What is formal-relational contracting?
Many public services are now delivered by charities and businesses which are commissioned and contracted by the public sector. Formal-relational contracting is an approach to commissioning this kind of public service delivery which acknowledges that we cannot expect to design the service perfectly upfront, and we must be able to adapt and respond to change throughout the lifecycle of the service. This approach puts learning, iteration and adaptation at the centre of the procurement process, contract design, and contract management - rather than trying to lock down every future possibility at the outset. Here, you will find an evolving set of practical guidance and support to help you take a formal-relational approach to contracting public services:
- Shaping the approach
- Selecting the right partners
- Establishing the contract
- Sustaining the partnership
- Learning from and growing the approach
The importance of the contract
Drawing on a body of research over many years, we know that countless commissioners are informally working in relational ways with their providers - but this is often done in “hushed tones” and despite - rather than because of - what the legal contact between the two parties may stipulate. At its most basic level, a contract is an agreement between two organisations about how risk and uncertainty is going to be managed in the future. Traditional, technical contracting approaches seek to specify services in as much detail as possible and anticipate as many potential issues as possible to define precisely what happens and who bears what risk if they occur. Often they are drawn up by legal and contracting teams far away from the nuanced understanding of the service and its wider context. Prescriptive contracts designed in this way are not effective in supporting and enabling complex services to change and adapt when conditions change.
How formal-relational contracting can help deliver complex social outcomes
A formal-relational approach to contracting offers a practical way for public sector commissioners and their charity or for-profit providers to unlock a more flexible approach to service delivery. It prioritises shared learning, adaptation and iteration and can be characterised as taking a ‘test and learn’ approach. Taking a test and learn approach can:
- enable providers to adapt and iterate how they deliver services based on what works
- improve outcomes
- avoid expensive failures by derisking delivery of services.
The result? Collaboration, shared learning and continuous service iteration are prioritised in the agreement and embedded through agreed shared ways of working – while still ensuring a compliant procurement process and a formal legal contract governing the relationship.
Supporting commissioners and delivery partners to take a formal-relational approach to contracting
The Government Outcomes Lab and transformation consultancy Public Digital are working with a group of leaders and practitioners from local and central government and service providers to develop and test ways to help commissioners and delivery partners to take a formal-relational approach to contracting. Our aims are to:
- build a common language to talk about the challenges and opportunities
- develop a set of usable guides and tools that have been tested in real-world commissioning contexts
- help commissioners and suppliers work together in a new way
Here, you will find an evolving set of practical guidance and support to help you take a formal-relational approach to contracting public services.
Get involved
We’re always looking for contributors, please contact us at relationalcontracting@bsg.ox.ac.uk if you’d like to find out more about how you can participate.