Successful commissioning toolkit Pooling money and what goes with that

This page is part of our successful commissioning toolkit.

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).

Practical example: Pooling money

The play department of a council designs an ambitious scheme to encourage safe play by young children. It determines outcomes for this and has a budget. This budget is put together from a number of sources, including the council’s play department itself, the National Lottery and the Government Office for the Region.

The play department is asked to give a presentation on its plans to the Local Strategic Partnership (LSP). The LSP is impressed but asks the department to consider pooling its scheme – and the associated budget – with a number of other smallish schemes for young people.

At first, the play department is nervous about this, fearing its particular focus – and its budget – will be lost in a new, bigger whole. However, in discussion it becomes clear that the ‘specialness’ of the play department’s scheme can be retained by keeping its outcomes in the new, larger scheme, alongside the other contributing schemes’ outcomes. Finally, it also becomes clear that there may be synergies when the small schemes work together, as well as efficiencies in managing the schemes as one.

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.

Notes

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.

Successful commissioning toolkit: Table of contents

Competition

Delivering to users