13 December 2007
Third sector groups are missing out on government contracts. Helen Gilbert asks why and examines what is being done to increase charity involvement
Public sector procurement from the third sector has been in the spotlight in recent weeks, and the news has not been encouraging.
In September, the Department for Work and Pensions (DWP) awarded 15 Pathways to Work contracts to five private sector firms and one charity - the Shaw Trust. Then last month an inquiry by the Association of Chief Executives of Voluntary Organisations (Acevo) revealed why charities are missing out on public sector contracts.
Acevo found some skilled and experienced third sector suppliers were put off bidding by the procurement approach used in some government contracts (see News, page 9
Elsewhere, the DWP published an interim report into its commissioning strategy. It called for a "key role" for the third sector and "diverse supply chains" and said it wanted to "engage with organisations of all sizes across the voluntary sector".
But charities are frustrated by the lack of detail. Peter Kyle, director of strategy and enterprise at Acevo, says: "The question is how these [DWP] goals are to be achieved through a procurement process based on the larger-scale, lower-cost contracts the department is committed to.
"It is essential the DWP acts quickly and decisively, working to develop a precisely-defined commissioning model that will allow for both large-scale contracts and dynamic cross-third sector engagement." He says this must have "an emphasis on funding mechanisms that support outcomes, innovation, best practice and added social value".
But charities need help. Gareth White, third sector procurement officer for Lancashire County Developments, Lancashire County Council's economic development unit, said many deals were too big and charities needed help knowing where to look for contracts and details on purchasing rules and regulations including EU Procurement Directives. "The third sector has a problem with capacity issues and with being able to take the time to search for public sector contracts and learn about procurement rules and regulations.
"Many public sector contracts are very large, both in value and in locations expected to be covered, which can exclude some excellent but smaller third sector bodies from being able to bid." But he is convinced public sector buyers can do more to help and warns against regarding the sector as a "cheap and easy option".
"Where possible, the option to award a contract in 'lots' should be offered as this will enable smaller third sector bodies to be able to bid for smaller pieces of the pot," White explains.
He adds social issues should be included in tender evaluation processes more often as this is where the third sector can show its "added value" and contribute to some public sector sustainable buying policies. Sarah Parker, strategic procurement manager at the City of Wakefield Metropolitan District Council, agrees. The local authority has introduced measures to help the third sector become more involved.
These include developing a voluntary sector directory - which organisations can sign up to, making them more visible to council buyers - and arranging alternative payment terms for third sector groups to help with cash flow.
"Third sector organisations are ideally placed to deliver added value into the local area and support the council in meeting Local Area Agreement targets," Parker says. "As part of the tender processes, Wakefield Council asks organisations what social, economic and environmental benefits they can bring in the delivery of the contract."
Meanwhile, Belinda Pratton, senior policy officer at the National Council for Voluntary Organisations, urged buyers to use the Compact Funding & Procurement Code, which sets out good practice.