mechanism to engage the public and partners. They found that having to map out all of their commissioned services and pathways was actually a powerful learning exercise for commissioners too, revealing some overlap and confusion. It identified the potential to spread good ideas more widely.
• Despite reduced demand post-COVID, a council found itself faced with providers threatening withdrawal of services and even bailiffs if not paid. This led to a realisation that caseload was disorganised, officers did not see their role in the bigger picture, and systems were not supporting practice. Critical information was in the heads of individuals and time was being spent firefighting, creating a vicious cycle. Rather than blame and restructuring, they engaged in an exercise to pull together an overview of their work, share the bigger picture in terms of strategic goals and purpose, and implement simple IT systems to pull together data so everyone could see the whole story at a caseload level.
• One London borough is implementing a Dynamic Purchasing Vehicle, following some success in rough sleeping transformation and a realisation that supported living procurement was being limited by existing governance and process. A clear vision was presented to Cabinet along with progress on regularising existing contracts and other steps to get things better structured and organised internally. After a nine-month process of making the case and proceeding through decision-making, a Dynamic Purchasing Vehicle is now going out to tender which will allow much more flexible call-off of services. The process will start with supported living, then single vulnerable adult services, and move on, with learning embedded, to residential care, extra care, and shared lives, meaning that the onerous approval process does not have to be repeated, and a new fit-for-purpose commissioning process with more room for flexibility and learning can be developed.
• A city council adult social care commissioning function was faced with the challenge of working in partnership across other council services and implementing the Care Act provisions which required flexible and effective commissioning. Over the course of a year, a Chartered Institute of Procurement and Supply (CIPS)-qualified commissioning lead supported a complete reorganisation with a strong commercial focus and significant upskilling. The service now has responsibility for service design, market shaping and ensuring effective supplier relationships. It also establishes the most appropriate routes to market, defining tendering procedures under the Light Touch Regime and tender evaluation methodologies. The council’s contract management function also includes management of major corporate contracts, and covers around one third of the council’s total spending. Approaches have included an award-winning, partnership-based advocacy service tender, Light Touch procurement (piloted with drug and alcohol treatment), implementation of a Dynamic Purchasing System, a new approach to voluntary sector procurement involving the creation of a single borough-wide consortium, with associates, using an outcome-based contract designed to support prevention, and brokering the sale of a vacant residential home to a new provider in order to maintain local capacity which was then block contracted to the local authority.

One thing to read

Market Shaping Toolkit – supporting local authority and SME care provider innovation and collaboration. Institute of Public Care, DH, ADASS, LGA, The Care Provider Alliance. 2015 https://ipc.brookes.ac.uk/publications/market-shaping-toolkit-supporting-local-authority-and-sme-care-provider-innovation-and-collaboration