So far, we have considered your programme as a separate programme. That may be where matters end up. But you need first to consider the option of pooling your fund with another fund. There are a number of factors to consider:
- A large procurement or grant can provide economies of scale, especially in the management and administration of the money. It should be necessary, for example, to have only one monitoring system;
- Third sector organisations (TSOs) often point out high costs to them of work with multiple funding streams from different public bodies; and these often have different management requirements. A smaller number of funds might reduce the burden this places on TSOs.
There may be a concern within a public body that, if its fund is merged with a larger pool, the particular focus of its policy and service will be lost. However, this need not been the case. At local level, there has been experience of simultaneously:
- Pooling budgets across departments (of the council) and other organisations (especially the NHS); and
- Maintaining, within the pooled arrangements, the focus on important individual policies and services by including outcomes relating to those in shared sets of targets (for example, in Local Area Agreements and Total Place).
There is often concern among TSOs that they will not have the organisational ‘muscle’ to win funds in large, ‘pooled’ grant or procurement exercises. However, this need not be the case for two reasons:
- TSOs can form themselves into a consortium or partnership. You as a commissioner should understand that forming these will take time and you need to build that time into the commissioning process [Note 1];
- It is now established that, where a public body has a financial agreement with a ‘prime provider’ that, in turn, will have financial relationships with third sector ‘sub-providers’, the prime provider must apply Compact principles to the sub-providers. [Note 2]
If you are creating a larger procurement or grant, with more onerous tendering or application processes, then bear in mind that smaller organisations (and not TSOs) may need more time to prepare bids and other documents you require. They are less likely to have the capacity to produce these quickly and more likely to be deterred by tight timescales from competing.
Note 1: Commission for the Compact, Commissioning Guidance (pdf – 1237KB).
Note 2: For example, the Department of Work and Pensions (DWP) has decided to set up prime contracts for many of its services. But DWP expects any prime contractor will have to subcontract much of its work if the whole system – DWP, prime contractor and subcontractors – are to deliver the desired outcomes. Many of the subcontractors will be TSOs. The DWP has put in place conditions to ensure the prime contractors treat TSO subcontractors responsibly and in accordance with Compact principles.