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 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.
2.0 THE LEEDS WORKSHOPThe Leeds dissemination workshop was held on the 10th of July 2007 at the Leeds Media Centre in Chapeltown. The theme for the workshop was Influencing the Demand Side. Speakers and delegates at the workshop included representatives from SDRC and the BEST Procurement Partnership, local government and social enterprise.
The workshop consisted of two sections – the first comprising a series of presentations on various issues pertaining to the theme of Influencing the Demand Side. Delegates listened to presentations on this theme from the perspective of the BEST Procurement Programme in the East Midlands as well as from the perspective of Leeds City Council. 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.
3.0 ISSUES RAISED – INFLUENCING THE DEMAND SIDEThe remainder of this report summaries the main issues that emerged from both the presentations and the group discussion at the Leeds workshop. Delegates discussed the ways in which attitudes within the public sector can be, and to some extent have been, changed in order to recognise the added-value of social enterprises within procurement policies and both locally- and nationally-relevant issues were raised.
3.1 THE DEMAND SIDE – PUBLIC SECTOR PROGRESS
In relation to the theme of Influencing the Demand Side, delegates discussed the progress that has been made by local authorities so far, as well as what can still be improved, in relation to public sector recognition of the added-value and needs of social enterprises. It was pointed out during the workshop that various local authorities have begun to change their procurement processes and open the door to social enterprises. This is sometimes a direct result of social enterprise support and advocacy organisations lobbying the public sector.
3.1.1 CHANGING PROCUREMENT PROCESSES – RECOGNISING COMMUNITY VALUE
Delegates discussed the changes that Northamptonshire County Council went through in relation to their procurement processes, some of which were as a result of their involvement in the BEST Procurement Programme. They also discussed in more general terms that the public sector is beginning to change procurement processes in ways that are beneficial to social enterprises because they are looking towards incorporating notions of community value into the contracts that they commission.
Delegates discussed the changes that have been made in Northamptonshire such as the creation of a virtual procurement team which has a representative from each of the devolved procurement teams, and is separate from corporate procurement. This may help the council to join up functions and match these with the multiple value propositions offered by social enterprises, e.g. provision of a service such as gardening and employment of disadvantaged groups. They also have an intranet that staff can put information on and communicate with each other about procurement. This is used to disseminate best practice in terms of procurement over wide geographical areas.
The public sector is also developing processes to ensure that there is a level playing field for all suppliers that want to bid for a contract. A representative from the East Midlands pointed out that a county council within the region has devised a Local Enterprise Policy, Environmental Procurement Policy and a Voluntary Sector Policy. Northamptonshire County Council have looked at their pre-qualifying questionnaire to determine what the barriers may be to social enterprises winning public sector contracts because they noticed that many of such organisations were unable to get past this stage. They have now standardised their pre-qualification questionnaire through the East Midlands Centre of Excellence to twelve simple questions. In general, delegates from the public sector felt that although it is beneficial to encourage social enterprises to apply for tenders it is about getting risk and value judgement right for the service that they are trying to procure.
It was pointed out that the public sector is starting to write community benefits into their tender documentation and evaluate organisations in terms of the wider societal benefits that they offer. This helps provide greater opportunities for social enterprises to win public sector contracts. One way of building in community benefits is to tie all contract outcomes to the goals that the local authority has set for the area in terms of, for example, the local community charter.
Leeds City Council is, for example, going to try and integrate an awareness of the Community Benefits Charter into all of their contracts. Charters cannot force people to do anything but they can promote and encourage good practice. They will ask their suppliers how they can help to contribute to the council’s aims regarding community benefits. Some delegates felt that provided a local authority can demonstrate that it has a community strategy and that community benefit is contained within council regulations then the provision of community benefit can be written into virtually every contract.
Such changes influence the demand side by contributing to the quality of assessment and influencing how demand is met to assist in effective and efficient delivery.
3.1.2 CHANGING THE WAY CONTRACTS ARE ADVERTISED
This workshop highlighted that the public sector are increasingly moving towards using the internet as the main vehicle for advertising their contracts. It was thought that this would make contract opportunities more visible to social enterprises.
It was pointed out that regions are developing their own locally-focused contracting websites, such as the Source Northamptonshire1 website. All contracts worth £30,000 or more are currently advertised on this website but it was pointed out that the council hopes to reduce this threshold in the future. A reduction may be useful for social enterprises because they are likely to be interested in lower value opportunities.
It was mentioned that Leeds City Council have also developed a supplier and contract manager system. This is a regional system that organisations can register on as suppliers and receive alerts when contract opportunities arise. This helps save social enterprises the time of trawling through contracting opportunities. They also have a help-desk which will talk potential suppliers through the process of registering on the system. Organisations can apply for contracts on-line or they can complete a hard copy if they prefer. In order to make this even more accessible for social enterprises, the West Yorkshire Social Enterprise Link looks through the supplier and management system and other sources of contract opportunities and advertises the contracts that would be suitable for social enterprises to consider tendering for.
3.1.3 TRAINING THE PUBLIC SECTOR
It was discussed that some branches of the public sector have been training their staff to understand how procurement and community benefit can be combined in tender specifications and evaluations. This is an effective way to train staff to look for the kind of benefits that social enterprises can offer when writing and assessing tender specifications and applications.
It was pointed out that a council within the East Midlands, for example, has tried to raise awareness of social enterprises within the council. One way this has been attempted is through workshops run for corporate and virtual procurement team staff. The council also attended a workshop on Sustainable Procurement that helped them to realise that they did not meet the requirements of the Sustainable Procurement Agenda. One way to rectify this may be to engage more with the social enterprise sector and the added value that contracting from them can bring.
Northamptonshire County Council have also been involved in the development of a specification on-line writing tool that is now freely available to anyone. 2 The on-line learning tool involves three modules on how to include community benefits and how to evaluate them in a tender. Leeds City Council has also tried to raise awareness of social enterprise within their council.
3.1.4 TRAINING SOCIAL ENTERPRISES
The workshop demonstrated that the public sector is starting to provide support to social enterprises that enables them to understand the procurement process. It was pointed out, for example, that at the county council level within the East Midlands, a selling guide has been produced that tells suppliers how to go about selling to the public sector. It sets out for suppliers what the council buys and how they go about it. This brings together all boroughs and districts into the one guide and was thought, therefore, to have the advantage of giving out a common message. This can be particularly useful to social enterprises who may be new to the process of selling to the public sector. Certain branches of the public sector are also starting to organise events at which they can engage with potential suppliers in an environment that fosters communication and understanding.
3.2 FURTHER WORK FOR THE PUBLIC SECTOR
It was discussed that specifying community benefits in tenders and contracts may give the greatest chance of helping social enterprises win a contract. Therefore, it was felt that this is what the social enterprise sector should be lobbying for. This means that influencing demand comes into play when there has already been a decision to ‘buy’ rather than to ‘make’ by the public sector. This is increasingly happening as the public sector moves from being a supplier to a commissioner of goods and services. In the East Midlands one county council have developed an on-line learning tool for their staff that demonstrates how to include and evaluate community benefits in specifications. There is the potential for this to be replicated in other areas of the country. However, delegates also discussed the areas where they thought there was further work to be done by the public sector and the social enterprise sector.
3.2.1 PROGRESSING WITH COMMUNITY VALUE
The public sector is still wary of including community benefits within contract specifications as they are fearful that this will break EU procurement laws. More needs to be done to demonstrate that community benefits can be included legally. When specific community benefits are written into tender documentation those who respond have to address these. The council will then undertake an evaluation of how the criteria will be met, and this is given a specific weighting. Certain local councils are starting to examine how this can be done with each of their contracts that are coming up, but still feel that it is not possible to do this with all of them. The council needs to consider what weighting should be put on community benefits and what these benefits actually are. One way to do this is to involve service users and take into account what they consider community benefits to be. However, it was pointed out that this is a judgement call as some community benefits might be considered more important than others depending on the service user. There are also different political positions on what community value might be.
Social enterprises may also benefit from finding out what the general public want in this regard. It would then be possible to approach the public sector and tell them what the end users of their services want. In turn, this may make it possible for the social enterprise sector to influence how the public sector contracts out their services.
3.2.2 PROGRESSING WITH PROCUREMENT
Delegates felt that in many areas of the country there is the potential for the public sector to engage to a greater degree with joined-up procurement. Delegates highlighted that social enterprises have different things to offer and that this is not always readily understood by the public sector, meaning that there are missed opportunities.
Delegates also felt that the public sector needs to ensure to a greater degree that its entire staff is familiar with procurement processes. In order to avoid uncertainty, all public sector staff involved in procurement should be familiar with the current contract procedurals which will clearly show whether it is necessary to go to tender or not. It was generally perceived within the group of delegates that public sector staff do not always understand their own regulations. Social enterprises would also benefit from being familiar with these which differ for each council but are usually found on their websites.
Delegates also debated the degree to which the public sector is reserving contracts for ‘sheltered workshops’ and the degree to which social enterprises could benefit from this. It was discussed that the public sector can only reserve contracts for organisations that meet the criteria for being a sheltered workshop. EU procurement rules stipulate that these are organisations that provide employment to vulnerable or disadvantaged persons who normally make up more than fifty percent of the organisations’ workforce.
It was discussed that social enterprises may meet such criteria and may stand a better chance of winning contracts advertised for sheltered workshops because they would not be competing against local SMEs or other private companies. Making local authorities aware of the sheltered workshop opportunities would, therefore, be a beneficial way to influence the demand side.
Delegates wondered whether a coffee shop in Leeds which offers training to the learning disabled may be a good example of an occasion on which a sheltered workshop contract was won by a social enterprise. This lead on to other delegates stressing that in such situations there need to be checks to ensure that the right learning opportunities are provided to the employees so that they do not become reliant on this employment but use it as an extra step to help them on the road to mainstream employment in the open market place.
As noted above, the councils in the East Midlands are trying to move towards common contract procedurals across the local authorities. The opportunity to change contract procedurals does not arise very often as the process takes around nine months to complete. Common procedurals may help social enterprises, especially those approaching public sector procurement for the first time and delegates felt this was an area that other local authorities should be encouraged to consider.
It was also felt that when big companies win contracts with the council they should be encouraged to sub-contract to local suppliers or SMEs. However, delegates were unsure where social enterprises would find out about sub-contracting opportunities. Therefore, there may be a need to encourage the public sector to facilitate the dissemination of such opportunities.
3.3 INFLUENCING THE DEMAND SIDE – FURTHER WORK FOR SOCIAL ENTERPRISES
3.3.1 MAKING THEMSELVES KNOWN
It was discussed that social enterprises may need to make themselves more known to the public sector in order to be able to influence procurement strategies. However, delegates debated whether being known to the public sector will actually help social enterprises when it comes to winning contracts.
It was discussed that in relation to advertised contracts opportunities should be visible to all social enterprises but in relation to contracts under the advertising threshold (this varies between council areas) it can be beneficial to track down individuals in the council in order to discuss how a social enterprise can find out about opportunities that do not involve formal tendering. This type of networking can lead to opportunities for social enterprises to gain smaller value contracts or contracts that involve innovative/ new ways of working. One delegate from a social enterprise mentioned that they have never had to tender for contracts with the local authority. They have always approached the local authority and told them what they can supply and the local authority has always got back to them, asking for their services. Delegates pondered whether contracts are still found by chance – if an organisation is not know by those who are assessing the applications then do they have as much chance of winning the contract?
Social enterprises may need to try harder to make themselves known to the public sector to take advantage of opportunities available. Social enterprises have to decide what size of contract they want to go for because if it is under the threshold of advertising then they will have to actively seek out the right people in order to find out about the opportunities. The same applies if they are offering something new. Delegates commented that a mechanism for piloting or pathfinding for innovative ideas is needed.
3.3.2 MAKING PARTNERSHIPS
Delegates discussed that social enterprises may need to be prepared to form partnerships and consortia in order to deliver some of the services that are being contracted out by the public sector. It was felt that social enterprises need to put more effort into this in order to be competitive and visible as a sector that has the ability to influence the demand for their service. The public sector is starting to host events that aim to help social enterprises understand partnership working but it is up to social enterprises to take advantage of such events. It was pointed out that in the Leeds area the public sector is supporting a virtual social enterprise network which should encourage collaboration between organisations.
It was questioned by delegates whether problems may arise if organisations with differing legal structures entered into a partnership. These restrict some social enterprises to only delivering in specific areas. The consensus was that this is likely to aid the process as each organisation will have their own agenda and know what they can deliver.
Overall, delegates felt that it was important for the public sector not to insist that social enterprises form consortia but simply to be aware of it as an option for service delivery. Delegates felt that there may be organisations that are capable of undertaking contracts where a number of different products or services are required without forming a partnership. It is also important to recognise that there are organisations that will not want to work with each other. There are instances of where partnerships have failed as it takes time to develop this approach.
Some delegates gave general advice to social enterprises planning a partnership and stressed that they should choose the strongest partner (in financial terms) to lead and demonstrate this in the pre-qualification questionnaire. It was mooted that if a partner is weak then it is best not to consider a joint venture because all organisations will be evaluated and this may lead to the partnership losing out on the contract. It was discussed that social enterprises should be aware that if there is a lead partner then this is the only organisation that will be assessed by the public sector.
Representatives from the social enterprise sector felt that is was important for each partner to maintain their own individual identity and vision when entering into a partnership. Therefore, social enterprises should be aware that there are various models of partnership, including ‘joint ventures’ in which there is no lead partner. It was felt that social enterprises would benefit from being provided with examples of how successful partnerships have operated.
Delegates pondered whether it would be beneficial to try and influence the demand for this type of contract (partnership) because it has some capacity to help social enterprise win public sector contracts. However, delegates were also keen to stress that this is not a panacea and needs to be viewed as only one method among many because it can often be difficult to bring social enterprises together in one bid. The success of partnership working may lie in the public sector and social enterprises being open to a variety of partnership models and not being prescriptive.
4.0 CONCLUSIONS
This workshop brought a wealth of discussion points relating to the theme of Influencing the Demand Side. This report has summarised the main points to arise from delegates’ discussions. It was argued that the social enterprise sector can lobby the public sector in order to try and bring about change. However, it was also highlighted that change can often come from within the public sector with key staff instigating a wider change in values.
There appeared to be consensus that ‘influencing demand’ needs to be conceptualised as influencing how something is bought by the public sector. Therefore, there are key ways in which the social enterprise sector can shape the demand for its services by influencing the ways in which the public sector buys goods and services. The workshop highlighted that some changes are already occurring but that there is more that can be done.
It was felt that the most effective way of making contracts more accessible to the social enterprise sector is to influence those who are writing tender specifications. Delegates would like to be able to influence what the public sector evaluates against when assessing tender applications, particularly in relation to the inclusion of community benefits. This would require a lobbying of those who write tender specifications and, more widely, those who make decisions regarding public money.
There is also a need to influence the size of contracts and to question whether large contracts are the appropriate way forward for the provision of services – it was felt that breaking down contracts into smaller parts may help maintain the quality of local services. Delegates felt that taking on smaller value contracts may be a foot in the door for social enterprises when it comes to public procurement but it does not influence the way contracts are drawn up to any great degree.
Overall, it was felt that change needs to be long-term with sustainability and socially responsible principles embedded into all public sector staff and mechanisms developed to ensure that this is not lost through personnel change.
AUTHORS
Sarah-Anne Munoz (MA, MSc, PhD), 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
heather..george@sdrc.uhi.ac.uk
1 www.sourcenorthamptonshire.gov.uk
2 www.specification-writing.info
