The response to domestic and family violence, long-term unemployment and the rise of chronic disease are just a few examples where non-government organisations and private enterprise are stepping in to help governments take positive action.
This has seen the contracts landscape shift once again with the merging – or morphing – of disciplines. The traditional commercial tender format, with its focus on value for money, innovation and outcomes-driven solutions is moving into the funding space – for good cause.
Government reform and ‘conscious capitalism’
Governments all around the world are acknowledging that they can’t solve the world’s social problems on their own; and to really drive impact, the way they fund and evaluate social programs needs to change.
With funding challenges, government is divesting its involvement in direct service delivery and focusing its core business on contract administration and policy. The widespread “commissioning” of public services to non-profit and private sector organisations has necessitated the process of transparent procurement, monitoring and evaluation.
Building local capacity
This is especially evident in the human services sector across primary healthcare, aged care, domestic and family violence, employment and training services, and disability services. Industry is now being tasked to help solve social problems and service gaps by delivering client-focused, flexible, relevant and responsive front line services that were traditionally managed or delivered by government.
The result of this new contestable market has been a competitive network of community, government and commercial agencies vying for their share of an integrated inter-agency response that delivers localised services closer to the people.
Shift from output to outcomes
In its early stages, outsourced service or program contracts were used as a policy tool to help drive down costs, and to reward productive and efficient private businesses through incentive or output based payments. Mega contracts for the running of facilities such as detention centres, correctional centres, hospitals and employment services were among these contracts.
In the health and human services sector, organisations are using sophisticated data, research analysis, technology and a range of assessment tools to measure not just outputs, but program outcomes to analyse impact (eg. reduction in hospital admissions; evidence of positive behaviour).
Impact on business development
New fiscal models are also emerging such as social impact investments which are funds set up by organisations (e.g. private equity and banks) with the intention of generating social and environmental impact alongside a financial return. Local needs assessments and innovative service design feature strongly in the best funding and tender applications, and measures to assess the impact of the service model, practice and client/patient outcomes are helping government and industry make better, more appropriate policy and commercial decisions.
The downstream effect of these new types of contracts won’t limit business opportunities for others, but it will change the relationship landscape once again. Business development and personal contact will become more important to learn of partnering, alliance and sub-contractor opportunities.
These emerging trends have significantly matured the way in which tenders and funding applications are put together in terms of lead up time, the changing structure of the tender team, and many organisations generally.