Edinburgh Research Dissemination Workshop 25th September 2007
RESOURCE CAPACITY AND FUTURE SOCIAL ENTERPRISE DEVELOPMENT
- INTRODUCTION
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 of social enterprises and procurement.
- THE EDINBURGH WORKSHOP
The Edinburgh dissemination workshop was held on the 25th September 2007 at the Drill Hall. The theme for the workshop was Resource Capacity and Future Social Enterprise Development. Speakers and delegates at the workshop included representatives from SDRC, the Development Trusts Association (DTA), local social enterprises, the Scottish Government and the Social Enterprise Academy
The workshop consisted of two sections – the first comprising a series of presentations on various issues pertaining to the theme of Resource Capacity and Future Social Enterprise Development. Delegates listened to presentations on the demand side from the perspective of the BEST Procurement Programme in the East Midlands. They also heard from representatives of the Scottish Government and the Social Enterprise Academy. Delegates were also informed of the research carried out by SDRC.
The second part of the workshop comprised an open discussion involving all participants and focused on the workshop theme. 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.
- ISSUES RAISED – RESOURCE CAPACITY
The remainder of this report summaries the main issues that emerged from both the presentations and the group discussion at the Edinburgh workshop. Although the delegates were predominantly from the central belt of Scotland both locally- and nationally-relevant issues emerged. Delegates discussed, in particular, the current and future ability of social enterprises to win public sector contracts.
3.1 RESOURCE CAPACITY – A BARRIER TO CONTRACTING WITH THE PUBLIC SECTOR
Delegates discussed the resource capacity issues that are faced by social enterprises in terms of being a barrier to them winning contracts with the public sector. It was felt that there is a general assumption made at various levels, from national government down, that social enterprises have the ability to enter procurement relationships with local authorities. However, delegates felt that this is a generalisation and despite government rhetoric and funding streams contributing to the notion that social enterprises should be winning public sector contracts, the staffing and capacity levels of many social enterprises mean that they fall well short of being able to do so. It was mooted that many social enterprises are simply too small to work with local authorities.
3.2 OVERCOMING RESOURCE CAPACITY BARRIERS
Delegates from the public sector stressed that social enterprises need to try and overcome these resource capacity barriers. It was felt that change needs to take place within the social enterprise sector because unless social enterprises are efficient businesses that are able to supply what the public sector want they will not win tenders. Delegates from the public sector intimated that social enterprises should not rely on the public sector seeking them out and should concentrate on increasing the effectiveness of the business side of their activities as this will ultimately led to a better chance of selling to the public sector.
4.0 ISSUES RAISED – FUTURE SOCIAL ENTERPRISE DEVELOPMENT
4.1 THE POLICY CONTEXT – HELPING SOCIAL ENTERPRISE
Delegates discussed at length that future social enterprise development is closely linked to the policy context within which they operate and the kinds of support provided to them by the public sector. Social enterprise practitioners suggested that it would be beneficial for a procurement policy to be set across the whole of the public sector because they felt, at the moment, that there is a lot of variation between different geographical areas and different sections of the public sector.
The delegates who worked within the public sector also recognised that although they cannot, and do not wish to, discriminate in favour of social enterprises at the expense of other types of organisation when examining tender applications, they can make things easier for the third sector to compete. The public sector must, for example, treat all organisations equally but they can incorporate social and environmental clauses into tender specifications that will not only be beneficial to society as a whole but may also have the effect of making it easier for social enterprises to win contracts.
However, it was felt that for these kinds of policies to be considered by the public sector a reform programme may be required in order to bring people with more experience in dealing with the third sector into procurement positions within the public sector. The stance of the Holyrood and Westminster governments also has a role to play in this issue because they can lead the way for public sector procurement to have in-built issues of sustainability. Pressure from central government for the public sector to use local suppliers may help social enterprises win more work because the public sector would have a greater incentive to have a diverse and locally-focused supply base. It was stressed that central policy drives the local government agendas that are put into place with regards procurement policies and, therefore, a strong central policy relating to social enterprise could be a real driver for change at the local government level.
However, those working within the public sector feel that they too need support in order to be able to create more opportunities for social enterprises. The feeling amongst delegates from the public sector was that the concept of social enterprise is fairly new to them. They felt that there is little advice available to them to tell them how to make the procurement process more accessible to the third sector. Delegates felt that there are no guidelines or templates available to procurement officers showing them how to engage in such processes. It was also felt that public sector workers cannot change things on their own – they need the elected representatives to make policy decisions and wider council policy changes.
The delegates generated several suggestions for ways in which the public sector can help social enterprises become more involved with procurement – the suggestions that were most well-received included: providing training to social enterprise in procurement; more encouragement of private-third sector partnerships and the instigation of framework agreements that would, for example, state that a proportion of spend is directed towards user-led organisations. It was also suggested that the public sector could organise meet-the-buyer events aimed specifically at social enterprises and do more to try and bring consistency to the processes of public sector buying across Scotland. It was felt that the use of on-line portals for the advertisement of all big public sector contracts could make opportunities more visible to social enterprises. However, it was suggested that it would be particularly useful to include up-coming opportunities on such a portal, in addition to open calls for tender.
4.2 ADDED VALUE AND THE PROCUREMENT PROCESS
It was felt that the main way in which the public sector can encourage the greater participation of social enterprises in procurement is to incorporate an understanding of added value into the procurement process. Therefore, delegates pointed out that the public sector needs to develop a method to ensure that added value is part of the criteria evaluated when assessing tender applications. It was suggested, for example, that local authorities should take into account not just cost but also their other objectives, such as regeneration, when evaluating tender responses as a means of taking into account the social added value offered by the third sector. This may offer social enterprises a way of competing for tenders because it would allow for services that were more expensive, but also better in terms of quality, to be considered ‘value for money’.
It was concluded that the best way to achieve the incorporation of added value into the procurement process is to influence those who are coming up with the requirements and specifications of local authority tenders so that they include such factors. This would mean that the tendering process would be designed with an awareness that not only price will be evaluated but also concepts of quality which have been built in at the onset. It was suggested that this could be achieved by the greater involvement of procurement officers at the point of policy-making, not just at the point of tender. Involving social enterprise practitioners in the specification writing stage was also suggested as a method for ensuring that tenders incorporate the social outcomes that the public sector wants. It was felt by several delegates, however, that social return is likely to become a bigger and bigger part of procurement evaluation.
4.3 BUILDING RELATIONSHIPS WITH THE PUBLIC SECTOR
Communication was seen by all delegates as being central to the development of a successful relationship between social enterprises and the public sector. On one level, it was felt that the third sector needs to lobby the Scottish Government and local authorities to get social benefits properly described in tender specifications so that social enterprises can compete for contracts. On another level, it was stressed that social enterprises need to know who to talk to within the public sector when they need advice or information about competing for an upcoming contract. It was felt that often the public sector have little knowledge of how social enterprises function and when they approach for advice they end up being directed to the wrong people within the public sector. It was felt that the biggest barrier to communication is that many procurement staff are set in their ways and do not want to engage with social enterprises.
- CONCLUSIONS
Resource capacity can be considered a barrier to social enterprises gaining contracts with the public sector. In particular, human resource capacity issues for social enterprises prevent them from successfully winning tenders – in particular, social enterprises struggle to devote time to the preparation of tender documents. Some delegates felt that social enterprises should focus on being successful businesses and that this will lead to a greater capacity and ability to compete for public sector contracts.
There was also much discussion about the influence of the policy context on the experience of social enterprise in general and specifically in relation to their degree of involvement in procurement. Overall, it was felt that a strong message from central government, alongside clear guidelines for procurement officers, would be the most effective way to generate greater access to procurement for social enterprises. In addition, a successful procurement relationship between social enterprise and the public sector would involve an incorporation of added value in the evaluation criteria for tender responses and greater communication between both sides.
AUTHOR
Sarah-Anne Muñoz (MA, MSc, PhD, FRGS), Researcher
Sustainable Development Research Centre
Horizon Scotland
The Enterprise Park
Forres
Moray, IV36 2AB
01309 678111
Sarah-anne.munoz@sdrc.uhi.ac.uk
