State Commissioning Strategy discussion paper

The Labor Government is committed to improving outcomes for all Western Australians, empowering communities and improving the lives of the most vulnerable.

I am pleased to present this discussion paper, providing stakeholders with the opportunity to help shape the State Commissioning Strategy (the Strategy) for the next five years.

The Strategy aims to provide a holistic and sustainable approach to the commissioning and delivery of community services, aligning with the Delivering Community Services in Partnership (DCSP) Policy. It will determine how community services are commissioned across the state. These services include social housing, homelessness, domestic violence, out-of-home care, mental health services, youth and aged based programs alongside other related services that will be provided to the community over the next five years and beyond.

The Strategy will ensure greater cohesion between government, service providers, peak bodies and consumer advocates. Importantly, the Strategy will enable government to listen to service users as well as their carers, families and guardians, collaboratively and transparently, addressing the needs within our community.

I invite community members to share their ideas and expertise to help guide the development of the Strategy. It is essential we get your contribution, and all views are welcomed. I look forward to your comments and working with you in the years ahead so we can maximise outcomes for the Western Australian community.

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Hon Dr Tony Buti MLA
Minister for Finance; Lands; Sport and Recreation;
Citizenship and Multicultural Interests

July 2021

The Western Australian (WA) Government is committed to ensuring that all Western Australians have the essential services they need to be well supported and live healthy and fulfilled lives. A diverse range of community services are delivered by WA government agencies, and the WA government acknowledges that a large number of existing contracts are due to expire in the next two years. The Departments of Finance, the Premier and Cabinet, and Treasury are leading the development of a State Commissioning Strategy for Community Services (the Strategy) with input from a range of stakeholders, including service user representatives and/or advocates, other government agencies, and the community services sector. An Independent Review Panel¹ has provided advice on the key issues to be addressed in the Strategy. 

The development of the Strategy provides an opportunity to:

• take a longer-term approach to commissioning, by defining a clear sequence of commissioning activity
• take a partnership approach across the whole community services system, including government and the community services sector
• increase the role of service users in the planning and design of services
• consider ways to improve the sustainability of services through better resource management
• build the evidence base for which services are most effective.

The purpose of this discussion paper is to seek feedback on the development of the Strategy. It includes the following:

• the case for commissioning: background on strategic commissioning and why it is needed in WA
• key issues: a description of six issues that must be considered in the design of WA’s Strategy and on which feedback is sought
• enablers of commissioning: a description of the enablers that underpin the Strategy
• have your say: information on the consultation process and a summary of consultation questions.

¹ The Independent Review Panel members were Emeritus Professor Colleen Hayward AM, Ms Sue Ash AO and Ms Jenna Palumbo.

Strategic commissioning is about providing better services to Western Australians. Services that:

• meet the needs of the people that use them, at the right time and in the right place;
• are sustainable and delivered by organisations that have the right staff and systems in place
• are based on evidence of what works and robust quality standards
• are culturally safe and tailored to local community needs.

Strategic commissioning on its own will not deliver all of these benefits. It’s about a different way of thinking and working together to translate community priorities and government strategies into services that support better outcomes for Western Australians.

The Delivering Community Services in Partnership (DCSP) Policy reflects many elements of a strategic commissioning approach. It will remain a key tool in implementing the Strategy, guiding commissioning with the community services sector.

However, to date a coherent approach to strategic commissioning of community services has not been implemented across government. The development of the Strategy provides an opportunity for a more coordinated and system-wide approach to the delivery of community services across the diverse portfolio of community services in WA and across a diversity of providers, including government and the community services sector.

What is commissioning and why is it important?

Strategic commissioning seeks to improve the design and delivery of services.

At the heart of strategic commissioning are two goals:

• to provide targeted and higher quality services that deliver improved outcomes to service users, particularly those who are most vulnerable
• to promote efficient delivery of services and get better outcomes from investment. 

Commissioning represents a collaborative approach to developing services in partnership with service users and service providers through better relationships and new ways of working. While there is no universally agreed definition, there are a number of common elements and features which distinguish strategic commissioning. These include:

• assessing the needs of service users in collaboration with service users and providers
• defining the most pressing priorities and communicating these to relevant stakeholders
• designing services with service users, drawing on available evidence about what works
• resource allocation to the most appropriate provider to deliver the services
• continuous monitoring and evaluation of service effectiveness.

Commissioning cycle

All commissioning is informed by a clear design for the service provisioning system. 

• Service users and community needs are at the centre of commissioning. 
• The process involves ongoing, genuine, respectful engagement. This includes:
  • co-design
  • cultural safety.
• The approach is iterative, responsive and seeks to build the providers. This includes:
  • identify need and plan
  • communicate intentions
  • design services
  • procurement and contracting 
  • manage and monitor
  • review and evaluate.

Commissioning takes a system-wide approach

In the Australian context, commissioning is often confused with procurement, or contracting, of services from non-government agencies, but it is far broader and encompasses the end-to-end policy and delivery cycle. Commissioning may involve services delivered by government or by non-government organisations.

In addition, while strategic commissioning can provide a framework for designing and delivering an individual service, to be truly effective commissioning must look beyond the idea of a single service option and consider the entire system within which a service is delivered.

Commissioning builds capability across the system

Commissioning is fundamentally about collaboration between service users, providers and government and how each provides value. 

It considers the capabilities and arrangements required to support service delivery and recognises that many community services are interconnected and are seeking to achieve common goals. Each ‘round’ of the commissioning cycle represents a variety of opportunities to make changes to the system and build the capability of actors within the system. 

There are diverse commissioning approaches

While most commissioning takes a cyclical approach, there are a wide range of governance, procurement and funding options that can be used to commission services. Many of these options may be appropriate in some circumstances and not others. For example, under the National Disability Insurance Scheme (NDIS) disability services are commissioned through a market-based approach where each service user has their own individual plan and purchases services from providers. The concept of market in the delivery of community services is varied as not all service types are delivered by the market. This is an important consideration when determining how best to procure a service during the planning phase of commissioning.

What community services are currently commissioned? 

Community services are services that provide support to sustain and nurture the functioning of individuals and groups, to address physical, social and economic disadvantage, maximise their potential, and to enhance community well-being.

Community services are commissioned by 14 different government agencies in WA. There are a wide range of different service types with an estimated total expenditure of $3.9 billion per annum. Major types of services are depicted below.

Some of these service types are commissioned by multiple agencies (for example housing support services are commissioned by the Department of Communities, the Department of Justice and the Mental Health Commission). The approach to commissioning these services currently varies significantly between agencies. The Strategy provides the opportunity for a more coordinated and consistent approach.

Estimated Community Services spend in WA²

Area	$
Communities	2.0bn
Health	1.3bn
Mental Health	0.6bn

² Figures provided represent an estimated spend across community services delivered by Government and Non-Government organisations. Figures are estimated from 2020-21 Budget Paper 2 (Agency Total Cost of Service) and Agency level data. ‘Other’ category totals $0.09bn and includes the Departments of Education, Justice, Local Government Sport and Cultural Industries, Mines Industry Regulation and Safety, Primary Industries and Regional Development and WA Police Force.

Who delivers services? 

Strategic commissioning involves government making informed decisions about who is best placed to provide a given service. Commissioned services are delivered in three main ways:

• government agency delivery: this is where government departments go through the process of assessing need and choose to deliver services with agency staff and resources
• non-government delivery – DCSP Policy: The DCSP Policy provides an approach to identifying community need, service design and procurement that is targeted at services provided by the community services sector. It covers over 1,400 contracts with over 500 community services organisations and over 80 local government entities
• non-government delivery – outside of the DCSP Policy: Some services are outside of the DCSP Policy through commercial procurement frameworks.

Under the new Strategy, the DCSP Policy will continue to be applied in the procurement of community services from non-government partners. A 2020 audit conducted by the Department of Finance identified the vast majority (up to 90%) of contracts established under the DCSP Policy will expire over the coming 1-2 years. Many contracts established under the DCSP Policy have also been in place for over 10 years, without consideration of whether they remain contemporary, sustainable, and appropriate to continue to meet the needs of service users. This highlights the need to address the questions of continuity, longevity, and sustainability of services through a new commissioning approach. A coordinated approach and timeline for reviewing these contracts will be an important component of the Strategy.

This section explores six key issues for service users, government agencies and service providers that will be at the core of the Strategy. They have been identified based on stakeholder input from the community services sector senior leaders and peak body representatives, including representatives of the Aboriginal Advisory Council of WA and the Independent Review Panel. These issues are also informed by the commissioning experience in other jurisdictions.

The key issues for the strategy are:

1. embedding a system-wide commissioning approach grounded in outcomes
2. planning and designing place-based services that respond to user needs
3. prioritising genuine partnership and the leadership of Aboriginal people and organisations
4. ensuring sustainable services that deliver value
5. investing in evidence-based early intervention and prevention
6. strengthening monitoring, evaluation and review of services.

Consultation question

Are there other issues associated with commissioning that should be covered in the Strategy?

Embedding a system-wide commissioning approach grounded in outcomes

Prioritising outcomes for service users

Commissioning focuses on meeting the needs of the community in the most efficient and effective way. This means looking beyond outputs of services, such as the number and types of services that service users have received, and seeking to understand the outcomes of service delivery, such as how services have improved the lives of service users.

In line with the Government's Supporting Communities election commitments in 2017, an Outcomes Measurement Framework (Framework) for community services was developed, led by the WA Council of Social Service under the Supporting Communities Forum, including the high-level outcomes listed below. Work is underway between government and the community services sector to further develop and implement the Framework. Once finalised, the Framework will inform the Strategy and guide commissioning of services around a common set of outcomes that cut across multiple service sectors.

The initial outcomes are:

• healthy - we are healthy and well
• equipped - we have the skills, experiences and resources to contribute to our community and economy
• empowered - we choose how to live our lives
• stable - we are financially secure and have suitable housing
• connected - we are connected to culture, our communities, our environment and to each other
• safe - we are and we feel safe and free from harm
• sustainable - our built and natural environments are liveable and sustainable.

An integrated approach 

Focusing on outcomes will require a holistic focus across service systems, as the needs of service users are often not limited to a single service domain or funding line. For example, for a service user to feel safe, they may require a response from the community services, justice, and health systems.

To achieve a commissioning approach that supports a holistic focus on outcomes for service users, it will be necessary for the Strategy to apply to all parties involved in the community services system, including:

• all government agencies involved in delivering and commissioning community services
• all service providers delivering and commissioning community services. 

The Strategy must also enable partnerships between government departments and with and within the community sector to drive more integrated service delivery.

While the Strategy should apply to all parties involved in commissioning of community services in WA, a uniform approach is not desirable. The Strategy will seek to outline the essential and non-negotiable features of WA’s commissioning approach while enabling flexibility to achieve outcomes, in the most effective manner.

Consultation question

How can commissioning approaches drive more integrated service delivery?

Planning and designing place-based services that respond to user needs

Embedding co-design

At the centre of all good commissioning approaches is the delivery of services that respond to the needs of service users. Co-design is a process to develop processes, systems and services with genuine user voice and empowerment of people with lived experience. In a community services context, this means determining needs and designing services in partnership with service users, service providers and peak or advocacy groups. In the past, design of services has at times relied on input from service providers as a proxy for service user feedback.

A challenge with implementing co-design approaches is that they can be time consuming and may occasionally delay delivery while service users are waiting to receive services. Co-design must therefore also be timely and responsive to ensure that service users are getting the services they need when they need them. This means that government and providers should plan ahead and allow sufficient time for co-design.

Responding to local needs

WA is a large and diverse state and the needs of service users in Perth may differ significantly from those in the regions. Place-based approaches focus on improving outcomes in a particular location and designing unique approaches based on the needs of that community. Place-based approaches often seek to achieve integration with other services in a region to deliver a more holistic service response for service users. Commissioning approaches should support local decision making in order to best respond to the needs of communities. It should not create barriers to community-led approaches.

Commissioning can support place-based responses by ensuring that co-design is undertaken at a local level with local organisations by drawing on community voice. Where appropriate to achieve high-level outcomes, government may also devolve some decision making to a local organisation, so the entire commissioning cycle can be undertaken locally with the input of local service users. 

Some specific funding tools can be used to focus on achievement of social outcomes in a particular location, for example collective impact approaches, which involve a structured collaboration between cross-sector organisations to drive towards a common agenda.

Consultation question

How can service users be most effectively engaged to design services that meet their needs in the context of place and community?

Prioritising genuine partnership with Aboriginal people and organisations in the planning, design, and delivery of services

A strong mandate for Aboriginal leadership

Under the 2020 National Agreement on Closing the Gap, all Australian states and territories have committed to a new approach for policies and programs for Aboriginal and Torres Strait Islander people based on full and genuine partnership. By prioritising Aboriginal leadership and empowerment across all stages of decision making and, in the planning, design, and delivery of services to Aboriginal communities, all parties are working towards cultural safety and outcomes for local communities. Closing the Gap highlights key outcomes including: 

• strengthening structures that empower Aboriginal and Torres Strait Islander people to share decision-making authority with governments
• building the community-controlled sector and increasing the amount of government funding for Aboriginal and Torres Strait Islander programs and services going through Aboriginal and Torres Strait Islander organisations
• systemic and structural transformation of mainstream government organisations and greater transparency of resource allocation to dedicated Aboriginal and Torres Strait Islander service delivery
• enabling Aboriginal and Torres Strait Islander people’s access to and the capability to use locally relevant data and information to drive their priorities and development in a culturally safe and informed way
• pursuing enhanced socio-economic outcomes specific to closing the inequality gap.

This means services for Aboriginal people should be designed with and by Aboriginal people and that there should be an increased proportion of services for Aboriginal people delivered by Aboriginal Community Controlled Organisations (ACCOs) and other Aboriginal organisations. This will see a shift in some service provision from current providers to ACCOs and other Aboriginal organisations. Enabling this capacity building of Aboriginal organisations will be essential to achieving this agenda along with increased cultural competence of government and providers.

Commissioning can support Aboriginal control

Strategic commissioning provides a framework for co-designing services with Aboriginal communities to ensure services are culturally appropriate and targeted to need. While there is no one size fits all approach, strategic commissioning presents an opportunity for enhanced coordination across agencies, providers and community organisations, enabling a shift to local control to drive place-based outcomes. Specific commissioning approaches can also support operational and other freedoms for providers, with government support provided where it is most useful. In New Zealand, strategic commissioning has been used to deliver social services for Maori communities for many years, through the establishment of intermediary commissioning agencies that are Maori led and connected to local communities. There are also a number of pilot strategic commissioning approaches with Aboriginal and Torres Strait Islander communities in Australia. Promising programs are those that have engaged meaningfully with communities and given autonomy to service providers.

Alongside the Closing the Gap priorities, the Western Australian Government is currently developing an Aboriginal Empowerment Strategy to guide how it works with Aboriginal people to achieve better social, economic, health and cultural outcomes. The Strategy must be aligned with other major strategies that support partnerships with Aboriginal people. 

Consultation question

How should the Strategy strengthen the involvement of Aboriginal people, organisations and leadership in the planning, design and delivery of services?

Commissioning to deliver the greatest value

Commissioning is not about reducing investment but is about delivering the greatest value for all involved, including service users, service providers and government. This means using government resources in the most efficient way to achieve enduring outcomes for service users.

Many approaches to commissioning seek to create some concept of a well-functioning market. While the community services sector cannot be compared to a traditional private sector market due to its emphasis on social outcomes and reliance on government funds, it does operate as a supply chain to deliver services.

There are a range of options for commissioners to ensure there is an adequate mix of providers in the supply chain and to support the best outcomes for service users. For government commissioning of community services, these options are summarised below.

Approach	Description	When this approach delivers value
Government delivered	The commissioner delivers the service directly using their own staff and other resources.	When the commissioner has the capability and capacity to deliver the service efficiently and effectively. When there is a high level of risk that can be better managed through internal delivery or where the commissioner has statutory roles and responsibilities. Where the “supply chain” is unable to deliver critical services.
Non-government delivered though open advertisement	Commissioner conducts a competitive tender process.	Searching for a new or innovative approach and seeking to attract new entrants to the “supply chain”. Range of highly skilled and experienced service providers is available.
Non-government delivered through limited sourcing	Commissioner seeks bids from a defined list of providers, either through an approved panel or after shortlisting early in the commissioning cycle.	An open competitive tender would be onerous or inappropriate. Seeking a range of delivery propositions and the potential efficiencies that are driven by competition.
Non-government delivered through direct procurement	Commissioner identified need and sole sources work from a provider. Provider identifies need and approaches government with an innovative solution.	A provider is best placed to deliver in a region or service (this may include ACCOs). Introducing competition or an additional provider would be inefficient (e.g. deplete workforce, service a too-small user base). When the provider is meeting (or can meet) expectations for existing contracts.

A sustainable and diverse ecosystem of providers

Regardless of the delivery option, government has a role in monitoring, evaluation and regulation for all services to ensure quality and safety of delivery and to protect service users.

Government also has a critical stewardship responsibility over the system as a whole, including that it pays a fair and appropriate amount for services to ensure the ongoing quality and sustainability of services and support a diverse ecosystem of providers, including small providers, place-based providers, and ACCOs. Providers must also be able to attract and develop an appropriately skilled workforce.

The DCSP Policy defines sustainability as the ability of the organisation to continue to provide services over a long period. This means that agencies must purchase community services at a sustainable price. In the past community service providers have faced challenges to service sustainability and have been supported with supplementary funding. A longer-term approach that gives all providers certainty is preferable. The government’s future approach to commissioning will actively seek to support a sustainable and diverse market of service providers, as this will be important in meeting the needs of service users.

Consultation question

How can Government work with the sector to ensure services remain contemporary and are agile enough to change to meet the needs of service users?

How can the sector ensure services are priced appropriately encompassing all costs for the service to support sustainability? 

Investing in evidence-based early intervention and prevention

The benefits of early intervention are well documented

Community services funding is often directed towards people in crisis, as their needs for services are often acute and require an urgent response. This includes services provided through statutory systems, such as child protection services.

However, some community services users may not require an intensive intervention through a statutory system if their needs are met before their situation escalates. A large body of peer-reviewed evidence from Australia and internationally demonstrates the importance and wide-reaching impact of effective early childhood programs, including reducing demand on health, mental health, housing, and justice services. The concept of early intervention also extends beyond childhood and can include earlier service responses to a range of needs, such as mental health, disability and drug and alcohol use.

Towards a longer-term approach

Intervening early has benefits not only for service users, but also has potential to reduce costs to government over the longer term and free up capacity for service providers to focus on the activities of most value to service users. These benefits will take time to achieve and investment in early intervention cannot replace investment to support those in crisis in the immediate term, which creates a challenge for prioritisation of funding.

Investment in early intervention is also complex because the outcomes that are sought are longer term and it is often harder to attribute outcomes to particular interventions. To intervene early, and effectively, government needs a better understanding of pathways to disadvantage and how agencies can work together to support people to avoid tertiary systems.

Consultation question

How can commissioning support a focus on the longer-term needs of service users, as well as the immediate needs of those in crisis?

Strengthening monitoring, evaluation, and review of services

Building a learning system

In order to effectively meet the needs of service users, it is necessary to continually assess whether services are being delivered as intended and are achieving the desired outcomes. This involves regular monitoring and review of major commissioned activities with the results of these evaluations used to inform future commissioning activities.

While governments and service providers routinely collect data on outputs of services, such as the volume of services delivered to service users, data on user outcomes is harder to collect and is often lacking. Collecting data on outcomes requires a clear evaluation framework and methodology that links the outputs of service delivery to short-, medium- and long-term service user outcomes and involves a structured data collection approach that is not burdensome to providers or governments. 

Service outputs can be measured immediately, but it can take time to assess the outcomes for service users from specific interventions. This is particularly true where outcomes cut across multiple service systems. For this reason, service providers and government agencies generally require longer term contracts that give them the opportunity to work towards and achieve longer term outcomes. Measurement of outcomes must involve partnerships between governments and providers to collaboratively collect and interpret the most important data.

Recommissioning and review of service delivery

When a service has been running for some time it may be appropriate to recommission that service. This should include conducting a fresh assessment of need, co-designing new and innovative service models with service users, and potentially reconsidering the delivery approach (insourcing or outsourcing) and the appropriate organisation to deliver.

In recent years in WA, a range of community service contracts have been frequently renewed for a short period of time. This is not desirable, firstly because it fails to give service providers sufficient certainty to try new and innovative approaches to achieve service user outcomes, and secondly because there is a missed opportunity for end-to-end service re-design to better meet the needs of service users.

To avoid this situation in the future, the Strategy will define a transparent, sequenced and prioritised program for the review of existing service agreements and recommission where appropriate ensuring services remain contemporary and effective.

Consultation question

How can data collection be comprehensive enough to evaluate service without being overly burdensome for service users, providers and government?

To achieve the shift to a more consistent and systematic commissioning approach, a number of essential enablers will be required. Some of these enablers are already largely in place, such as governance and oversight mechanisms, however, others will need to be built or updated over time.

Governance and accountability

Strong leadership across government and the community sector will be necessary to support the transition to new commissioning approaches. Existing governance groups and oversight bodies will play a role leading the change, ensuring coordination across government and the community sector, and promoting an ongoing focus on meeting the needs of service users. Key bodies to guide the implementation of the new commissioning approach will include Cabinet and the Expenditure Review Committee, senior leaders from government agencies, community services sector and Aboriginal leaders, peak bodies and consumer advocates representing service users. Governance factors will also be included in the Strategy.

These mechanisms must serve to hold all parties to account for implementing the Strategy as intended. It is equally important for government agencies to be held to account, as well as providers, and all parties must have the opportunity to provide honest and open feedback when things are not working as intended.

Capability and capacity

The most critical enabler of the Strategy will be capability and capacity. Successful strategic commissioning requires government and service providers to have a range of capabilities that are significantly different to those required in a traditional procurement and service provision environment and the capacity to implement new approaches. New approaches to commissioning also introduce new capability requirements for service users themselves, including the ability to articulate their needs and participate in co-design processes. Required capabilities for government agencies, providers and service users are described below:

• Government - Government capabilities must support the overall system as well as operations. 
  • Government capabilities can also be understood as those relating to strategic decision-making (determining needs, prioritising issues and evaluation solutions), relationship management (managing a large portfolio of operational relationships) and cultural competency. 
• Providers - provider capabilities must support innovation, productive collaboration and local outcomes. 
  • Providers must have sufficient capabilities to effectively work with commissioning system requires an ability to constantly improve and work collaboratively, act in a cultural competent capacity, as well as delivery defined services.
• Service Users - user capabilities must enable articulation of needs and co-design participation. 
  • Users are increasingly expected to have sufficient capabilities to participate in the commissioning cycle. Users must be able to articulate their needs and then participate in the co-design process. 

Building the required capabilities of government and the community services sector will be necessary to support the desired change and this could be supported by a capability framework that clearly articulates required capabilities.

Data

To implement a commissioning approach, all parties need to collect high-quality data that can be used to understand the performance of services and the outcomes for service users. This will require operational staff to be collecting data in a consistent format using appropriate tools and platforms. It also requires the capability to appropriately share, analyse and interpret data to inform the ongoing identification of community need.

Data collection and analysis cannot be undertaken without the close involvement of service users themselves at a community level. Government and state-wide service providers may not fully understand the story data is telling and local communities require access to their own data so they can make meaningful decisions about their own needs and priorities. This is particularly the case for data about Aboriginal and Torres Strait Islander people.

Policy and legislation 

There are a range of current policies and supporting processes that underpin the Government’s current commissioning approach. These have been useful tools to support a more coordinated approach to commissioning across government and to promote collaboration, however they will need to be refreshed and updated to support a new coherent, coordinated and holistic commissioning approach with greater consistency. In particular, the DCSP Policy may need to be refreshed to reflect a new delivery environment.

Consultation questions

What enablers are most important for implementing new commissioning approaches in WA and are there any other key enablers not listed here?

How can government and providers have brave conversations when things are not working?

What capabilities to governments, providers and service users require to implement this strategy?