Esrc Policy Forum Procurement

8/9/2019 Esrc Policy Forum Procurement

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Social Enterprise & Public

ProcurementRevd Timothy Curtis

Senior Lecturer in Social Entrepreneurship

University of Northampton

HEFCE/Unltd Ambassador for Social Entrepreneurship in HigherEducation

Supported by


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Brief

What are the challenges for local government

in policy, commissioning and procurement

that make it harder for them to get the most

out of social enterprises?

wickedness of the issue not addressed

procurement is uni-directional & untrusting

Needs to be purposive, prosumed and co-

produced.

2The University of Northampton


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Policy shift-Its all in the full stop

Social enterprises are businesses with

primarily social objectives. They principally

reinvest their surpluses in the business or

community for these purposes.

Cabinet Office section on Voluntary Sector

Formerly the Office of the Third Sector,

Cabinet Office



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The idealised model

Social Enterprise is in here,

somewhere



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Private Sector

~1trillion GDP

Lets get real

Procurement

~150billion

Public Sector

~400billion revenueSocial

Enterprises

~8.4billion

monetised

civil society

~157billion



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.the car owners ofBritain.

Pretty much everyone, then

Most people are employees Most people are not owners (of the private

sector)

So, is Big Society all the employees or all the

owners?



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Procurement

The way it was

Non-transparent opportunities& leads

Councils knew their budgetsbut not their spend (BESTProcurement)

Incumbents had the advantage

Lowest cost v best value

Fragmented supply chains

Grant/SLA/Short-termcontracts

Liability foisted on contractor

The way it is

The Compact

LM3/e-procurement

OGC portal(s) Whole-life costing

Consortia/supplychaindevelopment

Full cost recovery

Longer/larger contracts

Customer more active in riskmgt

RELATIONSHIP CONTRACTING



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The size of procurement

Sodexo

12bn revenue

380,000 employees

80 countries

8 client segments:Corporate, Health Care,Seniors, Education, Defense,Remote Sites, Justice andSports & Leisure.

6% operating margin

Serco 3.9billion revenue

provide and operate two new prisonsin the UK, at Belmarsh West, London,and Maghull, Liverpool, with a

combined value to us of around600m over 26 years.

formed a new partnership, GSTS 4Pathology LLP, with the Guys and StThomas NHS Foundation Trust, topursue opportunities in thissubstantial market, which is valued atapproximately 2.5bn.

signed three contracts under the UKGovernments Flexible New Dealinitiative worth 400-500m

Running schools and inspectingschools for Ofsted

Social enterprises are just not

competing with these publicly

listed companies

They are competing with SME &

privately owned businesses8The University of Northampton


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Top privately owned companies

9

These are not

known for

their public

contracting-except

construction

Note the

complex mix of

ownership

types, inc EBT


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The problems of procurement Rule bound but does not recognise social construction of contract development

Justice Holmes commented one hundred and five years ago: "Nothing is more certain than that

parties may be bound by a contract to things which neither of them intended, and when one does

not know of the other's assent

Poor understanding of wickedness of social issues

Poor understanding of the complexity of overhead in providing services

The value added by good participants (like volunteers) is lost to the valuecalculation

Requires and implies centralisation, professionalisation, risk avoidance and

individualism (Young & Temple 2010)

Perverse outcomes: cherrypicking of easy to reach targets, focus on contract terms

rather than what is really going on, unstructured supply chains (NAO 2010)

inefficient duplication of procurement overheads (see later)

Market logic applies to narrow deliverables, but misses out the crucial dimension

that allows doctors to heal, teachers to teach and carers to care: the relationship

with patient, pupil or client. NEF 2006

Essentially untrusting & uni-directional



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Chapter 1 ofDialogue Mapping: Building Shared Understanding

of Wicked Problems, by Jeff Conklin, Ph.D., Wiley,

October 2006.

The problem with social issues


Some problems are so complex that you

have to be highly intelligent and well

informed just to be undecided about

them

Dr. Laurence Johnston Peter

lets take a diversion for a minute


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Wicked Issues

The problem is not understood until after theformulation of a solution.

Wicked problems have no stopping rule.

Solutions to wicked problems are not right or wrong. Every wicked problem is essentially novel and unique.

Every solution to a wicked problem is a 'one shotoperation'

Wicked problems have no given alternative solutions. Horst & Rittel and Conklin




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Tamed Problems

Chapter 1 ofDialogue Mapping: Building Shared Understanding

of Wicked Problems, by Jeff Conklin, Ph.D., Wiley,

October 2006.

PS, the trick is not to tame an issue,

but to keep it wicked 13



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Social construction of procurement

14



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The (hidden) overhead for the

Big Society Perceived need to control the very complex arrangements for delivery of

services leads to layer upon layer of indirect activity. A team to specify what service is needed and to create a bidding specification

Several organisations to commit resources to create competitive bids often, in the case of activities that will lastover several years, these bids can run into hundreds, even thousands, of pages and cost tens or even hundreds ofthousands of pounds to produce

The purchasing team to negotiate, answer queries, re-specify details and so on, before ultimately selecting one

provider The provider to set up a democratic structure with Board, committees, procedures to supervise and give

legitimacy, and to demonstrate Good Governance

The committee to be involved with the purchaser in setting up a new organisation that meets all theexpectations of good practice, equal opportunities, financial accountability to the last penny, smooth publicrelations to let the public know that they are there and so on

A building, a phone system, intranet/ website/ customer and back-office systems strong enough to give peoplethe information they need for complete public accountability

Sub-contracts for cleaning, food, stationery (lots and lots of paper!), maintenance

A Human Resources department, disciplinary and grievance procedures, appraisal and career development system

Salaries, bonuses, pension provisions, cars and allowances for indirect staff and senior managers all atcompetitive market rates

And so on and so forth

HOW SOCIAL ENTREPRENEURS CAN HELP BUILD A TRUST-BASED BIG SOCIETY

By Charlotte Young, Chair of School for Social Entrepreneurs and Nick Temple, Policy + Communications Director, Schoolfor Social Entrepreneurs June 2010


therefore: getting back on track


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Outcomes based commissioning

Ignores the equity required in the process of

delivery

Neutral regarding how the contractor achievesthe outcomes- performativity

Services cease or dont expand when fixed

outcomes are met

Unintended outcome ignored



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Social Impact Bond

requires the taming of an issue to agree on

the metrics of success

Secures long-term investment to create short-terms savings in government spending

Enticing, but is very close to PPP without

consideration of who the social investors are,

and what return on investment they require



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Personal budgets

Leads to a retail consumptionmodel of service provision and use

Individual budgets without mutualsupport misunderstand the natureof public services.

Replaces relationships with markettransactions

Buying a dog with a personalbudget

what users need is long-termrelationships of mutual trust if theyare going to benefit.

drift to Maybelline model ofservices



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Mixed provision is no panacea

Pathways is led by Jobcentre Plus in some areas but is contracted out tothird sector and private organisations in over 60 per cent of the country.

The National Audit Office found that there is no evidence that theprogramme is performing better or costing significantly less in contractedout areas than in those run by Jobcentre Plus.

the private contractors were only really any good at the easy bits of thecontract - the volunteer particpants in the scheme who were keen to getback into work.

When it came to the really hard, time consuming, expensive cases -people who were reluctantly forced onto the scheme - no providerexcelled, but the private sector performed even worse than JobcentrePlus.

One third of prime contractors and two thirds of subcontractors expectingto make a financial loss. National Audit Office 28 May 2010 Support to incapacity benefit claimants

through Pathways to Work.

The University of Northampton 19


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Relational contracting

Tony knows more than me!

increasing the degree of contractual

incompleteness can enhance efficiency (Wu &Roe 2007)



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Coping with the problems

not seeking to propose a one size fits

all solution that tames thewickedness of this issue



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Trust

Hidden currency of contract success

Large number of small interactions

Regular interactions

Direct transaction Open, transparent sharing of trust feedback

Technology now exists to provide for micro-transactions, micro-manufacturing andtransacting trust relationships- ebay, paypal,facebook, smart phone apps



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Co-production

reduce or blur the distinction between

producers and consumers of services, by

reconfiguring the ways in which services aredeveloped and delivered

services can be most effective when people

get to act in both roles

as providers as well as recipients.



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Pro-suming

Prosuming is the creation of wealth without

being paid for it, doing it for yourself or to give

it away. Alvin Toffler, Third Wave 1980

In mental health- peer provision



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To develop NEF

Define public service clients as assets who have skills thatare vital to the (cost-effective) delivery of services.

Define work long-term share value to include anythingthat people do to support each other.

Include some element of reciprocity.

NEF example engaging disaffected 16-year-olds by usingthem as tutors for 14-year-olds, and achieving both majoracademic improvement for both and reductions inbullying.

The value of the engagement, and consequent efficiency,

is lost to the system Let the 16-year olds earn sweat equity

NOT more procurement with new organisations on thesame, old, terms



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Co-produce

co-design

co-decide

co-deliver

co-assess

Co-own Co-operate

Pro-sume

co-finance

value unpaid labour

3rdjob

contract

purposively

develop

trust

reward

reciprocity

Documents

Esrc Policy Forum Procurement