Appendix One
The Association of London Government’s approach to
commissioning services from voluntary and community
organisations
Executive Summary
 The ALG consulted on a Commissioning Voluntary and Community
Services document from 15 November 2005 until 31 January 2006
 This document presents the ALG’s approach to commissioning, taking
account of the consultation responses we received
 The ALG will deliver commissioning through four phases: planning,
securing services, monitoring & evaluation and modifying &
revising
 The ALG will provide funding for up to four years
 The ALG will specify the outcomes that we wish to commission
 The ALG will primarily use a two-stage commissioning process, but
will use a one-stage process in clearly defined circumstances
 The ALG will develop the detail of our commissioning processes by
autumn 2006 and will consult London boroughs, the voluntary
sector, other funders and other stakeholders
Introduction
1. The Association of London Government (ALG) is one of the largest
funders of the voluntary sector in London, investing approximately
£28m per year in more than 400 groups providing a wide range of
services across the capital. As the collective voice of London
local government, it is in a position to influence the environment
in which the voluntary sector operates, including the funding
policy and practice of other funders.
2. In March 2004, the ALG appointed an independently-chaired Grants
Review Board to investigate its future role and scope in funding
the voluntary sector. One of the key recommendations arising from
the review was the introduction of commissioning as the primary
approach to allocating funding. The ALG developed an outline
commissioning process in consultation with the Voluntary and
Community Sector Steering Group, on which we consulted more widely
from 15 November 2005 – 31 January 2006 with the publication of
the Commissioning Voluntary and Community Services document,
which is available on our website:
www.alg.gov.uk/upload/public/attachments/621/Consultation%20-
%20Commissioning%20Policy%20%20Procedures.doc.
3. There were 37 contributions to the public consultation: the ALG is
grateful for the range of views expressed and the time
organisations have spent giving us their thoughts. We have put a
summary of the views expressed on our website.
4. This paper sets out the ALG’s approach to commissioning. The ALG
will develop detailed processes to support our approach between
March and June 2006 in consultation with London boroughs, the
Voluntary and Community Sector Steering Group, other funders and
other stakeholders.
5. We have included a glossary of funding/ALG terms used in this
document in Annex One of this document.
The ALG’s Commissioning Process
6. The ALG’s funding for the voluntary and community sector is
provided and governed by London local authorities. The ALG must
ensure that services are available to meet identified priority
needs across the whole of London and that access is not restricted
on the basis of where someone lives. Improved access will be
secured through funding sub-regional organisations that together
provide coverage across the whole of London1 and pan-London
organisations.
7. The introduction of commissioning at the ALG aims to ensure that:
 priority services are available to those who need them,
wherever they live in London
 priorities and outcomes are better informed and more
strategic
 funding is focused on the most effective ways of meeting
needs
 resources are distributed and used efficiently
 there is a better match between the ALG’s priorities, what we
fund and what we wish to achieve for Londoners with our
funding
8. The ALG’s eligibility criteria will not be affected by the move to
commissioning. To be eligible for funding, an organisation will
still need to:
 provide cross-borough, sub-regional or London-wide services:
single borough services cannot be funded
 be constituted to provide services in more than one borough
1
for example if one organisation provided services for residents of Barnet, Enfield, Haringey and Waltham
Forest, another provided the same service for residents of Barking & Dagenham, Havering, Newham and
Redbridge, another for Hackney, Islington and Tower Hamlets residents etc, until a network of services are
available across the whole of London


be constituted as a voluntary organisation: local authorities
and other public bodies are not eligible
not operate for profit
9. Each specification will fall under at least one of the themes that
the ALG’s Leaders’ Committee has agreed for ALG funding:

increase access to London’s opportunities

reduce social exclusion, poverty and disadvantage

promote equality and reducing discrimination
What does the ALG mean by Commissioning?
10. The ALG has
commissioning.
adopted
the
Audit
Commission’s
definition
of
‘Commissioning is the process of specifying, securing and
monitoring services to meet people’s needs at a strategic
level’. (Audit Commission: Making Ends Meet, October 2003.)
11. The commissioning cycle
consist of four phases:
 planning
that

securing services

monitoring and reviewing

modifying and revising
the
ALG
proposes
to
adopt
will
12. The following sections explain the activity that will take place
in each phase.
Phase 1 – Planning
13. The planning phase includes deciding what we will fund in the
future. The ALG understands the importance of getting this stage
right. The diagram below outlines the main steps the ALG will
take:
Consultation on commissioning priorities: 15 November
2005 – 17 March 2006
ALG reviews consultation responses about the ALG’s
future funding priorities and develops proposals for
future priority services: March – June 2006
ALG Leaders’ Committee meets to decide future
priorities: 11 July 2006
ALG publicises future funding priorities: July 2006
ALG consults on first service specifications with
boroughs and voluntary and community organisations:
July – October 2006
ALG agrees and advertises our first service
specifications: November 2006
ALG consults on subsequent service specifications with
boroughs and voluntary and community organisations
14. The ALG has consulted widely with London boroughs, voluntary and
community organisations, other funders and other stakeholders
about our future funding priorities. We have held a series of 14
consultation meetings across London to discuss the Better Services
for Londoners consultation paper, which the ALG published to
stimulate debate about our future funding priorities. In addition,
we have held a range of meetings with London boroughs, the Mayor
of London and other funders. The Better Services for Londoners
publication is available to download on the ALG’s website:
www.alg.gov.uk/upload/public/attachments/619/BetterServices2.pdf).
The ALG has also investigated the range of data that exists that
could support the evidence of need identified by respondents to
the consultation on our future priorities. The ALG will make the
evidence of need that it collates and the data indicators
available on our website.
15. The ALG’s Leaders’ Committee aims to meet in July 2006 to decide
the ALG’s future funding priorities. ALG officers will develop a
list of services the ALG could commission using evidence and views
submitted during the consultation and data on needs for the
Leaders’ Committee meeting. ALG officers will liaise with the
voluntary and community sector, London boroughs, the London Mayor,
other funders and other stakeholders to gather any additional
information that is needed. Officers will present ALG Leaders’
Committee with a range of services that could be funded and
suggested priorities for funding, based on the evidence officers
collate. We will include an impact assessment for our proposals,
including the impact of withdrawing funding from any services.
16. The ALG will publish its priority services and the order in which
we will commission them, following the Leaders’ Committee
decision. We will commission services in tranches over the next
three years. We are planning that the first tranche will be
smaller than future tranches to ensure that the ALG and our
stakeholders have an opportunity to monitor the effectiveness of
the ALG’s new processes. Advertising service specifications in
tranches will benefit the voluntary and community sector by
avoiding launching all ALG’s funding opportunities at one time and
help the ALG manage our assessment timescales.
17. The ALG will involve the voluntary and community sector, London
boroughs, other funders and other stakeholders in the planning
process for each service to be commissioned. This will include
consultation and intelligence gathering to inform the development
of each service specification. The ALG recognises the importance
of this step of the commissioning process: the input of our
stakeholders is key to ensuring our funding is used effectively to
meet needs.
18. Most service specifications will be outcome focused and that the
ALG will not tightly prescribe how services are to be delivered.
We will only closely define how a service should be delivered
where there is very clear evidence that a particular specific
delivery method is needed.
19. By predominantly using outcome focused service specification we
aim to ensure that voluntary and community sector providers will
have flexibility to establish the most effective means of service
delivery in response to the changing needs of service users and
potential service users. We also commit to providing clearly
worded
service
specifications
without
jargon.
Service
specifications will include the scope, objectives, desired
outcomes, budget and the proposed timetable. In addition,
performance measures and funding management arrangements will be
clearly defined. Each service specification will be presented to
the ALG Grants Committee for final agreement.
20. In addition to the workflow set out in the diagram above, there
are several other areas of work that the ALG needs to undertake to
support the planning stage:
 support to enable voluntary and community organisations to
engage with commissioning
 training for ALG staff
 develop exit support for services that are no longer a
priority for the ALG
21. We will provide support to voluntary and community sector
organisations in London that may be commissioned to deliver ALG
priority services. We will develop proposals for supporting
voluntary and community groups to engage in ALG commissioning by
summer 2006. We will particularly seek to address the needs of
small organisations and for peer-led organisations (such as
organisations managed and run by women that provide specialised
services for women) when there is evidence of a benefit of peerled services compared to mainstream services. The ALG will also
develop tailored programmes to build the capacity of organisations
with the potential to provide priority services in areas where
there is a lack of provision. We will do this work in consultation
with the Voluntary and Community Sector Steering Group. We will
also develop a full training programme for ALG staff and will have
started to implement it by summer 2006.
22. In relation to developing exit support, we have discussed what
will happen to the grants given to groups that currently receive
ALG funding in our Commissioning Voluntary and Community Services
consultation document and in other publications. We have said that
Leaders’ Committee is expected to make their decision about which
services the ALG should commission in July 2006: following the
Leaders’ Committee decision the ALG’s Grants Committee will decide
whether to extend the funding for groups that are providing
services the ALG will commission in the future. All groups will
continue to be funded until 31 March 2007 (and organisations the
ALG funds to provide second tier support will be funded until 30
June 2007). Subject to the Grants Committee’s agreement, groups
that are providing services that continue to be ALG priorities
will have their funding extended until the ALG has advertised and
commissioned the service. This would ensure there are no gaps in
service and that the voluntary sector does not lose its capacity
to deliver ALG priority services.
23. The ALG is committed to giving groups providing services that are
no longer an ALG priority following the Leaders’ Committee
decision at least six months notice of the end of their ALG
funding. The ALG will also develop proposals for the support it
will provide to organisations that will no longer receive ALG
funding. All currently funded organisations should plan on the
basis that their current funding will end at the time the ALG
indicated it would. We will also develop plans for the support we
will provide for groups that are no longer funded by the ALG by
August 2006. We will consult with the Voluntary Sector Forum and
through sector forums for ALG funded groups.
Phase 2 – Securing Services
24. The securing services phase includes how the ALG will assess
proposals and award funding. The ALG will primarily adopt a twostage assessment process. At Stage One interested organisations
would set out their initial plans for delivering a service and get
a decision from the ALG about whether the proposal should be
developed in detail. Organisations that are successful at Stage
One would be invited to submit a Stage Two proposal and would then
get a funding decision. We will clearly specify the service we are
commissioning at Stage One so that organisations have a good
understanding of what they are seeking funding for. The
specification for each service will remain the same at Stage One
and Stage Two. The type of information required and the level of
detail will differ between the two stages. The ALG will develop a
proforma specification and define our requirements for Stage One
and Stage Two in consultation with the Voluntary and Community
Sector Steering Group and London boroughs. We will complete this
work by autumn 2006.
A two-stage process will result in fewer
organisations that are interested in providing an ALG funded
service spending a lot of their time developing detailed
proposals.
25. The ALG will use a one-stage process when a service is uniquely
provided by one organisation (or a very limited number of
organisations) or where a service is totally new and only a small
number of organisations could meet the identified need. In a onestage process an organisation seeking funding would have to
provide all the information the ALG would need to make a funding
decision in one submission. It is important for the ALG to be
transparent about why we adopt a one-stage process for a
particular service.
Therefore, we will define the circumstances
when we feel a one-stage process may offer benefit by autumn 2006:
which will be subject to consultation with the Voluntary and
Community Sector Steering Group. Further, when we consult on
individual service specifications we will consult voluntary and
community organisations and London boroughs if we consider there
are circumstances when a one-stage process would offer stronger
benefits than a two-stage process. We will also obtain agreement
from the Grants Committee before we advertise a service using a
one-stage process.
26. In a two stage process, we anticipate that Stage One and Stage Two
assessment would each take no more than two months (with an extra
four weeks to get a decision and to give groups time to respond to
officers’ recommendations for funding prior to a Grants Committee
meeting). We anticipate that a one-stage process with few
proposals would take between one and two months to assess (again,
with an extra four weeks to get a decision and give groups time to
respond to officers’ recommendations). These estimates are
indicative at this stage. The ALG will undertake further work to
develop our processes and finalise the timing of assessment and
decisions.
27. The ALG will ensure that we meet the full costs for services we
agree to fund and will develop guidance on how we will assess Full
Cost Recovery by summer 2006.
28. We will notify organisations of officers’ recommendations in
relation to their submissions four weeks before the Committee
meeting and will provide Grant Committee papers – which include
funding recommendations and officers’ reason for making a
recommendation – to each organisation that submits a funding
proposal, as well as putting them on our website.
29. We will review our procedures for giving organisations a right to
reply to officers’ recommendations. The ALG will produce a
template to assist organisations to focus upon specific issues
which they believe should be considered in a right to reply and
will consult with the Voluntary and Community Sector Steering
Group. Organisation’s replies to officers’ recommendations will be
reviewed by senior officers to ensure a consistent approach is
taken. We will extend the amount of time that organisations have
to respond to officers’ recommendations from the current two week
period to four weeks. The ALG considers that this process should
ensure our decisions will be transparent and accountable.
30. The ALG will negotiate a funding agreement with each of the
organisations awarded funding. The ALG will take a collaborative
approach to this process. Funding agreements will be focused on
outcomes and based upon standard conditions, reflecting good
practice in managing activities, including negotiated milestones
and targets towards achieving the outcomes. They will include
targets relating to the geographical spread of services and
anticipated breakdown of service users in terms of boroughs of
origin. Where similar services are being provided by a number of
organisations in different parts of London, the ALG will bring
organisations together to discuss common outcomes. Organisations
who receive a funding approval will be required to attend an ALG
Funded Group Seminar to help finalise their funding agreement. We
have decided to extend the period that funded groups will have to
return their funding agreements from four weeks after the Funded
Group Seminar to eight weeks and we will enable senior grants
officers to extend this to a maximum of 16 weeks when an
organisation has legitimate difficulties in meeting the eight week
deadline.
31. The diagram on the next page sets out an overview of activity
during phase two – securing services:
ALG develops detailed commissioning processes in discussion with the
Voluntary and Community Sector Steering Group by summer 2006
When developing individual service specifications, the ALG consults
London boroughs and the voluntary and community sector whether a onestage or a two-stage process is appropriate
ALG Grants Committee reviews the proposed service specifications
(including recommendations whether a service be commissioned with a
one-stage process or a two-stage process (most services will be
commissioned using two stages))
The service will be advertised (two-stage processes will all be widely
advertised; specialised one-stage specifications will be publicised to
relevant organisations and advertised on our website)
Two-stage process:
organisations submit their
Stage One proposals
One-stage process: organisations
submit their proposals
ALG assesses Stage One
proposals
ALG assesses proposals
Leading members from the ALG
Grants Committee ratify
officers’ recommendations
Invited organisations submit
their Stage Two proposals
ALG assesses Stage Two
proposals and make
recommendations
Voluntary and community organisations review ALG recommendations and
use their right to reply, at their discretion
ALG Grants Committee makes funding decision
Phase 3 – Monitoring and Reviewing
32. The monitoring and reviewing phase includes the ALG’s processes
for monitoring funded organisations and the support we will
provide to funded organisations to help them succeed. We will
visit each funded organisation at least once over the funding
period. Also, we will continue to require ALG funded organisations
to complete six monthly and annual monitoring returns, using the
ALG’s templates. The ALG will use this information to produce
reports for boroughs to communicate the range of ALG funded
services that are being provided for their residents and will
produce a report on how each service specification is being
delivered to Grants Committee and funded groups, to closely review
the difference our funding is making.
33. We will work to ensure that our monitoring processes and
requirements are proportionate. The ALG’s monitoring approach will
be based on the risk we perceive each organisation faces. We will
ensure all ALG funded organisations are informed of how the ALG
perceives their risk and the basis for our decision. The ALG will
publish our criteria for assessing risk for funded organisations
by autumn 2006.
34. The ALG will continue to work with London Funders (formerly known
as the London Funders Group) to develop more consistent monitoring
(and assessment) requirements across funders. We will report on
our progress at the Voluntary and Community Sector Steering Group
and via London Funders’ website (www.londonfunders.org.uk).
35. It is very important that London boroughs have opportunities to
tell the ALG about their view of ALG funded services as boroughs
provide the funding that the ALG distributes. The ALG will develop
a protocol for communicating issues/feedback that boroughs provide
for funded groups in consultation with London boroughs and the
Voluntary and Community Sector Steering Group by spring 2007.
36. Several organisations expressed concern that we proposed in our
consultation document to include unannounced site visits in the
range of monitoring activities we may undertake. We understand
this may cause particular issues for some organisations, such as
organisations working with vulnerable service users, for example.
However, the ALG (in common with other funders) may need to visit
funded organisations unannounced if circumstances arise that
seriously concern us about how a group is delivering services –
such as allegations of fraud. The ALG reserves the right to
undertake unannounced visits when they are the best way to ensure
our funding is being spent appropriately. The ALG will not visit
groups unannounced unless we need to investigate a serious concern
that can be best addressed by an unannounced visit.
37. Finally, the ALG will review the support it provides to funded
organisations and the best means for enabling funded groups to
share best practice as we develop the detail of our commissioning
processes. We will consult the Voluntary and Community Sector
Steering Group on draft proposals by summer 2006.
Phase 4 – Modifying and revising
38. The monitoring and revising phase involves the ALG reviewing the
effect of our funding to inform future priorities and our
processes. The ALG is committed to build on the knowledge from
undertaking commissioning to improve its practice and to inform
future commissioning. The ALG will also seek to learn from other
funders of the voluntary and community sector and other public
sector commissioners to develop our own approach.
39. It is also important for the ALG to use the information and
analysis from the monitoring and reviewing phase to inform the
development of individual services, to spread good practice across
London and to target boroughs for additional action where the
anticipated level of benefit is not being delivered. The ALG
Leaders’ Committee will agree how much each London local authority
should contribute to ALG funding for the voluntary and community
sector – and how much of the budget should be spent to benefit
each London local authority’s residents. Monitoring the degree of
benefit for each London local authority area is therefore a
central part of the administration of the funding programme.
40. We will develop our monitoring procedures by autumn 2006 and will
consult boroughs and the Voluntary and Community Sector Steering
Group. We commit to working in closely with London local
authorities and voluntary and community organisations that have
difficulty engaging users from particular areas and helping them
develop solutions. However, where an organisation is unable to
engage service users from an area that formed part of their
funding agreement after support from the ALG then we will withdraw
funding and commission a new provider to ensure that residents
from that area can access services they need. We will develop this
process as part of our monitoring procedures to ensure it is
transparent. This procedure will include a right of appeal for
funded groups.
41. The ALG will play a more active role in sharing good practice
across funded organisations. If necessary the ALG will renegotiate
funding agreements with individual organisations or across a
sector in order to improve practice across the capital. The ALG
may also renegotiate funding agreements to take account of
changing circumstances such as changes in the service user profile
within a particular area.
Conclusion
42. This document forms the basis of the ALG’s approach to
commissioning. The ALG will involve London boroughs, the voluntary
and community sector, other funders and other stakeholders as we
develop our future funding priorities and introduce the detail of
our commissioning processes. If you have any questions please see
our commissioning Frequently Asked Questions page on our website.
If your question is not answered in our Frequently Asked Questions
page, then please submit it via our website.
43. Annex Two of this document includes all the action points that the
ALG has committed to in this document.
Annex One
Glossary
Term
Commissioning
Elected Officers,
Grants Committee
Grants Committee
Leaders’
Committee
One-stage
assessment
process
Peer-led
organisations
Two-stage
assessment
process
ALG/Voluntary and
Community Sector
Steering Group
Voluntary Sector
Forum
Definition
Commissioning is the process of specifying,
securing and monitoring services to meet people’s
needs at a strategic level
The chair, deputy chair and vice chairs of the
ALG Grants Committee meet to take decisions that
are within their remit on behalf of the Grants
Committee.
The ALG Grants Committee comprises councillors
from every London local authority. The Grant
Committee is responsible for overseeing the
operation of ALG grants.
The ALG Leaders Committee comprises the Leader of
every
London
local
authority.
The
Leaders
Committee
is
responsible
for
defining
the
strategic direction of the ALG grants programme.
The ALG may decide, following consultation, that
a service we wish to fund is provided by a
limited number of providers. We will then seek
the agreement of the Grants Committee to specify
that organisations seeking funding to provide the
service provide a full proposal of how they will
manage and deliver it.
Organisations that are run by people and for
people of the same gender/ethnicity/ sexuality/
needs.
For the majority of services the ALG commissions,
we will invite organisations to initially submit
a short proposal demonstrating what they intend
to do and that they are eligible for ALG funding
(this is known as Stage One). We will invite
organisations that are successful at Stage One to
submit more detailed Stage Two proposals.
The ALG meets once a quarter with organisations
we fund that represent the interests of all ALG
funded groups.
The ALG delivers a conference once a year for
all groups it funds.
Annex Two
Actions arising from this document
Action
Completion
date
We will develop support for voluntary and summer 2006
community sector organisations in London that
may be commissioned to deliver ALG priority
services.
The ALG will develop a proforma specification summer 2006
and define our requirements for Stage One and
Stage Two in consultation with the Voluntary and
Community Sector Steering Group and London
boroughs
we will define the circumstances when we feel a autumn 2006
one-stage process may offer stronger benefits
than our usual two-stage process
The ALG will publish our criteria for assessing autumn 2006
risk for funded organisations
The
ALG
will
develop
a
protocol
for spring 2007
communicating
issues/feedback
that
boroughs
provide for funded groups in consultation with
London boroughs and the Voluntary and Community
Sector Steering Group
The ALG will review the support it provides to summer 2006
funded organisations and the best means for
enabling funded groups to share best practice as
we develop the detail of our commissioning
processes. We will consult the Voluntary and
Community
Sector
Steering
Group
on
draft
proposals