How do you buy services for a market that is volatile, expensive and where a mistake can put a person’s life at risk? This is the challenge faced by those who work in social services.

Despite the huge sums involved and the resulting need for buyers’ expertise, purchasing decisions in this sector rarely involve procurement professionals. Instead they are made by social services specialists. Further, the urgency of this service provision means agreements are frequently made on the spot, with little opportunity for negotiation.

“It’s a seller’s market,” says David Hewitt, director of PSL Consulting. The firm carried out a study recently into the procurement of residential care services involving 50 local authorities. Their average budget for these services was around £24.5 million. It found 17 per cent did not negotiate with suppliers at all.

The survey, Procurement Benchmarking of Residential Care Home Services, found 81 per cent of spend in residential care services was managed by one-off purchases. It also revealed purchasers rarely oversee budgets.

A unique area

But this isn’t necessarily a problem, according to Gordon Murray, procurement programme manager for the Improvement and Development Agency, which works with councils to enhance their performance.

“Many social services departments have good procurement people who are not CIPS-qualified,” he says. “It may be that a procurement department is not involved, but it is an entirely different skill from the one buyers are traditionally trained for.”

He says regional differences in need and provision, variation in prices, and the element of risk – due to the vulnerability of the people involved – all make social services a unique area.

Even the language used by social services differs. The terms “procurement” and “suppliers” are absent; instead, they refer to “commissioning” and “providers”. And, according to one former social services buyer, contract clauses in this area are more complex and sensitive. “If a widget manufacturer doesn’t get the size right you just say ‘on your bike’. But you can’t do that if you’ve got a group of people in a home – you can’t just close it.”

Rarely in any other area of procurement is someone’s life at stake if the purchaser makes a mistake, says Murray. And he believes this is why social services specialists can be unwilling to involve others. “There is a reluctance to recognise that procurement professionals could add value.”

In Murray’s view, it is up to purchasers to build trust by demonstrating an understanding of needs. He says purchasers can add value by taking a strategic, long-term view, looking at risk management planning and judging the impact of their decisions.

Procurement also has a role to play in developing relationships with suppliers, says Ken Cole, director of the London Centre of Excellence, one of nine regional centres of procurement best practice. “It’s about managing markets and working with suppliers – making it more attractive for them to do business with you.”

For example, procurement can make it easier and cheaper for suppliers to tender and can help them with corporate social responsibility issues, which are much stricter in the public sector.

Partnerships between suppliers and public-sector colleagues could be improved, according to two reports published in June by independent health research and policy organisation the King’s Fund.

Commissioning Care Services for Older People – Achievements and Challenges in London, found that partnerships with independent providers were varied, and some spoke of feeling “a bit like Cinderella not invited to the ball”. And another London study, The Business of Caring, said better partnerships needed to be forged with colleagues in health and housing.

“There’s not much strategic planning going on,” agrees Lynette Ranson, a business relationship manager for the Commission for Social Care Inspection, which examines the performance of social services and its providers.

She says another complexity is the government drive to help older people live in their own homes, which makes it difficult for authorities to assess how much residential care to buy.

“Local authorities have been quite slow in developing commissioning strategies, but it’s a tough nut to crack.”

Many councils are now looking at buying “block” contracts. However, this can lead to new dilemmas, says Ranson. “We have one authority that wants to buy 4,000 hours in a care home. A provider can say ‘we’ll deliver’ but what happens if you discover there’s a problem, such as staff not being trained properly?

“You also have to be careful not to force other suppliers out of the market or leave yourself with a cartel syndrome. It’s a delicate balance.”

Both the King’s Fund and PSL studies found that markets were increasingly dominated by fewer, but larger, care providers. The King’s Fund recommended that the Department of Trade and Industry support small care organisations to develop the business infrastructure they need to enter the market, expand or diversify their services.

It also called on local authorities to make greater use of “planning gain powers” to develop homes in areas where supply is short. This means persuading developers to incorporate specialist supported housing in plans for general housing or commercial developments.

All boroughs studied in the King’s Fund Commissioning Care report were taking steps to manage the market through different types of contracts and, where possible, by raising fees paid to providers to offer them greater security. But the report questioned how much room exists for further savings, as processes are being streamlined and prices paid for care services are being kept low.

However, the PSL study said a 3-4 per cent cost improvement could be delivered primarily in services for adults with learning disabilities by a “common price model”, which allows authorities to see how much they pay for all aspects of a service, such as washing, dressing, food and drink. It estimated that for the 50 authorities surveyed, this improvement would amount to a total of around £37 million.

Joint working

Cole believes purchasers need to be involved and their input would help improve service provision. “Social services professionals are trained in social work principles but they don’t have the commercial skills. Equally, purchasers are not trained in social services, but together you’ve got a good partnership.”

This approach is proving successful at Surrey County Council, where a purchasing team has been seconded to social services for the past two-and-a-half years. This has allowed them to forge strategic relationships with staff in the children and adult services directorates.

Furthermore, since last month five contract management staff have been placed within social services, to focus on contract management processes and relationships with service providers at a local level.

“Operational staff rely heavily on the creative business acumen of procurement professionals,” says David Odoni, head of contracts for care services at Surrey. This enables them to concentrate on their objectives, knowing their procurement colleagues are managing compliance.

The head of contracts is integrated with the social services’ senior management team to influence strategies with implications for procurement, contract management or provider relationships. Contract specialists also attend provider forums at which social services managers and care providers jointly review issues, and procurement staff train colleagues on best practice.

Elsewhere in the region, the South East Centre of Excellence, which leads on adult services, has identified two exemplar projects. One is looking at offering purchasing cards to allow clients to buy their own social care packages, and the other is exploring the use of standardised contracts. The South East Centre is itself working with the Association of Directors of Social Services and Department of Health to improve purchasing in this area.

While it remains a difficult sector to plan and buy for, areas of excellence and best practice have been identified where social services specialists and purchasers can work together to bring about improvement.