Commissioners should consider all the options for service change, of which decommissioning is just one possibility. Discussing options with providers can help commissioners to be aware of all the options that may be available to them.
The table summarises the options that our research found which can result in improved outcomes or savings whilst maintaining effective provider relationships and continuation of a service for users.
Commissioners should remember the balance between quality, costs and outcomes. If one is changed, this may impact on the others. So reducing costs may have a resultant implication for the outcomes that can realistically be delivered.
Options for change
|Contract re-negotiation||Negotiating with an existing provider to look at options for delivery with a reduced budget during the life of a contract.|
|Providers making efficiencies||Providers work individually or together to reduce the cost of providing a service, or reshape a service in order to provide better value for money.|
|Agreed top-slicing of costs||Agreeing a percentage reduction in funding to be applied to all services or providers. There may be scope for negotiating the level and timing of such cuts. For example, one commissioner applied a 3% cut across the board but gave organisations a choice of a 3% cut this year or 6% next year.|
|Changing the provider market||Improving the provider market by, for example, changing a large market of generally smaller providers through developing and empowering ‘market leaders’ who can innovate, offer better value for money and work with smaller, local organisations.One commissioner had 15 providers and wanted to reduce the volume and cost of transactions involved in managing many small contracts. It created ‘market leaders’ from three lead providers who, unable to meet everything in the commissioner’s specification, work with other providers to deliver the services.|
|Service innovation||Successfully exploiting new ideas (‘new’ in this context can be new to the sector or the organisation, taking an idea from one context and adapting it to another). Approaches such as commissioning for outcomes, contestability, personalised budgets and increasing service user choice may all increase innovation. Implementing successful innovation depends upon clear drivers, strong incentives, good ideas, an absence of barriers to implementation, and means for learning and replicating success (see the NAO report, Innovation across central government).Good communication between commissioner and provider is important.|