esrc policy forum procurement
TRANSCRIPT
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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.
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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
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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
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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
12The University of Northampton
lets take a diversion for a minute
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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
lets take a diversion for a minute
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Social construction of procurement
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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
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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.
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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