Payment-by-results unfair on voluntary organisations

6 February 2013

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6 February 2013 | Adam Leach

Government attempts to adopt a ‘payment-by-results’ approach to service providers on contracts is placing an unfair level of risk on voluntary organisations that are taking on government contracts, according to the National Council for Voluntary Organisations (NCVO).

In a written submission to the Public Administration Select Committee's inquiry into public procurement the NCVO claimed public purchasing can show a “lack of understanding of the voluntary sector”.

It said public buyers should engage more with the relevant organisations and bodies on how best to commission providers, before entering the formal procurement process.

In particular, the organisation that represents the voluntary and community sector raised concerns over the increasing appetite of government to use a payment-by-results model of paying providers. This, it said, puts off a number of providers from bidding for work as their financial situation does not allow them to wait until the conclusion of the work before being paid.

“Payment-by-results approaches are a particular concern for the voluntary sector. Most voluntary service organisations cannot participate, as they cannot wait for payment,” the submission said. “Charities that are involved, as sub-contractors to primes, have had mixed experiences so far. These issues must be addressed urgently, as government rolls out more programmes in this way.”

Both the Department for Work & Pensions on the Work Programme and the Ministry of Justice on its scheme to cut reoffending rates are using the payment-by-results approach.

The NCVO said it was concerned risk was being “inappropriately passed down the supply chain” through the contracts.

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