Longer Contracts in the Pipeline

Longer Contracts in the Pipeline


Third Sector Magazine

By Mathew Little



Central government departments are to be instructed to give longer contracts to service-delivery charities as part of efforts to improve public-sector efficiency.


A cross-departmental team, headed by John Oughton, chief executive of the Office of Government Commerce, has been charged with implementing Treasury plans to make £21.5bn of efficiency savings.


As part of the same drive, other government departments are to be told to change the way they contract with charities.


They must ensure full-cost recovery, introduce longer, multi- rear contracts, balance financial risk fairly between the state and the charity, and make sure monitoring and reporting requirements are appropriate.


The four-point plan was developed by Sir Peter Gershon, the former chief executive of the Office of Government Commerce, who was put in charge of the recent Whitehall efficiency review, which has recommended 100,000 civil service job cuts.


The Home Office will report to Oughton’s team at the end of September about how the new contract regime for charities will be implemented.  It will then go to the Prime Minister for approval.


The chief executives’ body Acevo lobbied for the reforms and is setting up a ‘sounding board’ for chief executives of service-delivery charities to monitor how they are implemented.


Chief executive Stephen Bubb hailed the new policy as ‘the most important reforms in funding we have seen for quite a few years.


‘The potential of these recommendations to deliver real change is enormous.  It’s the first time we’ve had succinct recommendations.  The Government is looking at the problem and saying something has got to be done, ‘he said.


Although the four-point plan at this stage only applies to central government, the Office of the Deputy Prime Minister is to examine how to extend its principles to primary care trusts and local authorities that contract with charities.


Last year, Acevo called for contracts of 10-25 years for charities delivering public services.  The Government appears to have accepted the case for longer contracts, although it is not clear how long they will be.  Acevo’s own commission of inquiry on its ‘sure funding’ proposal on extended contracts will report in November.


A spokesman for the Home Office said: ‘This gives added impetus to initiatives that are already going on from the cross- cutting review [on the sector and public services] to funders, and a procurement guide from the Active Communities Directorate.  We will liaise with the Office of Government Commerce about how implementation is going.’