Real has been providing direct payments support to disabled people in the London borough of Tower Hamlets for eight years, and has been operating in one form or another for two decades.
But Tower Hamlets council decided to carry out a “competitive procurement exercise” to identify a “suitable” provider for a new direct payments service, a contract it valued at £354,000 per year.
Real put in its own bid of £353,000, and scored the highest of all seven bidders on “quality”, while its most recent survey of clients found 100 per cent of those questioned agreed they had been given helpful information and support on how to manage direct payments.
Nine of Real’s 16 staff are disabled people, as are more than 70 per cent of the team who deliver the direct payments support service.
But after advice from his officers, the council’s independent elected mayor, Lutfur Rahman, chose instead a more “economically advantageous” tender by the national advocacy organisation POhWER, which offered to carry out the work for just £199,000.
POhWER, which was founded in 1996 by service-users, has an annual turnover of nearly £10 million a year and “unrestricted reserves” of £850,000, and delivers services to about 60 local authorities across England.
It claims it is also a user-led organisation, and that all but one of its trustees are disabled people.
But national policy documents from the Social Care Institute for Excellence, the Department of Health and the government’s Office for Disability Issues, as well as a joint protocol between the National Centre for Independent Living, the Association of Directors of Adult Social Services and the Local Government Association, stress the importance of services delivered by local user-led organisations.
Mike Smith, Real’s chief executive and the former disability commissioner at the Equality and Human Rights Commission, said: “I expect to have competition to keep us on our toes. But this is unfair competition.
“There is no way that a smaller, local organisation could bid at the winning price (only 56 per cent of the estimated contract value) and still exist.
“And we were doing a great job – our client feedback gives amazing affirmation on the difference we made to local disabled people’s lives.”
He added: “We will do everything in our power not to lose this important, vital, local service.
“The future of our organisation, and local support by and for local disabled people, is at stake.
“I don’t understand how a national organisation like this can justify to themselves why they feel they will better serve a particular local community when there is already a good, effective, local DPO delivering the service.”
He added: “Real has a code of ethics that says we will not bid against another disabled people’s organisation on contracts such as this. It just wouldn’t be the right thing to do.”
POhWER built its reputation providing advocacy services, but has now also moved into the field of direct payments support, winning other contracts in Sandwell, Buckinghamshire and Shropshire.
Damian Brady, chief executive of POhWER, said he could not comment on the Tower Hamlets contract, as it had not yet been awarded, but he stressed that his organisation already provided mental health advocacy and Mental Capacity Act services in the borough.
He said: “I don’t think there would be any prospect of us even applying [for a contract] without that level of local knowledge.”
Asked what he thought of the morality of a large national organisation under-cutting an established local DPO, he said: “What’s the morality? For us it is about the best service for local service-users using the direct payments service.
“It is something we would prefer not to do, but at the end of the day what matters most is the standard of the service provided to the client and we think we provide a really good offer.
“Sometimes, with very good organisations, one wins and the other one doesn’t. It might just mean that what we offer is better.”
He said POhWER worked with 30 or 40 small, local organisations across the country, and insisted that its intention was not to “wipe out the little people”.
He also denied that POhWER would ever bid for a contract at beneath the cost of providing the service in order to gain more of a foothold in the direct payments support market, and said: “We can’t afford to run loss-leaders. We just don’t do it.”
Real has been backed by other DPOs in its fight to fend off POhWER.
Tracey Lazard, chief executive of Inclusion London, said the decision by Tower Hamlets to award the contract to POhWER was “regrettable” and urged the council to reconsider.
She said: “The unwelcome trend of national providers winning contracts away from local user-led organisations represents a false economy.
“DPOs are proven to provide considerable added value and social return that benefits both service-users and the wider community yet their services are now too frequently being replaced by large national providers with the economies of scale to undercut local organisations, who have little knowledge or understanding of local need and who are prepared to cut services to the bone to win tenders.”
She said Inclusion London hoped that provisions in the new Care Act that will force local authorities “to have regard to a diverse and quality local market together with growing awareness of the contribution local user-led organisation can play in delivering excellent and effective services” would address this trend.
Sue Bott, director of policy and development for Disability Rights UK (DR UK), said her organisation had been “very concerned” at the award of the contract to POhWER, which was “yet another example of a local DPO being undercut by a national organisation”.
She said: “The only way nationals can run services more cheaply is by cutting corners – having less of a local presence and relying on online information. Local disabled people will be the losers.
“Many people have difficulty using the internet, even supposing they can afford it, and with something as complex as managing a direct payment people need face-to-face support.
“Councils should be investing in their local DPOs to give local disabled people a voice.”
DR UK has written to the council to make these points, she said.
A Tower Hamlets council spokeswoman said: “The direct payments support service has recently been subject to a competitive tendering process in line with procurement law and the duty of all councils to achieve best value for money.
“The contract is being awarded to POhWER. There is a ‘standstill’ period following contract award in which any provider that has tendered can submit a challenge to the process, and this ends on 2 September 2014.
“We acknowledge that it is difficult for organisations which lose contracts to adjust, however we have other contracts with Real and we look forward to an ongoing close working relationship with this organisation.”
21 August 2014