The Government, local authorities and the wider public sector continually claim their commitment to increased social sector and charity provision of public services. However, the sector all too often responds by saying that the procurement process is tilted against them. This is a key finding of ‘The Shadow State’ report on public service outsourcing from Social Enterprise UK.
So what does the public sector have to do to improve the opportunities for the social sector and charities to deliver more public services?
I suggest that the starting point has to be a radical change in mindset rather than a new series of procurement processes and procedures.
Public sector commissioning and procurement officials and their advisors should demonstrate respect for social and charity providers and potential providers. They should take time to understand their values, objectives and capacity. They should ensure that they understand what these providers will be willing to do and what they would regard as being in conflict with their values and social or charitable missions. Commissioners will also gain a great deal from actively listening to social and charity providers as they explain what they can offer (including innovative options) and the practical experience of service users – their beneficiaries.
In particular, the public sector has to understand social and charity providers’ commercial requirements. For example: what reasonable margins they will need for investment in their organisation’s growth and renewal; their cash-flow requirements; the fees they require to be exemplar employers; and their capacity for borrowing. There should be no expectation of, or unilaterally imposed requirement for, these organisations to subsidise contracted public services from their charitable or other income. Public sector commissioners and procurement staff would not expect such behaviour from business sector providers. The same should apply in respect of social and charity providers.
In my experience there is too little dialogue of this kind. This has to change.
The public sector can do more to encourage and facilitate social and charity providers to deliver public services through the way in which they procure and contract. In particular they could:
- adopt and apply the spirit as well as the letter of Chris White’s Social Value Act – procuring for wider social and public value, not simply for low-cost services
- recognise and expect decent employment conditions and terms for employees and volunteers (and not expect the latter to replace the former simply to meet contract price conditions)
- avoid contracts that constrain providers or simply turn them into public sector agents
- enable providers to have the financial and operational headroom to innovate, experiment and add value for their beneficiaries
- emphasise quality, not simply price, in public contracts
- ensure that the size of contracts and the range and geography of service delivery does not exclude smaller specialist local or even national charities
- avoid payment systems that require providers to either have very large reserves or the ability to borrow large sums of capital to fund their cash-flow; and also avoid payment systems such as aggressive ‘payment by results’ regimes that place too much risk on providers
- contractually require business sector providers and large national charities/social organisations to treat smaller organisations in their ‘supply chains’ as genuine partners; and indeed require them to include such organisations in their supply chains
- facilitate or support the facilitation of consortia of smaller suppliers
- offer grants to enable social and charitable organisations to build their capacity and readiness to bid for public services in ways that avoid charges of ‘state aid’
- facilitate access to affordable social finance for the social and charity sectors
Many of these approaches would equally be beneficial for small and medium-sized enterprises (SMEs).
The social and charity sectors, especially local voluntary and community organisations, are more than service providers. Many (indeed, probably the majority) do not currently and have no wish to provide ‘contracted’ public services. Others provide voice, advocate and campaign for their beneficiaries. The public sector at national and local level should recognise and respect these roles and offer grants and other support for them. They have to be willing to accept that an organisation has the right to challenge policies while being in receipt of funding – contractual or in other form. They should also respect those occasions when social and charity providers decide that they cannot respond to requests from the public sector because they feel what would be required of them is outside their mission and/or contrary to their values.
It is always very beneficial when public sector leaders publicly state this commitment to the sector’s role as an independent voice for its beneficiaries, and an understanding of the values base of the social and charity sector. Such statements generate confidence and create the basis for trust.
Over the next months and years there is going to be an increasing political expectation that the social and charity sectors will deliver an increasing range and volume of public services. However, this will only be sustainable if and when public sector commissioners and procurers adopt the behaviours necessary to secure this outcome.