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Is commissioning just contracting with lipstick?


While ‘commissioning’ has been prominent overseas for quite some time, it has only recently emerged as a buzzword in the Australian public sector. The NSW Treasury’s Commissioning and Contestability Policy defines commissioning as:


An approach to considering the outcomes that need to be achieved, and designing, implementing and managing a system to deliver these outcomes in the most effective way. It leverages the strengths of the public sector and where appropriate, involves private and non-government organisations and individuals to transform outcomes for customers.


NSW Treasury has established a unit to introduce this policy and the Australian Government is reportedly setting up a similar unit in the Department of Finance. The NSW Department of Family and Community Services is introducing a commissioning framework to manage its work with the non-government sector, while Commonwealth-funded Primary Health Networks (successors to Divisions of General Practice and Medicare Locals), are now operating primarily as commissioning bodies.


There are many different commissioning models available, but they essentially involve variations of the following steps.


  1. A comprehensive needs assessment is undertaken, which considers the outcomes to be achieved for consumers, clients or the community.
  2. A ‘market’ assessment is conducted, to determine whether there are providers available to deliver those services, or if capacity building needs to be undertaken.
  3. Co-design (or client-centric design) principles are employed to build a service system that will best meet those needs.
  4. The commissioner works with service providers to shape the service system.
  5. Ongoing monitoring and program evaluation is conducted, to see if the intended outcomes are being achieved and whether any adjustments to the service model need to be made.


So how does commissioning differ from traditional procurement or contracting approaches that have been in place for many years? Advocates of commissioning say it can be distinguished in a few important ways:


  • there’s a stronger emphasis on outcomes to be achieved rather than services to be purchased
  • it takes a systems approach to the design of services
  • it involves a more collaborative arrangement than a contractual agreement where services are merely pushed out to third parties.


Of course, the real question is whether commissioning is really a departure from traditional contracting, or simply a departure from bad procurement practices. At Nexus, we tend to think it’s the latter, as many organisations have been using a commissioning framework for years without describing it in those terms.


For example, when Nexus worked with Families NSW many years ago, it implemented a whole-of-government strategy that exemplified many characteristics of commissioning. It defined clear outcomes that were underpinned by a small number of key performance indicators, and allowed local offices to draw on a suite of evidence-based practices that could be tailored to their needs, in collaboration with a network of service providers.


Unfortunately, Families NSW is probably an exception. Too often, program funding is delivered using a siloed approach that’s underpinned by hard contractual relationships. It’s pushed out to a constellation of individual services, with the assumption that they will somehow add up to something more than the sum of their parts, in terms of improving the wellbeing of clients and communities.


It’s these perceived shortcomings of the contracting model that has led the shift in language from procurement to commissioning, and driven interest in this ‘new’ way of funding services or organisations. However, there are some challenges that government agencies need to be aware of when moving to a commissioning model.


  • It’s not always easy to specify unambiguous outcomes, given the complexity of the wicked problems governments often have to confront, whether it’s environmental management, social justice, closing the gap or crime prevention
  • Even if outcomes are clear and agreed, it can be hard to draw clear cause-effect links between the commissioned services and those outcomes. For example, is a decline in river catchment levels caused by bad water management, or a drought? Wicked problems, by definition, require a complex interaction between the public, private and not-for-profit sectors, often mediated by external factors beyond governments’ control.
  • While the relationship between commissioner and service provider is more nuanced in commissioning models than traditional contractor relationships, there will always be a power imbalance between the organisation holding the funds and the one who is dependent on that funding. Flowery language about partnerships and collaboration is unlikely to change this.


The lesson? While commissioning models can be beneficial, organisations need to change their processes rather than simply changing the language. Nexus is currently working with a few government agencies on commissioning, including the NSW Department of Family and Community Services and a Local Health District. If you need a hand with any stage of the commissioning process, get in touch and we’ll be happy to help.


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