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How to secure value for money through better financial relationships with third sector organisations

Successful commissioning means delivering the right outcomes at the right cost. Compare that with our definition of good value for money: ‘the optimal use of resources to achieve the intended outcomes’. Successful commissioning is, almost by definition, good value for money.

‘Successful Commissioning’ aims to help local commissioners in the public sector get better value for money from third sector organisations (TSOs). It also aims to help third sector organisations become more informed about the commissioning process, and about what they should expect from financial relationships with the public sector. Where TSOs can help deliver value for money then commissioners should make the best possible use of them.

Rather than telling commissioners how to do commissioning, our guidance focuses on those aspects of the process that are most likely to affect financial relationships with third sector organisations. We look at how commissioners can help the third sector to deliver services and outcomes that represent value for money. The guidance aims to:

  • clearly set out the main issues for effective financial relationships with third sector organisations;
  • make use of existing guidance in an accessible and practical way;
  • dispel some of the “myths” that exist around commissioning with TSOs; and
  • improve practices to achieve greater value for money.

This guidance is by the National Audit Office (NAO) and is endorsed by the Audit Commission, the Commission for the Compact, the Department of Communities and Local Government, the Department of Health, HM Treasury, the National Council of Voluntary Organisations (NCVO), and the Office of the Third Sector.

This guide was expanded in June 2011, to include practical guidance on ‘decommissioning’ i.e. where a service or a relationship with a service provider is ended. Decommissioning is a natural part of the commissioning process and it is just as important to plan for and manage this while maintaining value for money.

If you have a question, comment or suggestion to make about ‘Successful Commissioning’ or ‘Decommissioning’, or if you wish to suggest a practical example or case study, please email us at:

If you have a question or comment to make about the NAO’s wider work on third sector issues, please email us at:

HM Government

In assocation with:
Communities and Local Government
Department of Health
HM Treasury
Office of the Third Sector
Audit CommissionN.C.V.O.Commission for the Compact