Pricing, procuring and contracting human services

Introduction

DCJ engages service providers to deliver human services across a range of funded programs.

When pricing, procuring and contracting these services, we apply standard practices across most of our programs to ensure that individuals, families and communities receive the services they need, the service system has ongoing capacity and capability, and there is accountability for how funding is used.

The standard practices are aspects of our broader approach to commissioning human services in NSW and include:

• how we price service delivery
• how we procure human services
• how we contract service providers
• our payment process, and
• how we manage performance

These standard practices may not apply to some  bespoke contract arrangements such as Corrective Services and the Social Affordable Housing Fund, or they may be applied differently.

How we price service delivery

DCJ, not the market, sets the price for most of its funded programs. This enables a more straightforward, transparent and equitable approach to funding, and:

• avoids service providers proposing to deliver services at lower prices, which may introduce risk to either the quality of their service delivery or viability of their organisations
• reduces the risk of unanticipated factors influencing the cost of services. For example, an increase to wage levels, or changes in government policy settings. In these circumstances, we have the option of increasing the service price or decreasing the volume of services to be delivered to relieve pressure on service providers

What’s more, without the influence of price comparisons, we can focus on the quality of service delivery when evaluating proposals and tenders.

We analyse multiple factors to determine the cost of services. These include expectations of staffing levels, known staffing costs, service level intensity, geographical location and spread, and establishment and operating costs (including rent, utilities, administration, insurance, accounting and legal expenses). We also take into account increases to the cost of delivering services over the term of the contract.

However, in some situations DCJ wants the market to set the price. For example, when:

• developing new and complex programs aimed at delivering innovative service solutions
• the market is not established or known
• service providers are requested to offer assets as part of a service offering.

How we procure services

DCJ is an accredited government procurement agency.

We conduct our procurement activities in line with the NSW Government Procurement Policy Framework and within legislated procurement limits. This means we follow robust processes that:

• ensure our procurement activities deliver best value for money
• operate with probity, transparency and fairness
• and, above all, deliver desirable outcomes for clients and communities.

DCJ uses several procurement methods across its funded programs. The most commonly used methods include:

• open tender – a  funding opportunity is advertised and open to any eligible service
• select tender – a limited number of prospective service providers are invited to submit a proposal in response to specified criteria
• direct negotiation – one prospective service provider is approached.

We decide the most efficient method to use given the specific circumstances of the service to be funded, considering:

• the nature and complexity of the services to be procured
• the diversity of client and community needs
• the size of the market; that is, the number of service providers with the capacity and capability to deliver the outcomes being procured
• the number of service providers interested in providing the services
• our knowledge of markets in the applicable geographic locations
• the value of the contract and level of program funding
• the length of the contract’s term.

Aboriginal procurement

DCJ is committed to working in partnership with Aboriginal communities, providers and key stakeholders to build an Aboriginal human services sector that is viable and delivers desirable outcomes for Aboriginal children, families, and communities.

We operate in line with the NSW Government’s Aboriginal Procurement Policy which aims to create opportunities for Aboriginal owned businesses and employment opportunities for Aboriginal people.

Our procurement processes prioritise:

• identifying and developing Aboriginal service providers
• what opportunities exist to support employment for Aboriginal people
• whether potential service providers are culturally competent and can meet the needs of Aboriginal clients and communities
• what strengths, needs and opportunities are identified through engagement with Aboriginal clients and communities.