The importance of engaging with the market to understand industry capability and manage supplier expectations has long been understood. In writing about local government contracting in 2001, Sir Ian Byatt warned of the need for up-to-date information on potential suppliers and innovation in supply, and the need for local authorities to indicate their requirements to the market at an early stage and to understand suppliers' commercial requirements.91 Several years later, the NAO developed the same theme:
Departments should have sufficient knowledge of how supply markets for specific goods and services are organised. They need this to assess the level of competition they can reasonably expect to attract for their business and to adjust their contract strategy accordingly. They also need good information on the relative performance of existing and potential suppliers and the resilience of their supply chains which might impact on the quality of service they provide.92
More than a decade later, providers still report that departments and agencies struggle with early engagement. While procurement notes published by the Crown Commercial Service acknowledge the need for effective pre-market engagement, it is by no means commonplace or well-done. As industry figures explained:
The Civil Service don't get out and speak to providers - they don't know the market.
Tenders are coming out that don't allow us to show our capability. The specifications are locked down so that there is very little scope for innovation. Government needs to consult with industry prior to tender-writing, to understand the art of the possible.
Government should engage with industry on what the future looks like.
Beyond market engagement, a number of government reports have argued that government needs to accept responsibility for shaping and managing these markets. In his 2004 Efficiency Review, Sir Peter Gershon argued that:
. . . strategic management of major supply markets is not well established and consequently there is an underdeveloped understanding of factors such as the impact of new policies on the supply side, dynamics and characteristics of the supply markets, and the efficiency of these markets.93
Around 2005-2006, there was some excellent work done by departments and agencies in the analysis of particular market sectors.94 Today there seems to be little awareness of this body of research, or the uses to which it might be put in shaping and better managing the structure and culture of delivery.
From 2012, the Institute for Government published a series of excellent reports on market design and stewardship, but it does not seem that this work has been built upon systematically.95 Occasionally one stumbles across sophisticated guidance documents, but it is far from clear that they have made a difference on the ground. One example of this are the framework documents published by the Department of Health, the Local Government Association and the Association of Directors of Adult Social Care on the management of the social care market, including guidance on assessing market and provider sustainability.96
Unfortunately, no government agency has clear responsibility for market stewardship in this sector, and both the residential and home care markets are currently unsustainable. And once again, there is very little research being done in this field, and there has been no sustained effort anywhere in government to learn the lessons and to disseminate these across government in a disciplined way.