Académique Documents
Professionnel Documents
Culture Documents
October 2005
Designing social enterprise business and
procurement support programmes
This paper reports part of the activities undertaken during the Action 1 preparatory
stage of an EQUAL funded Development Partnership ‘BEST Procurement’ operating
in the East Midlands. The paper identifies the issues faced by social enterprises in
their interaction with potential and actual public sector clients and records the
considerations that formed the basis for the design of the resulting Action 2 social
enterprise and procurement support programme.
Introduction
1
In the East Midlands region, as elsewhere in the UK, there is a strong driver to
promote and develop social enterprise. Central government is promoting social
enterprise through the Department of Trade and Industry and its support of the
national Social Enterprise Coalition, a member organisation of social enterprises and
social enterprise support agencies that promotes the interests of the sector at national
level. Regional Development Agencies have been established to co-ordinate
economic development activity in the regions and many RDAs, in particular East
Midlands Development Agency (EMDA), recognise that social enterprises can help
deliver on their targets for social inclusion. There are also agencies that have
recognised the benefits of social enterprise in meeting sustainability targets for
regenerating communities and involving local people in the improvement and delivery
of local services.
Unemployment in the region remains lower than the national average and
employment rates higher. As a result the East Midlands in general, scores quite well
on a range of social indicators, yet masks a more complex picture of social conditions
within it. In larger urban areas, Black and Minority Ethnic (BME) communities, in
particular, suffer serious problems of social exclusion; whilst much of the region is
relatively prosperous such areas contain deprivation not statistically reflected.
Small firms, voluntary and community organizations, social enterprises and ethnic
minority businesses are recognised2 to be (potentially) innovative and add value. They
play an important role in the local economy and contribute to social cohesion. They
often have environmental goals. It is important that they have access to the local
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Designing social enterprise business and
procurement support programmes
government marketplace, including as members of the supply chain for strategic
partnerships.
BEST Procurement
The overall aim of the Development Partnership is to increase the conversion rate
between public expenditure and social and environmental improvement within the
East Midlands Region. This will be achieved by demonstrating improved value for
public money, establishing social enterprises as key delivery agents for this goal.
The DP intends to help social enterprises and voluntary and community sector
organisations to access procurement opportunities made available by the public sector,
to help the public sector purchase better labour market outcomes through its
mainstream procurement practices and to help social enterprises to provide high
quality employment opportunities for people from BME communities, women, people
with disabilities and people aged over 50 year.
The main partners are public sector bodies (local authorities and health sector bodies),
charities and academic institutions working on issues of sustainable development,
social enterprises and social enterprise support agencies and strategic regional and
national agencies.
The DP is focused on achieving a change in practice within the East Midlands Region
that other parts of the country can learn from, that provides evidence of use to national
policy makers and ultimately that informs European policy.
The DP’s aim is to increase the conversion rate between public expenditure and
labour market equality within the East Midlands Region. To do this it is necessary to
improve value for public money in targeted areas and establish the social economy,
particularly social enterprises and voluntary and community sector organisations, as
key players in achieving this goal.
System design
The emerging Action 2 project design was framed around a supply/demand model (in
line with Figure 1 which is discussed in more detail below), with a marketplace
connecting public authorities as the demand-side and social enterprises (SEs) as the
supply side. The intent of the BEST Procurement Action 2 programme was to identify
a mix of interventions within that marketplace to correct the distortions arising from
lack of information or poor communication. The literature review revealed a relatively
mature body of literature for each of the two aspects of the market – a significant
amount of work has been done at the strategic level of the social enterprise sector (in
academic as well as the grey literature), and on the nature and strategy of public
authority procurement. Less well developed is the link between the two bodies of
literature. There are a few, now well publicised, but rather aged, examples of SEs
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Designing social enterprise business and
procurement support programmes
entering the public procurement market, in particular that of the construction sector.
These examples mostly indicate difficulties with respect to the contracting side or the
capability of the social enterprise or involve very large SEs supplying primarily
outsourced public services such as homecare.
On both sides of the market place, there are two aspects of the procurement process.
On the side of the SE, there is the external aspect of the provision of products and
services and the choices that SE makes about the capabilities it presents to the market.
This includes the products and services already provided to the public sector in well
known areas as direct outsourcing of public services such as home care or social
service provision through social service provision such as recycling activities with the
disabled or construction industry training for the intermediate labour market. The
internal aspect is the ‘fitness for’ the market, ranging from the basic recognition of a
need or desire to trade rather than exist on grants through to the financial and
managerial capacity to trade effectively in the public procurement market. For the
public authorities, the external aspect is the communications it provides to the market
with respect to its procurement requirements including the nature and size of the
procurement event3.
It is important to note that there are two distinct types of procurement within local
authorities and the importance of each varies according to the extent of the central
procurement function4. The focus of much of the demand side procurement literature
is on the major, planned, public tender processes such as those advertised through
OJEU involving contract managers and central procurement officials. There is,
however, a significant, but as yet within this study, unquantified procurement at a
department or area office level that is more (although not entirely) ad hoc and usually
involves limited action tenders (as opposed to whole UK or EU advertising) to a
specific, small set of tenderers or are single action tenders on the basis of project
extension or locally determined procurement factors.
On the internal aspect of public authority procurement, there is the knowledge of the
skills and capabilities that the SE sector could offer, over and above that already
offered and the ability to ‘bundle5’ procurement requirements with social service
outputs (often crossing departmental budget lines). A significant weakness in this
area is the ability to effectively measure both procurement efficiency and social
service outcome adequately in terms of each other. This leads to the scenario where,
for example, community recycling initiatives ‘cost’ several times more per tonne of
recyclate (the measure of efficiency used in contracts with the private sector, but with
real but indeterminate social service outcomes. In such circumstances the ‘cultural
capital6’ is not being realised or measured. This is often the case where intermediate
labour groups are used as ‘cheap labour’ rather than trading on the specific skills or
experiences within the marginalised group – such as disables groups providing
Disability Discrimination Act compliance services.
The public procurement literature suggests significant opportunities but, unless linked
with specialist documents such as legal guides to procurement with social enterprises,
the support is insufficiently specific to support any but the most determined and well
prepared SE in the procurement process. In these circumstances, personal experience
in the procurement on behalf of individuals in the SE, or direct support from the
procuring authority7, are the primary factors for success. There is, however, literature
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Designing social enterprise business and
procurement support programmes
that analyses SME supply more generally which concludes that current trends
(largely desirable) to larger contracts, aggregation of spend, and longer relationships
with prime contractors and “partners” all make life more difficult for SMEs trying to
sell into the sector. The outlook for SMEs (and in this context SEs) that do not offer
any real differentiation (innovation, service, quality, specialist skills) compared to
their larger competitors is not good8.
The model above represents a systems diagram developed during the two day
workshop between SEEM and SDRC and many subsequent meetings during 2004/05.
On the left hand side of the model are the supply-side components, the profit
distributing (non-SE, private sector) and the two main types of SE’s – large
multiservice organisations (usually up to 250 employees up to £250m turnover 9) and
the small, niche SEs that are fully constituted legal bodies. Such small SEs may grow
to the large SE category through organic growth, merger or some form of consortium
(either with each other or with 1st tier private sector contractors). At the large SE level,
the main characteristic is long, large contracts, whereas the niche SE is most likely to
capitalise on ad hoc sales or other opportunistic developments.
The right hand side of the model is demand-side of the market. The model require
development, but the types of contract let by the demand-side can also be split into
large, tendered contracts, usually those above EU limits, and smaller contracts which
are let through limited tender lists, adverts and networking. These are often procured
by the technical department requiring the product or service, rather than a specialist
procurement department. Increasingly, local authorities are being structured on an
area basis and thus can procure identical products or services on a localised or area
basis providing significant opportunities for small SEs.
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Designing social enterprise business and
procurement support programmes
Two areas of significant risk for the supply- and demand-side can be identified. Risk,
or the perception of risk, in these circumstances limits the adoption of new contract
models. Interventions in the areas of risk , to reduce the perceived risk, through
information, experience and capacity building, can free up the process to allow
creatively structured technical and legal specification or free up an SE to develop
new products or services that the demand-side requires.
Demand-side
• Information brokerage- this has been suggested in a number of literature
sources, but barely implemented specifically for SE’s. The standard SME
support services such as TED, OJEU etc are available, but SE’s need to
recognise that such procurement advertising routes can applied to them.
Although national databases have not taken off as suggested, local and
regional initiative would benefit SEs as well as the local private sector.
• Catalyzer-similarly, there are a number of catalyzer initiatives that have been
trialled in a number of areas, most notably the recent BizFizz from NEF 10. The
approach for SEEM may be to replicate an existing model after due
consideration of the strengths and weaknesses of each, but with a view to,
regardless of which model, work as a partner with SEs to assist the
development of their experience in tender processes.
Supply-side
• Fellowship – many SEs may identify either the need or the opportunity to
expand from their existing structure towards greater trading, but there is a
critical period between identifying the opportunity, or an entrepreneurial
individual to take an initiative forward, and achieving that goal during which
the SE is quite vulnerable. It is straying from its core-business into an
unknown area with immeasurable payback and requires intensive support to
overcome the initial hurdles of developing an idea into a defendable business
plan or develop the systems required to be a credible public sector supplier.
The concept would be to provide for a three month intensive fellowship for
social entrepreneurs which provide them with business support from the
private sector11 and time and income to allow the new business to be
developed.
• Management systems capacity development – a major aspect of being a
credible public service supplier is having and maintaining robust management
systems that cover all aspects of financial, health & safety, environmental and
quality issues. As an SE develops towards being a public sector supplier,
support s required in implementing such systems and developing a culture
within the organisation that remains true to the core values of the staff but also
allows it to trade in a new way.
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Designing social enterprise business and
procurement support programmes
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Designing social enterprise business and
procurement support programmes
The design of the programme was such that the starting capabilities in procurement
issues of all beneficiaries entering the BEST Procurement Action 2 programme was
captured, in order to measure the ‘distance travelled’ by the beneficiaries during
Action 2 but also to assist in the selection of interventions that would be most
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Designing social enterprise business and
procurement support programmes
beneficial to that beneficiary. Thus, the ‘entry point’ for BEST Procurement Action 2
was designed to be ‘Enterprise Directions’
Enterprise Directions
The objective of the ‘Enterprise Directions’ work is to assist social enterprises
operating in any field of potential relevance to public sector supply to understand
whether and how they can improve their response to the public sector market.
The Enterprise Directions Partner will assist social enterprises making contact with
the programme, providing an initial one-to-one consultation at the clients premises or
a nearby location. They will then signpost the enterprise to one or more packages of
assistance under the Social Enterprise Development side of the programme where/as
appropriate
Enterprising ideas
The objective of the ‘Enterprising Ideas’ work is to run a series of workshops which,
incorporating market information provided, enable participants to develop new
approaches to delivering added social value to delivery of goods and services to the
public sector.
The Enterprising Ideas Partner will convene a series of workshops to enable potential
social enterprise suppliers and potential public sector purchasers to work together on
new ideas that could eventually lead to contracts.
Replication
The objective of the ‘Replication’ work is to identify existing social enterprises that
sell goods and/or services to the public sector in any part of the UK and Europe, and
oversee a process of replication within the East Midlands for approximately 5 new
social enterprises. It is anticipated that 2-3 of these will be established and start
trading during the timeframe of the project.
Culture Change
The objective of the ‘Culture Change’ work is to assist the staff and boards /
committees / trustees of organisations to evaluate their ‘fitness to trade’ and undergo
development activities to prepare their culture to support a move from grant based
income.
The Culture Change Partner will work with organisations (Voluntary and Community
Sector organisations and social enterprises without significant trading experience) and
assist social enterprises in understanding the nature of their operational culture and
identify what changes they need to introduce to enable them to trade. The Partner will
use a number of tools, from the private and public sector, on a one-to-one basis to
assist social enterprises in developing a change management plan, should they decide
to implement one, and coach them, over a period of a year, through that
transformation process.
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Designing social enterprise business and
procurement support programmes
Enterprising Management
The objective of the ‘Enterprising Management’ work is to assist the staff and, to a
more limited extent, the boards / committees / trustees of organisations to implement
management systems necessary to support greater traded income.
The Enterprising Management Partner will work with organisations (Voluntary and
Community Sector organisations and social enterprises without significant trading
experience). Initially the work will be done as a mixture of consultancy and
workshop-style training according to client demand. The success of these delivery
methods will then be compared to inform a decision about the forward strategy.
Sales Broker
The objective of the ‘Sales Broker’s’ work is to achieve increased sales of goods and
services from social enterprises to public sector purchasers.
The sales broker will work on behalf a number of social enterprises, advising them on
the way they promote themselves and making sales leads with public sector
purchasers for up and coming contracts. The broker will set up selling clubs and
networks as a route to collective promotion of social enterprise and the development
of the enterprises’ capacity to sell themselves.
Contract Finder
The objective of the ‘Contract Finder’s’ work is raise awareness within social
enterprises and the Voluntary and Community sector of contract opportunities as they
arise.
The contract finder will work on behalf of a number of social enterprises who
subscribe to the service, sending details of relevant contracts and the sources of
information. The contract finder may also work to promote the use of certain
websites by public sector purchasers where this would assist in the on-going success
of the venture.
Contracting Know-How
The objective of the ‘Contracting Know-How’ work is to develop and run a modular
training programme that meets the development needs of social enterprises wishing to
improve their response to contracting with the public sector.
Collaborative Frameworks
The objective of the ‘Collaborative Frameworks’ work is to develop, test and evaluate
appropriate ways of engaging groups of social enterprises in providing a successful
collective response to parts of the public sector market.
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Designing social enterprise business and
procurement support programmes
programme, however there may be limited scope for more speculative collaborative
development where a market opportunity is identified.
Advisory Partner
The objective of the ‘Advisory Partner’s’ work is to ensure that the Partners working
within the Social Enterprise Development Working Group (supply side) of the BEST
Procurement Development Partnership continue to do work of relevance to social
enterprises’ needs.
The Advisory Partners will be expected to take, inform and advise the regular
progress meetings with the Social Enterprise Development Working Group
Equality of Employment
The objective of the “E-Quality of Employment” work is to support social enterprises,
expanding or becoming more financially secure as a result of improved contracting
opportunities with the public sector, to develop their capacity as high quality
employers providing Equal Opportunities in employment.
The E-Quality of Employment Partner will work with signposted social enterprises to
measure the changes in quality and equality of employment and to support social
enterprises to maximise quality and equality in line with their social aims.
Innovation?
EQUAL exists to encourage innovative solutions to employment and social problems
which are difficult to solve. It provides support for applying new ideas to learning,
sharing and international partnership.
For the purposes of Equal14, the following categories have been adopted.
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Designing social enterprise business and
procurement support programmes
The main activities to be undertaken in Action 2 are to understand and influence the
demand for added value in public sector purchasing, to develop purchasing
frameworks and specific contracts that deal with issues of sustainable development, to
undertake supplier development of social enterprises and the VCS and to develop an
evidence base that addresses key areas of policy.
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Designing social enterprise business and
procurement support programmes
and an increased capability within the social economy to address the public sector
market.
The goal of market-shaping to create growth potential for social enterprises will open
up a new area of employment for disadvantaged groups by creating jobs within social
enterprises and facilitating their entry into them.
The programme will build new political alliances through undertaking joint work on a
shared agenda with the Regional Assembly. The programme will also involve new
working arrangements for the collaborative development of support programmes to
social enterprise at sub-regional level and will bring new partners together, e.g. Local
Authority Procurement Departments with Social Enterprise Support Agencies and the
Voluntary Sector. Other programmes, on the other hand, concentrate on actions
relating to one or other side of the marketplace, e.g. the Provide 15 project focused on
social enterprise support, NAPP focused on Local Authorities16.
The programme will also use new combinations of existing approaches, by combining
use of the various tools, guidance and methodologies currently available18 and
drawing on others' experience to create a holistic approach. Tools and guidance can
remain under-utilised by their target audience without effort being put in to increase
their application.
Conclusions
The design of the BEST Procurement programme has been undertaken on a ‘whole-
market’ approach. Internal programme design based on a systems approach with
external consultation has resulted in a series of supply-side procurement support
interventions being developed. These were taken forward by Social Enterprise East
Midlands in its BEST Procurement Action 2 briefs for which social enterprise support
agencies were free to bid. The final implementation of the design will be significantly
altered from the original design on the basis of the capability and development
interests of the development partners, adding to the innovation being deployed. This
has been a process of emerging design, based on a broad ranging literature review and
action oriented design workshops. The programme for SDRC in Action 2 is to
measure the implementation of the programme by its partners, identifying where and
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Designing social enterprise business and
procurement support programmes
why the programme departs from the design and establishing when and under what
conditions, the market-place interventions work best to overcome labour market
inequalities.
14
1
The Guild (Dec 2004) A Social Enterprise Strategy for the East Midlands 2004 – 2010, Norwich
2
Sustainability and Local Government Procurement Issue: 0 November 2003 Improvement and Development Agency
3
Too large a contract size may make the risk to great for an SE new to public procurement but too small a contract size
increases the complexity of the supply chain to the public authority.
4
“beyond common-use items/services, local authorities typically delegate responsibility for procurement and
commissioning to individual service departments directly involved in the delivery of a service”. (Local authority
procurement: a research report Aug 2004, Stellent)
5
Referred to as ‘blended value’ as opposed to ‘added value’.
6
“Cultural Capital is the value attached to the collective mental programming (values, beliefs and
behaviors) of the organization that supports its relationships with its employees, customers and
society.” Cultural Capital: The New Frontier of Competitive Advantage Increasing Market Value by Leveraging the
Intangibles By Richard Barrett, 2001
7
Running the risk of distorting the market place by providing direct guidance not available to other suppliers.
8
SMEs & Public Sector Procurement Research Report prepared for the Small Business Service by Peter Smith and Adam
Hobbs Shreeveport Management Consultancy January 2001
9
These limits are only indicative, and are draw from EU definitions of SMEs’.
10
http://www.neweconomics.org/gen/tools_bizfizz.aspx
11
Lawyers, accountants, non-exec directors etc would like to win future work from the new entrepreneur
12
Such as homecare or mental illness support
13
A Methodology for European Evaluation of the Employment Initiative, 1999, NEI/FHVR.
14
Measuring and sustaining innovation – a guide for Development Partnerships May 2005 GB Equal Support Unit
15
The Provide project, www.co-operatives-uk.coop
16
New Approaches to Public Procurement, “A progress report on Social Enterprise”, DTI p33
17
www.seem.uk.net
18
such as Think Smart….Think Voluntary Sector”, 2004 OGC/Home office, p2, LM3, websites such as
www.nearbuyou.co.uk, Public Procurement: a toolkit for social enterprise, DTI, October 2003, and National Procurement
Strategy for Local Government October 2003