The Sustainable Development Research Centre (SDRC) is the research partner to the Benefiting the Economy and Society Through (BEST) Procurement programme, which is part funded by the European Social Fund under the Equal Community Initiative Programme. Action three of the programme is to disseminate the research undertaken through a series of dissemination workshops in each region of England, one in Scotland and one in Wales. Each of these will discuss one of five themes: Agents for Change; Health Markets and Social Enterprise Development; Influencing the Demand Side; Resource Capacity and Future Social Enterprise Development and Business Effectiveness. Each workshop will bring together BEST Procurement programme development partners and local people involved in the supply and demand sides - providing a forum for them to discuss their experiences with social enterprises and procurement.
2.0 THE BIRMINGHAM DISSEMINATION WORKSHOP
The workshop was held on the 25th July 2007 at the Moseley Community Development Trust in Birmingham. The theme for the workshop was ‘Agents for Change – public sector and social enterprise’. Delegates at the workshop included representatives from SDRC and various sections of the public sector, including regional and local government. There was also representation from the voluntary sector, social enterprises and the Development Trusts Association.
The workshop consisted of two main sections – the first comprising a series of presentations looking at the theme from an East Midlands and a local perspective. The second part of the workshop comprised an open discussion involving all participants that discussed the theme: Agents for Change – the Public Sector and Social Enterprise. As a primarily participant led discussion, this provided an opportunity for delegates to share their good and bad experiences and discuss issues important to them.
3.0 ISSUES RAISED – AGENTS OF CHANGE AND TYPES OF CHANGEThe remainder of this report summarises the main issues that emerged from both the presentations and the group discussion at the Birmingham workshop. Delegates discussed the role of social enterprises and the public sector as agents for change in relation to increasing the level of public procurement from social enterprises and both locally- and nationally-relevant issues were raised.
3.1 AGENTS FOR CHANGE – LOCAL AUTHORITIES
Representatives from both the East and the West Midlands pointed out the successes that have been achieved by local authorities with regards to generating a better understanding of social enterprises within the public sector and the instigation of various ways to help social enterprises become engaged with public sector procurement to a greater degree.
Certain councils have, for example, started to change the situation and have created virtual procurement groups and employed co-ordinators between the council and the VCS. One of the public sector representatives at the workshop explained that their council now values having a clear delineation between grants and contracts that is understood by its staff and is now moving towards funding social enterprises and community organisations through contracts for the delivery of goods or services, rather than through grant funding. They have also developed a framework to determine the added value of every contract and believe in full cost recovery as they do not believe the local authority should be subsidised through the VCS.
One council representative said that they realise there is no ‘one size fits all’ solution because social enterprises can vary from start-up to well established businesses. Thus, they recognise the benefits of having individual relationships to better understand the needs of such organisations as well as what they supply.
It was also pointed out that one council have set up network meetings on a quarterly basis which provide social enterprises with the opportunity to join together for up-coming contracts. The procurement officers can also provide information on what they are likely to buy in the future and give social enterprises advance warning and possibly work with them on the tender specification. They can have this dialogue beforehand, but once the procurement process starts they must step back and be impartial.
Delegates also mentioned other ways in which the public sector is currently acting as an agent for change. They talked about, for example, how certain councils are trying to move away from short term contracts to provide more security for businesses like social enterprises. The advertisement of contracts on www.supply2gov.uk – particularly lower value contracts – was also discussed as this was seen to help raise awareness within the social enterprise sector of contracts available within the council. Certain local authorities are looking to expand the contracts advertised on this.
3.2 CHANGING ATTITUDES WITHIN THE PUBLIC SECTOR
Several delegates raised the issue that a successful procurement relationship between the public sector and the social enterprise sector may need to start with a change of attitude within the public sector. Many within the public sector are aware of this and have developed ways to tackle the issues such as through Sustainable Procurement Strategies that highlight the added-value of procuring from local social enterprises. However, such strategies are only effective if they are widely acknowledged by public sector staff.
However, delegates from the public sector discussed how they had held a procurement workshop with strategy managers across the authority to explain the Sustainable Procurement Strategy and create a link with all departments. This gave the opportunity to discuss procurement with them and identify which departments might be most relevant for contracting with social enterprises. Another council said that they have an in-house procurement training programme to raise awareness with staff and ensure continued awareness. There are also procurement guidelines in place for officers unaware of the benefits that the third sector can bring.
In addition, one council realised that although they had standard documents, each procurement officer had a separate way of doing things. It was decided that there needed to be more consistency with the documents to enable social enterprises to become familiar with them and take less time to complete them. The council has now made slight changes to both the pre-qualification questionnaires and invitations to tender.
3.3 HELPING SOCIAL ENTERPRISES UNDERSTAND PROCUREMENT
Many councils have discovered that there is a general lack of understanding of procurement and contracting on the part of social enterprises. One council has provided workshops for social enterprises on how to procure with the local authorities. This focused on why they use pre-qualification questionnaires and what information the social enterprise needs to supply. It also explained what invites to tender are, what local authorities are looking for and how social enterprises need to explain added benefits. It was stressed that social enterprises need to be forthcoming about their benefits as the council cannot award points for them if they do not know about them. It was stressed that social enterprises need to sell their benefits.
Another council held a ‘Meet the Buyer’ event for social enterprises and procurement officers to start a dialogue and get to understand each other better. Their Corporate Procurement Strategy also gives sector specific guidance for procurement, and also has a social enterprise guide.
It was discussed that social enterprises need to get contracts from the local authority for what they see as a community need rather than the local authority specifying what the social enterprise should do. This, in many cases, means creating a market for what they do. The council are beginning to recognise the need for social enterprises and the Voluntary Sector to be involved in the whole procurement process and how beneficial partnerships with social enterprises can be. The earlier the dialogue is started with local authorities, the more the social enterprises can get issues reflected in the tender specification. It was recognised by social enterprises however, that capacity is required within the organisation in order to engage with the public sector, which can be difficult for some.
3.4 CHANGING WORKING PRACTICES
3.4.1 LOCAL AUHTORITIES
Delegates also exchanged ideas on the ways in which local authorities can act as agents for change by instigating changes to their working practices. One aspect considered important by many delegates concerned local authorities monitoring whether they contract with social enterprises. One of the local authorities present at the workshop, for example, is currently trying to determine how many social enterprises they work with and will match this with spending to see how much is going to social enterprises. They will also determine which social enterprises they work with and which sectors the social enterprises operate within. They will aim to increase spend through social enterprises and begin to determine the benefits and added value that can be gained.
This illustrates how the relatively small step of monitoring whether any spend is going to social enterprises can lead to bigger changes that benefit the social enterprise sector. On a wider scale, the Regional Centre of Excellence has developed the Sustainable Procurement Information Network 1 which provides information for local authorities on making social and community improvements. This is also contributing to changes in working practices that are opening doors for the social enterprise sector.
3.4.2 SOCIAL ENTERPRISES
The discussions at this workshop highlighted the change towards social enterprises being involved with consortia and cluster approaches. These can mean that better established, business minded organisations, can start to work with smaller, more specialist organisations that have good connections to communities. This sort of relationship can also help social enterprises to develop capacity to deliver better quality services.
A cluster is designed to provide help and advice to each individual participant organisation as well as developing the cluster as a whole. It was expressed however that the social enterprise sector can be reticent to talk to each other, and this can lead to communication problems within clusters. It was discussed however, that clusters have no legal security, and therefore organisations could leave the cluster at any time and leave the other organisations in a difficult position. It was also felt that there was a slight conflict for participant social enterprises between the desire to develop their own business and the necessity of spending time on developing the cluster – which can be difficult to reconcile.
It was also expressed that dealing with more than one organisation on a contract is a new idea to public sector procurement officials. It is necessary for them to try and ensure that the smaller organisations involved in the contract get proper treatment from the lead contractor and this would need to be agreed at the beginning. As a consequence the local authority may only be happy to work with one organisation and therefore they will sub-divide the contract so that smaller organisations can work on small areas, and each will have individual agreements for their element of the tender.
3.5 BARRIERS TO CHANGE
Despite the discussions documented above surrounding what is currently being done by both the public sector and social enterprises to facilitate a procurement relationship between them, there was also discussion by the workshop delegates of the barriers still faced by both sides.
3.5.1 BARRIERS FOR THE PUBLIC SECTOR TO CONFRONT
Although it has been shown above that delegates discussed the successes of local authorities in acting as agents for change, the discussions in the workshop suggested that not all authorities are at the same level and for some there is a great deal of work to be done.
Public sector attendees explained that at one time their local authority had no strategic partnership with the VCS or social enterprises, had no idea how much money they were spending with the VCS and social enterprises, there was no clarity between grants and contracts and organisations weren’t sure which they had received. Some grants were awarded to organisations year after year and were not open to other organisations. However, this local authority is currently putting into place some of the changes outlined above.
Quality Standards and Social Enterprises
The workshop revealed that one council is considering employing a system for maintaining quality standards for all services they outsource. They have been looking at a system in Herefordshire called ‘acquA’ which is used by the local authority and VCS as a quality standard for delivery of health and social care and is delivered by the Herefordshire Alliance. They have also been looking at PQASSO as this is a common quality standard, but it is self assessment tool which is not externally verified. It was discussed that social enterprises can be asked to take on a number of quality standards and environmental policy but these have a negative impact on the social enterprise due to limited capacity to implement them. Therefore, there needs to be a consensus reached as to how social enterprises can demonstrate quality without being overstretched in the quest to achieve standards.
Budget Cuts and Added Value
With the problem of budget cuts facing the local authorities, one delegate likened the process of procurement to a question of whether to shop at a large supermarket chain or the local corner shop. The major focus for local authorities is efficiency and, therefore, they may sometimes be drawn away from small social enterprise organisations (represented by the local corner shop). It was felt that this leads to a huge dilemma for the local authorities, and it was felt that, in the end, it is the politicians that make the decisions. With budget cuts and efficiency savings some delegates felt that it is inevitable that local authorities will move towards designing bigger contracts. Social enterprises will need to respond to this by either growing larger or by working with others.
The council has discovered, however, that there are a lot of opportunities for the local authority to deliver the Local Plan objectives through the building of relationships with the social enterprise sector. Social enterprises should focus on this aspect when tendering and demonstrate that part of their value for money is how the contract will be able to address part of the Local Area Agreement, as well as delivering the requirements of the contract on time, sustaining jobs and improving the local skills base in the community.
Local authorities have also realised that social enterprises provide long term benefits, and that it is necessary to look to the future when deciding to work with them. They need to contract with organisations that provide the most social benefits as well as most efficient and most economic aspects as this will make savings in the long term. It was discussed that local authorities need to be aware of the positive social and economic impacts that local social enterprises can have. Those local authorities that are aware of this, however, are moving towards having an established minimum percentage of contracts going to such organisations.
It was reiterated by many delegates that Social enterprises can provide multiple bottom-line benefits, whilst most other organisations focus on mainly financial aspects. It was felt that local authorities are a long way off from acknowledging the added benefits that social enterprises bring. It was discussed that this is perhaps due to the plethora of Government targets that local authorities need to achieve – because whilst local authorities may recognise benefits from social enterprises, they do not tick the Central Government targets.
3.5.2 BARRIERS FOR THE SOCIAL ENTERPRISE SECTOR TO CONFRONT
The workshop also highlighted that there are barriers that it may be possible to tackle from within the social enterprise sector. It was felt, for example, that third sector organisations need to form links between local authority procurement officers, social enterprises and other Directorates in order to create better communication and bring them together at an earlier stage of the procurement process.
It was discussed that it would be beneficial to develop the equivalent of a Charter Mark which social enterprises could use as part of their selling point, and identify them as social enterprises. It was recognised that this could be important to develop if ‘for-profit’ organisations were to change to become ‘social enterprises’ to get into the market but without incorporating the true characteristics of a social enterprise.
Culture Change within Social Enterprises
Delegates debated whether some staff within the third sector also need to change their thinking processes from ones relating to grant aid to ones that focus on business and entrepreneurship. This requires a culture change with a part of the organisation focusing on business and the other part focusing on the community aspects and social or environmental goal. It was raised, however, that many funding organisations have been imposing the business model on voluntary and community organisations before they will give them grants but many are not necessarily ready for such a change.
It was discussed that part of the difficulty with a culture change that heads in the direction of contracting is that organisations do not understand the language of procurement. It was suggested that there should be organisations that could mentor smaller groups and organisations in order to help them understand complex issues such as, for example, full cost recovery. It was felt that the impact of business advice and support from an experienced practitioner is very important – particularly within the context of social enterprise peer-to-peer sharing of experience.
Lack of Focus and Direction
A lack of focus and direction was also discussed as a barrier that could be tackled from within the social enterprise sector. It was felt that it is very important for social enterprises to be clear on their social goal and remain focused in their pursuit of its achievement. In relation to this topic, delegates pondered experiences related to some delegates’ experience of an EQUAL funded project in the West Midlands. They felt that there were a lot of opportunities available through the project but it was necessary to be quite focused where they wanted to go. They felt this was necessary as they could have been pulled into situations that may not have been in their remit or region. One particular organisation was founded by the need for regeneration of a neglected area and it was felt essential for them to remain clear on where they are going and choose carefully what their direction was to be rather than taking on anything that was offered to them in order to remain economically stable. It was discussed that this can be a universal problem for social enterprises.
EU Procurement Rules and Social Enterprises
Delegates discussed EU procurement rules as one barrier that stops social enterprises winning contracts from the public sector. It was felt that the EU procurement rules inhibit the promotion of environmental issues in contracts. The EU rules exclude preferential treatment to local suppliers and social enterprises in order to make sure the selection process is fair, but this means that often the contracts do not go to local suppliers who, it was felt, would be better placed to provide many services.
Delegates felt that there were, however, strategies that could be instigated from within the social enterprise sector in order to combat such barriers. As mentioned above, social enterprises need to focus on their commercial aspects and have a business approach as they cannot win contracts without this. Peer-to-peer sharing of experience within the social enterprise sector may also help to disseminate knowledge about EU procurement rules.
3.6 CONCLUSIONS
This report has provided a summary of the main themes to have emerged from the Birmingham dissemination workshop. It has highlighted that the public sector, social enterprises and social enterprise support organisations can act as agents for change and contribute towards a culture change that helps the third sector win contracts from the public sector.
The discussions highlighted the good work being done by many local authorities to try and support the social enterprise sector and demonstrated that the public sector are increasingly aware of the added value that contracting from social enterprises can bring. Highlighted, for example, was the work done by several local authorities to foster discussion and communication between themselves and the social enterprise sector at various points in the procurement process.
The discussion to emerge from this workshop also suggests that culture change is not only something that needs to be fostered within the public sector but also within the social enterprise sector. Culture change within the public sector involves formulating a better understanding of social enterprises and the added value and quality that they can bring. Culture change within the social enterprise sector involves fostering an understanding of procurement practices and professionalism in tender applications.
AUTHORS
Sarah-Anne Muñoz (MA., MSc., PhD., FRGS), Researcher
Heather George (BSc.), Research Assistant
Sustainable Development Research Centre
Horizon Scotland
The Enterprise Park
Forres
Moray, IV36 2AB
01309 678111
Sarah-Anne.Munoz@SDRC.uhi.ac.uk
1 www.s-p-i-n.co.uk
