Foster care commissioning guide

Commissioning is all about the most effective and efficient way of using all the available resources to improve outcomes for children, young people and their families. With budgets reducing and demand increasing, local authorities have placed an emphasis on commissioning in recent years, eager to secure the best value for money for the public purse. In commissioning foster care services, local authorities believe that their ‘in-house’ services already provide good value for money and as such, do not directly commission these services. The majority of commissioning we see is targeted towards the independent sector. Commissioning can be broken down into four distinct activities, Analyse, Plan, Do and Review:

  1. Analyse

At the start of the commissioning process, the local authority will consider the current and future needs of children requiring foster care placements. It will need to anticipate its future children in care population including emerging trends, numbers of children, specialist needs and specific cohorts. The authority should also have some idea of the anticipated outcomes it will require for its children, e.g. reunification, respite, permanence. Understandably, the lack of a ‘crystal ball’ makes this is a near impossible task and so the local authority will only be able to give a best estimate of the needs of its future children in care population. Along with considering the needs of its children, the authority also needs knowledge of the available services in the area (and further afield to some extent). How far will its in-house services meet demand? Will its in-house services provide all types of foster care or just focus on a particular type? What independent foster care services operate in the area and what are their strengths and weaknesses? What are there plans for service development? How can services compliment each other, rather than compete? What residential care provision is available and what impact may this have on the way foster care services are used? What other local services are available to support children in care and their service providers? Local authorities should work in partnership with service providers and external agencies to collate this information. It should then be consulted upon, agreed and used to move forward to the planning stage.

What works well?

Local authorities are starting to use improved IT systems to collate information on the needs of its children both in care and on the edge of care. Where local authorities consult with providers, valuable information can be gleaned. For example, providers can sometimes be first to spot emerging trends. Where local authorities group together (consortia) to commission services across a larger geographical area, they can share valuable expertise, skills and knowledge. Having an accurate picture of the needs of children and available services can help providers to determine where the gaps in the market may be and so influence development plans. Bringing parties together at this early stage allows opportunity to network with other providers to provide complimentary services.

What doesn’t work well?

Not all local authorities are skilled at capturing data accurately over time. It is sometimes out of date and there are not always mechanisms in place to harness knowledge of external services. Local authorities working in consortia may use various data collection methods and so struggle to provide a consortia wide picture of needs and provision that can genuinely compare like-for-like. Where local authorities work in consortia, it can be difficult for them to agree how they will work together, how the project will be funded, managed and governed. If there is not a robust partnership agreement from the offset, this can risk the whole commissioning exercise. Sometimes, such challenges will mean a consortium gradually moves apart over time. When commissioning foster care services, local authorities often only provide information on the cohort of children placed in independent foster care. NAFP are working with local authorities to help them understand the benefit of providing the independent sector with a wider knowledge of their whole ‘child in care’ and ‘edge of care’ population. At the analysis stage local authorities do not always engage adequately and early enough with the independent sector. This means some information may not be accurate or valuable information missed out completely.

  1. Plan

After a needs analysis has been completed and research undertaken on service provision. A decision will be made about the services that are needed. There may also be a decision to reduce funding for certain services that are no longer needed. At this stage the local authority will work with its partners (including any other local authorities and the independent sector) to develop a strategy for securing the services that are needed.  Consideration will be given as to what type of arrangement will work best, for example:

  • An approved list of providers (APL) who have met certain basic criteria and provided information that is placed on a database open to the consortium or partnership members.  Local authorities use this to identify potential providers who could meet their needs, and then deal directly with those providers agreeing prices or other conditions on a spot purchase basis.  Usually such lists are open for providers to leave or join at any time or at least at regular intervals.
  • A framework contract, which is closed for a defined period of time.  A framework contract has a common specification and contract with providers who will provide the specified service at the prices agreed.  They are typically established for periods of two or three years initially, often with an option to review the contract and extend it by a further one or two years.  At review points, both commissioners and providers may be able to join or leave the framework, and there may be mechanisms for resubmission of prices. Frameworks are more often used where there is low demand and high supply as this enables local authorities to work more efficiently with a selected number of providers.
  • Frameworks typically include several ‘lots’.  A lot is a category of service i.e. standard fostering or residential care, enhanced fostering or residential care, specialist residential or foster care, parent and child placements or placements for disabled children.  Lots may be further divided by age bands.
  • Frameworks may also include ‘tiers’.  A tier is usually based on an assessment of providers’ quality and price, with those offering the lowest price at the required quality on tier one, with other providers placed in tiers two or three as the price and or quality threshold rises.  Tiers are used in different ways. Historically those on tier one would normally be approached first for available placements. However, given both the shortage of provision and the concerns about children not being matched to the right placement, we are increasingly seeing referrals being sent to all tiers at the same time, with the tiering position becoming a consideration only after options are known. (This practice varies widely across local authorities).
  • A dynamic purchasing system (DPS) is continuously or almost continuously open for providers to join or leave the contract.  Otherwise it operates much like a framework agreement with agreed specifications and contracts. As with frameworks DPSs can have lots and tiers.  DPSs are more often used when demand is high and supply is low. This more flexible arrangement helps to encourage providers into the sector.
  • Block contracts are where local authorities agree to purchase a specified number of places from one or more providers.  The majority of local authorities operate internal block contracts and guarantee their in-house services that they will refer to them before making a referral to the independent sector. This happens the majority of the time, although if a child has more complex needs and/or time is limited, the local authority may make a referral to the independent sector at the same time as referring in-house.  The main concern about block contracts is that they may incentivise a more restricted placement choice. The very nature of this means that there is a risk of children being placed with carers who cannot best meet their needs. Where children are not properly matched, this brings increased risk of placement breakdown and of outcomes not being fulfilled. Local authorities, seeing the economic benefit of block contracting, are considering how to mitigate these risks.
  • Cost and volume contracts are where no purchase of placements is guaranteed, but there is agreement that as the numbers of placements purchased increases, prices will be reduced. As with block contracting, there may be a temptation to place a child in a placement if this brings financial efficiency. Again, the same risks as those we see with block contracting need to be considered and mitigated.

Whatever the procurement arrangements, local authorities /consortia will develop contract documents to underpin these arrangements. A specification for the required services will be drawn up along with the terms and conditions under which all parties will operate. This contract will set out conditions under which individual placements can be made or ‘called off’ under the contract.  Some consortia require local authorities to follow the same prescribed call off procedures, which prescribe when and how providers must be contacted with requests for placements, while others allow each participating authority to determine how it uses the framework contract, DPS or approved list. Increasingly local authorities and providers are using IT platforms to source and match placements. The benefits of these are that they are more secure than previous methods and can facilitate a wider choice within quicker timescales. However, the number in operation (and therefore duplication) is increasing providers costs which are ultimately passed on to local authorities. There is also some opinion that platforms, due to the increased reliance on technology,  risk, rather than enhance relationships. Given parties obligations under GDPR, it is likely we will see a growing use of secure IT platforms and parties will need to work in partnership with providers, and each other, to ensure any chosen platform meets the needs of both parties and that there are safeguards in place to ensure relationships are not compromised.

What works well?

Having a strong and experienced project manager who has the time, capacity and resource to lead the project and who is properly supported by Directors of Children’s/Social Work Services. Where a genuine partnership ethos exists and where the independent sector are included from the offset and key representatives are consulted with at each stage and for key decisions. A communication protocol which is clear, accessible and up to date and which enables all parties (including external parties) to keep track of developments and provide feedback and input. Engaging with providers from the offset to co-produce terms and conditions that are fair and reasonable.

What doesn’t work well?

Poor governance and lack of capacity and resource to effectively project manage the exercise. Where the independent sector is not adequately involved or consulted. If terms and conditions are not workable for all parties then this risks the success of the entire commissioning exercise. Poor communication arrangements. External parties can often find it difficult to follow the progress of the planning stage. Few local authorities share this information in an accessible, timely, effective and transparent way. Some IT platforms are cumbersome and can require an investment of training and capacity that smaller providers may struggle with.

  1. Do

This is the stage of the commissioning process when the local authority/ies carry out the procurement exercise. Providers will be invited to tender and if successful will be placed on the agreed framework / DPS / contract. The process is carried out through an electronic procurement portal and usually interaction with providers at this stage is limited. There will be opportunities during the procurement process for providers to ask clarification questions and the lead authority will have an obligation to respond to these within reasonable timescales. Contracts will then be awarded to successful providers and an implementation and start date agreed.

What works well?

Local authorities are increasingly applying a ‘light touch’ to the qualification process, meaning that providers now have to provide less information, making the process more efficient for all parties. The increasing use of IT means that much information is already in the public domain such as  inspection reports and returns, Statement of purposes. Where parties have co-produced contract documents and are clear about expectations, responsibilities and obligations, this reduces risks of the exercise failing at this stage. Where project planning is good with appropriate timescales and where consideration is given to the impact of other tenders that may be operating at the same time.

What doesn’t work well?

If co-production has not been effective at the planning stage, it is likely that providers will have a number of clarification questions. This may bring new issues to light and this may result in the exercise being extended or terminated altogether. Where capacity, resource or re-prioritisation within the local authority impacts on the process and timescales are altered or a new lead appointed with insufficient knowledge of the work completed to date. Where local authorities are overly risk averse at this stage and communication is restricted to such a degree that it can even compromise current placements. After the framework / DPS/ contract has been awarded, local authorities and providers will start to work together to use the arrangements to place individual children. The process of placing an individual child also follows the key stages of a commissioning cycle (analyse, plan, do and review - see section 5)

  1. Review

The performance of the framework/DPS/contract should be continuously monitored and then reviewed at key points. Contract monitoring arrangements should have been agreed at the planning stage so that all parties can plan the capacity and resource that is needed for this. In monitoring an independent providers performance, a local authority should have robust internal arrangements to share information between social workers, IROs and commissioning teams. Having a real time understanding of how well a provider is meeting children’s needs is the most effective way of determining how well they are delivering the outcomes that are required.

Ideally local authorities should also have mechanisms for monitoring their own performance under the contract. By its very nature foster care is a service that is successful only if corporate parents carry out their own responsibilities. Local authorities are obliged to ensure information is properly shared, delegated authority is effective, social work support is available and that providers are given the necessary resources in a timely way to provide the services. Where a local authority defaults on these obligations, it places the provider,its carers and ultimately children, at risk. Therefore, in ascertaining the performance of a provider, the local authority should also have mechanisms to consult on how well it performs itself as a partner.

After an agreed period, the arrangement will be reviewed in full and partners will consider how well the established framework / DPS / contract is enabling a sufficient supply of foster care provision in the area (or at least that there is a sign of a positive move towards this.) At this stage a decision will be made whether to continue (if this is permitted under the contract) or to commence a new commissioning exercise (if the needs of the population and/or changes in the market warrants this). At this stage the current arrangements will be brought to an end whilst analysis and planning for a new commissioning exercise begins.

What works well?

Some consortia have shared monitoring arrangements meaning that providers only have to complete one return therefore reducing the duplication and associated cost. Where local authorities consult with providers over the monitoring tools to be used. To jointly consider what information is needed, in what format and for what purpose. Where regular partnership events are held and co-produced between providers and local authorities.  Where information is shared at a strategic level. For example, how well gaps are being filled and what the areas of increasing demand are. What are the emerging changes in the sector that may impact on the contract and how do partners work jointly to address these. Regular face to face contract meetings between local authorities and providers looking at the progress of individual children, the need to review any individual packages of care and to discuss the overall development and direction of the organisation. To look at what support may be needed from / for either party.

What doesn’t work well?

Some consortia operate different monitoring arrangements meaning that local authorities ask for similar information, albeit in a different format. This can have a significant impact on cost, capacity and resource. Too often monitoring arrangements are not agreed during the planning stage and so parties can struggle to find the necessary resources for this when the contract starts. Where local authorities create monitoring tools without input from providers, this can result in them asking the wrong questions which makes responses meaningless. Local authorities can struggle to establish effective internal arrangements for sharing information. This often means that commissioning teams often ask providers for information that has already been supplied. This adds to the providers workload. Providers are not often enough asked how well their local authority partners performed under the contract and so lessons are missed. Providers may have valuable information to share and ideas about how a local authority could improve its performance as a partner. There is a lack of effective mechanisms for obtaining this information.

  1. Commissioning - for individual children

Just as there is a need to follow a clear path to establish a sufficient supply of foster care provision, there is also a need to ensure similar steps are taken when placing individual children in foster care. The same stages of analyse, plan, do and review should be followed:


Assess the child’s needs and compile a profile of the child which is accurate and up to date. To ensure all relevant parties have been consulted, particularly the child. To produce a referral that includes the profile of the child and which is clear about the purpose of any required placement and what outcomes may be required. To involve those who know the child best, including current carers in quality checking information before a referral is sent out.


At this stage the local authority will consider its placement finding strategy. This will be dependent on needs and circumstances. For example, if a young baby without complex needs is admitted into care in an emergency, the local authority will likely make an initial referral to its in-house foster care service. If, on the other hand there is a plan to find a therapeutic foster placement for a teenager currently in a children's home, this process may take several months and will need to be robustly project managed and include all parties from the offset. There is a tendency for local authorities to apply a blanket placement finding procedure to all cases, whereas success is more likely if the strategy for finding a placement is tailored to specific needs and circumstances. Where there is a plan for a child to move from one placement to another, it is also more likely to succeed if the social worker, local authority placement team and current provider work together to develop and agree a placement finding plan with clear responsibilities and timescales. Too often providers are omitted from these discussions and so their valuable expertise and knowledge is missed and there is greater risk of failure.


At this stage the referral will be sent out to independent providers who will be invited to offer a placement for the child. This is a complex stage which requires a high level of organisation and project management as different parties need to manage and co-ordinate different aspects of the matching process. Consideration needs to be given to accuracy of referral information, time for planning, variations to contract documents, any need for retainers, preparing child and carers, ensuring obligations under the framework contact are adhered to. When a match has been agreed, an individual placement contract (IPC, sometimes called an individual placement agreement - IPA) will be drawn up by both parties. This sets out the basic details of the child and of the placement. It also sets out the agreed fee for the placement including any additional costs that may have been agreed. This document will make reference to the provider delivering a service in accordance with the child’s care plan/ placement plan.


Once a placement has been made, the statutory review process will begin and children will be visited regularly by their social workers. Every child will have a care plan / placement plan and this will set out the overall aim of the placement, the desired outcomes and the resources and strategies agreed to meet the child’s needs. This plan is regularly reviewed and amended as and when a child’s needs change. The IPA/IPC should also be reviewed when there are amendments to the care plan / placement plan which may result in an increase or decrease in costs. Framework contracts should include a clause which allows either party to request a fee review in these circumstances. Where there has not been a change in a child’s needs which warrants a change of fee, then the fee may be reviewed in accordance to any terms in the overarching contract under which is was made. For example, to reflect any changes in legislation or cost of living.


May 2018

Further reading:

NAFP - How well are fostering services commissioned?