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1.2 Defining the Service

The agency should then decide upon and describe what it is purchasing or funding (whether that is a service or something else). This should be informed by a needs analysis that draws upon:

  • The objectives sought.
  • Information on the effectiveness of Government interventions (e.g. evaluations).
  • Any relevant national standards or legal requirements.
  • Appropriate analysis, including an assessment of the needs of the users of the service.
  • An understanding of the NGOs available to offer services.
  • Consultation with ultimate users, NGOs, potential providers, and other stakeholders. The importance of meaningful consultation within the context of policy development and needs assessment has been consistently highlighted by voluntary organisations, iwi/Maori and NGOs.

The desired outcomes should inform the entire contracting process. Each Government agency should have a clear view of the way in which services being purchased will contribute to the achievement of the outcomes, and that should be reflected in agreements. This provides important contextual information. It will also provide a reference point for reviewing the effectiveness of the service delivery, for agreeing any changes to the contract should they be needed, and for evaluation.

The typical funding arrangement is where one or more Government agencies pay an NGO for the provision of a set of services, often to a third party. In some cases the purchasing agency will have a clear idea of the nature and quality of service that it wants to purchase from an NGO, based on a realistic and robust needs analysis, involving appropriate consultation. In such cases negotiations with the NGO are likely to be around the details of the service to be provided. In the absence of a robust need analysis there is a risk of a mismatch between a Government agency’s views of what services are necessary, and those of the NGOs they deal with. The Government agency may purchase an existing service that provides a starting point for thinking about the desired service, although this should not constrain it from considering new ways of achieving its objectives. The Government agency may also have to purchase services that comply with relevant national standards, and may also need to maintain national consistency in the delivery of services.

It will usually be sensible to develop the description of the service in consultation with NGOs (current and potential), users, other Government agencies, and other stakeholders.[4] Many NGOs regard consultation as a central element in their relationship with Government, including iwi/Maori and community and voluntary sector organisations. NGOs that provide services to their communities will often have a good understanding of the particular needs of their communities. Consultation may need to proceed at community level and services be provided at that level.

Consultation and openness are important in making policies and programmes acceptable to the public, and can help communities understand the constraints faced by government agencies. Listening to the views of stakeholders can help anticipate implementation problems, identify alternative options for providing services or activities, and can ensure that those providing the service are clear about what is being asked of them and how performance will be determined.

Consultation does not mean agreement or even negotiation, but it is more than notification. It implies providing parties with sufficient information to allow intelligent responses to be made, and the agency entering into consultation without having finally determined its position. Government agencies need to be clear that they have properly understood and taken into account the concerns of the people they have consulted. During consultation, departments should take care not to be overly influenced by mobilised stakeholder groups to the detriment of groups without a strong voice. Several consultation rounds may be required. Proper consultation is likely to be the key to building a good relationship based on trust. Agencies need to manage stakeholder expectations around consultation, as while consultation helps provide information and good argument, it does not necessarily produce a decision that will bind Ministers. The amount of consultation effort should generally be proportionate to the length of the relationship and scale of services at stake. To help use resources most effectively, government agencies could, for example:

  • use each other’s networks and consultation mechanisms.
  • share information gathered from consultation, and share best practice on consultation.
  • develop joint mechanisms to consult communities together.

Questions that may need to be discussed during consultation include:

  • What outcomes are being sought?
  • What is an appropriate level of service?
  • Will the service be accessible to and used by the target group?
  • How would NGOs and service users prefer that the service be delivered?

In some cases the definition of the service may be developed (or already delivered) by the NGO itself, which proposes a set of activities that, in turn, form the basis for the contract.

Some users of social services have complex needs, and NGOs address these by adopting a holistic approach to the provision of support and by providing a range of services. The delivery of services within kaupapa Maori frameworks often requires Maori providers to adopt holistic service provision, requiring dealing with Maori in terms of their totality. Government agencies should put themselves in a position to understand and respond to such needs. Alternate approaches for service identification and contract development may need to be considered. For example, dealing with housing needs may require consideration of related employment, health, income and security issues. Pacific peoples and other communities may also be interested in holistic service provision.

There may be circumstances where contracts for blocks of related services, rather than individual services, will better meet the needs of the service users and provide for flexibility of service provision. This may require extensive co-operation between Government purchasers, including possibly single multi-service contracts or the use of a managing agency to manage the ongoing relationship and contract with the NGO on behalf of the other Government agencies. The selection of the manager should be discussed with the NGO concerned, and preferably proceed with the agreement of the NGO and service recipients if possible. The NGO may also wish to retain relationships with all the Government agencies involved. The managing agency selected should be the most suitable to the overall aims of the service provision. The appropriation issues associated with a number of Government organisations funding the same NGO can be addressed in a number of ways e.g. locating the money within one Vote or fiscally neutral adjustments between Votes.


  • [4]Cabinet has directed government department chief executives to ensure officials identify the key community, voluntary and tangata whenua organisations in their sphere of activity and build good practice relationships into their policy development and service planning. Resources and guidelines to help build good practice relationships are available from
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