Luton Research Dissemination Workshop 14th June 2007
AGENTS FOR CHANGE – PUBLIC SECTOR AND SOCIAL ENTERPRISE
1.0 INTRODUCTIO
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 LUTON WORKSHOPThe Luton dissemination workshop was held on the 14th of June 2007 at the Lewsey Farm Learning Centre in Luton. The theme for the workshop was Agents for Change – Public Sector and Social Enterprise. Speakers and delegates at the workshop included representatives from SDRC, the Development Trusts Association (DTA), local social enterprise and local government.
The workshop consisted of two sections – the first comprising a series of presentations on various issues pertaining to the theme of Agents for Change – Public Sector and Social Enterprise. Delegates listened to presentations on the demand side from the perspective of the BEST Procurement Programme in the East Midlands and were informed of the research carried out by SDRC. Presentations were also given by representatives of the local authority and local business.
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 – AGENTS FOR CHANGE
The remainder of this report summaries the main issues that emerged from both the presentations and the group discussion at the Luton 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
Local authority representatives at the workshop from both the East Midlands and the Luton area raised similar issues in relation to the role of local authorities as ‘agents for change’. There was, for example, a real awareness that local authorities are keen to gain a better understanding of social enterprises and best practice regarding contracting with them. This motivated, for example, a local authority in the East Midlands to become involved in the BEST Procurement Programme. However, local authorities in the area local to Luton are also looking towards acting as agents for change. There is a move within councils to improve their policies and procedures to ensure they are in line with national policies. This can open up opportunities for social enterprises to supply goods in, for example, the context of Sustainable Procurement. 1
However, it was also discussed that the party-political composition of local government can impact on their policies relation to social enterprises. Within councils that have recently become Labour controlled it was felt that a new focus for procuring from social enterprises, both directly and indirectly through the supply chain, would start to emerge.
3.2 CHANGING ATTITUDES WITHIN THE PUBLIC SECTOR
Delegates debated whether a key change to help social enterprises engage with public procurement could be achieved by changing the attitudes of public sector procurement professionals towards social enterprises. Attempts to change attitudes within the public sector in the East Midlands through the BEST Procurement Programme were discussed as illustrations of best practice. It was pointed out that county councils had held workshops, supported by BEST Procurement Programme partners, which involved procurement staff, senior officers and councillors from the local authority. Training was also offered to the procurement team of a local authority that focused on raising awareness of social enterprises, highlighting the community benefits that they can bring, as well as the legal framework of procurement – in terms of what a local authority can and cannot legally do in order to make procurement processes easier for social enterprises to negotiate. It was also pointed out that in the area local to Luton, the council had put a training programme in place with the explicit aim of changing attitudes within the organisation. Other examples were discussed in which councils are providing courses for voluntary organisations and social enterprises in which they offer examples of the opportunities they can take advantage of. Doing so also allows councils to understand what social enterprises perceive as the barriers to entering into a procurement relationship with them.
It was suggested that a way to change attitudes within the public sector is to identify where they are already working with social enterprises. Carrying out such an exercise, it was intimated, highlighted for one council supply chain management and monitoring issues by revealing that no-one within the council was recording levels of contracts awarded to social enterprises. It was recognised that doing so can be a difficult task because a standardised definition of social enterprise must first be decided upon. Another council discovered that over 50% of the supply base was local (within 12 miles of their main town). Revealing the level of contracting that is already carried out with local social enterprises helps to convince procurement professionals that some social enterprises do have the capacity to supply the public sector.
3.2.1 SOCIAL ENTERPRISES AND LOCAL ECONOMIC VALUE
Councils recognise that their procurement influences the local economic development of an area. In fact, many local authorities view local job creation as one of their primary objectives. Therefore, social enterprises can often be the logical choice of supplier because they create jobs and improve the skill base in the local area.
It was suggested that a good private business would be able to achieve the same as a social enterprise. The response was that social enterprises often operate in areas of deprivation where profit would not be made and a private business would not be able to operate. Therefore, social enterprises fill a gap in the economy. Social enterprises also take into consideration long-term benefits that private companies tend to be uninterested in.
Integrating recognition of local economic added value may therefore be a significant way for local authorities to act as agents for change in relation to opening up procurement opportunities for social enterprises. However, delegates pointed out that it is important to make sure that the specification includes the added benefits that the council are looking for in the contract.
3.3 HELPING SOCIAL ENTERPRISES UNDERSTAND PROCUREMENT
Delegates discussed various ways in which the public sector can instigate change by helping social enterprises understand procurement. It was felt that social enterprises should be provided training in awareness of contracts and funding, so that they do not just accept the first agreement that the council presents them with – they should be aware that they can change it if it is not satisfactory for them. It was pointed out that in the East Midlands the website ‘Selling to Northamptonshire’ has been launched which provides information for organisations wishing to work with them on contracts, practices and policies. The Sustainable Procurement Taskforce is encouraging all councils to provide this information. Delegates also noted that the organisation La Gente has developed an on-line specification-writing training programme, aimed at all council staff but particularly at heads of procurement. However, this tool is openly accessible to everyone and, therefore, social enterprises can have a look at how local authorities may be writing their contract specifications.
it was discussed that the local authority can enforce good practice with direct contracts, but it is much more difficult to enforce good practice further down the supply chain for subcontractors. Therefore, social enterprises need to be able to deal with these situations as well and offered the necessary support to do so.
It was felt that social enterprises should be able to deliver a good service for end users of public services. At the same time, their income should cover costs and generate a profit for the organisation. In this respect it was felt that social enterprises should be provided training to explore the issues on how to cost services, as it is important for them to be able to reinvest for the future and make the organisation stable.
It was discussed that the public sector keeps up to date with everything that is going on through forums and meetings etc. Social enterprises would also benefit from meetings where organisations can meet the public sector. The issue was raised, however, that there would need to be people willing to give information and their time to such meetings, and they may be difficult to find. However, it was postulated that this is a public sector solution to informing social enterprises about procurement because social enterprises will find it difficult to dedicate the time to such events.
3.4 TYPES OF CHANGE – CHANGING TENDER SPECIFICATIONS AND PROCESSES
The workshop highlighted that many councils are working towards the standardisation of documents and the simplification of pre-qualification questionnaires and pre-tender documentation. It was felt by social enterprises that it would be beneficial to have simplicity in process, decision making and monitoring. It was felt that there is a lack of resources within the council and that many contract specifications are written very quickly. It was felt that there needs to be more forward planning for contracts and more people involved.
An example was provided of an instance in which a council tried to tailor contracts to encourage and enable social enterprises to work with them. Their contract for temporary agency staff had been very inefficient and they had managed to streamline this and save money through employing private sector suppliers. The contract will soon be up for renewal and the council have already identified that they would like to work with social enterprises and the voluntary sector and start to do this by conferring with them when drawing up the supply requirements. They are considering achieving this through breaking the contract down into small sections that could be undertaken by social enterprises.
Delegates also discussed an instance in which a homecare contract was coming up for renewal and the council contacted a team of consultants in order to determine the best way to drive down costs. The consultants suggested awarding the contract to just four companies, ignoring the social benefits which could have been derived by contracting any of the sixteen locally-based organisations that were able to supply the services needed. This illustrates the need for the public sector to include social and community benefits into tender specifications. However, it was felt that local authorities around the country may be duplicating each others work and not sharing experiences.
3.4.1 CHANGING ADVERTISING PRACTICES
Northamptonshire County Council has developed a website on which they list all of their available contracts and also try to show upcoming opportunities. Luton council has also developed a procurement website, and this will be going live soon. This will advertise contracts coming up as well as contracts previously awarded. They are trying to raise awareness of their contract opportunities in order to encourage social enterprises to compete, even for large contracts. These websites aim to show that contracting opportunities are accessible to all organisations, especially local ones and the third sector.
3.4.2 CHANGING WORKING PRACTICES
In many social enterprises the board of governors or trustees do not have a business background and are not trying to run the organisation as a business. However, it is not possible to escape the fact that social enterprises are operating in a business culture where they are bidding for contracts. A case study discussed in the workshop mentioned that social enterprises may have to adopt innovative ways of working in order to marry their community or social ideas with business acumen. The example involved an organisation that had a split board - with one section focused on the community aims and the other sector of the board focused solely on the business side. It was discussed that there are no legal implications to having such a split board but it allows the social enterprise to do things differently with those that are interested in the community aims able to focus on that, whilst the business experts can help drive forward the commercial side of the organisation. It was suggested that social enterprise workers would benefit from taking time to observe how other organisation work, although this may be difficult to combine with the demands of running a social enterprise.
There are lessons, however, that social enterprises can learn from the private sector in this regard. The private sector usually approach the public sector by asking them what service they want, and then try to work out how to provide them with it. They use this approach because they do not want to remove the chance of working with them by saying exactly what they provide. The private sector is also used to the customer coming to them with a specification for what they want and then figuring out how to provide it. Innovative social enterprises may benefit from taking this approach.
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 of the barriers still faced by both sides.
3.5.1 BARRIERS TO CONTRACTIING WITH SOCIAL ENTERPRISES – THE PERCEPTIONS OF LOCAL AUTHORITIES
Delegates discussed an instance in which a council service team were given the opportunity to highlight what they saw as barriers to procuring with social enterprises. One barrier mentioned was that the council is generally risk averse and they are concerned that social enterprises may not be able to provide services satisfactorily to them, ultimately leading to problems for the local authority. Another barrier is that local authorities need to ensure that their procurement process fits in with the overall policies and procurement legislation, particularly the EU Directive. Local authorities are also under pressure to scale-up projects in order to manage risk, which could exclude most locally-based social enterprises. There was also a general fear expressed within the council of innovation and change. Another problem that council procurement mangers face is that budgets are under pressure. There is a demand to ensure that the money spent on procurement is spent properly.
3.5.2 BARRIERS TO CONTRACTING WITH LOCAL AUTHORITIES – THE PERCEPTIONS OF SOCIAL ENTERPRISES
Social enterprises often experience difficulty in finding the correct person to contact within the council when looking for procurement opportunities. It was also expressed that the tendering and overall procurement process is very complex. Delegates often discussed a lack of trust between social enterprises and the public sector as a major barrier to a successful procurement relationship between them.
It was felt that lack of trust often stemmed from the rapidity with which the public sector can change decisions and renege on agreements and priorities. Experience of such situations has made social enterprises wary of dealing with the public sector. It was discussed that trust is gained through actions and earning respect. If a local authority develops a reputation for being unreliable then they will not develop such trust with social enterprises. It was felt that there is a general lack of consideration and understanding by people in local authorities regarding the impact of their actions and decisions on social enterprises. It was delegates’ experience that social enterprises do not trust councils enough in order to go down the route of procurement – trust is therefore a major barrier.
Social enterprises feel that public sector contracts need to provide reliability in the long-run and not terminate without due reason. If they do not provide such stability then social enterprises will not feel confident enough to work with the public sector. Many social enterprises feel, however, that the public sector think organisations will work with them no matter how they treat them. It was felt that it is necessary to put oneself in other peoples’ shoes in order to understand what is important to them. It was discussed that social enterprises could balance risk by working with the public sector but also working with other organisations and not depend solely on income generated from public sector procurement.
Delegates regaled personal experiences, for example, an instance in which a tender submission deadline was abruptly changed to five months after the original deadline, with no explanation for the change. This was despite being informed that the original deadline was non-negotiable. This is another example of the public sector practices making social enterprises wary of working with them. However, it was discussed that this can occur because the public sector has a lot of opinions and stakeholders involved so when decisions need to be made things are not easy to change and it is necessary to take time over the decision-making process. For social enterprises to have a successful procurement relationship, therefore, it is important to have good communication with the public sector.
It was raised, however, that in one delegate’s experience, unless something goes wrong with a contract, local authorities will pay on time and are good at doing so compared to other private sector organisations.
3.6 CONCLUSIONS
This workshop has illustrated some of the innovative ways in which the public sector and social enterprises are acting as agents of change in order to facilitate a more productive procurement relationship.
It has been illustrated that local authorities can act as successful agents for change and are starting to do so in various parts of the country. It is clear that councils are trying to understand social enterprises better. Local authorities, for example, are improving policies and procedures in an attempt to open up procurement to social enterprises. However, they can also offer support and training to social enterprises in order to help them better understand the procurement process. This, however, has to be done alongside changing the attitudes of public sector procurement professionals towards the third sector.
Thus, making procurement officials aware of social enterprises is one part of training but making social enterprises aware of contracts and what to accept or renegotiate is the other part.
It is clear from the workshop, however, that there are still barriers to social enterprises contracting with the public sector. There is a fear of entering into a procurement relationship on both sides and trust needs to be fostered between the social enterprises and the public sector. Both sides need to demonstrate to each other that they can act in a reliable and professional manner. In relation to this there are lessons that social enterprises can learn from the private sector.
Overall, it is clear that the public sector and social enterprises need to communicate with each other and understand each other better in order to establish a procurement relationship that maximises benefit on both sides.
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
The Government has formed the Sustainable Procurement Taskforce to work towards making local government procurement process take sustainability issues into account.
www.sourcenorthamptonshire.co.uk
