Overcoming barriers to tendering for the voluntary and community sector

1. Overcoming barriers to tendering for the voluntary and community sector Matthew Jackson, Head of Research

2. What i CLES? About CLES Leading UK member org for research into Economic development Planners, sociologists, geographers, local government, environmental scientists, economists Established 1986 Independent charity Economic development and well-being Hybrid; research, consultancy, members Publishers:

3. Today Objectives To understand the shift towards contracting To explore barriers to tendering To discuss how these barriers can be overcome To understand different ways of measuring impact

4. changing policy environment (a reminder) 4

5. Policy themes of last ten years How we have done policy in last ten years? • Regeneration and Local Economic Development • Grants AND contracts • Efficiencies AND effectiveness • Place shaping and stewardship • Outputs and targets • Public sector driven and top-down delivery • Tackling social exclusion, inequality and poverty • Primary healthcare • Right to welfare

6. Emerging policy themes How we have done policy in last ten years? • Economic growth • Contracts, procurement and commissioning • Cost-saving • Co-production • Outcomes and payment by results • Service pluralism and cross-sector delivery • Job creation • Preventative healthcare and well-being • Welfare reform 6

7. Challenges – for the VCS How we have done policy in last ten years? • Mainstreaming existing activities • Demonstrating outcomes • Organisational sustainability • The payment by results culture • Government buy-in (centrally and locally) • Supporting the most vulnerable when the policy focuses on middle England • Tendering and competing for contracts • Are there any more? 7 7 7

8. The shift from grants to contracts

9. ‘A grant-maker is not contracting for a service that forms part of its own business. It is offering financial support in an area of work designed by the third sector which it wishes to sponsor. The work would add value to the funder’s overall aims and objectives. The organisation retains considerable freedom in the way in which it carries out the work.’

10. The importance of grants • 1. Operational values • Grants provide start-up capital • Grants stimulate innovation • Grants fosterer partnership working across sectors • Grants sustain organisational ethos • Grants enable the economic viability of organisations • 2. Local economic • Grants stimulate local employment and volunteering • Grants fosterer entrepreneurship • Grants add value to mainstream delivery

11. The importance of grants • 3. Local social benefits • Grants facilitate social interaction • Grants tackle worklessness and deprivation • Grants improve the perception of place and the environment • Grants provide needed and bespoke support services

12. Stage 2 – survey

13. Stage 2 – survey

14. The critique of grants How we have done policy in last ten years? • Viewed as paternalistic • Short term and unsustainable • Does not build capacity 14 14

15. Defining Procurement ‘the purchasing by local authorities and other public sector bodies of goods and services’ ‘Procurement is the process of acquiring goods, works and services, covering both acquisitions from third parties and from in-house providers. The process spans the whole cycle from the identification of needs through to the end of a services contract or the end of the useful life of an asset’ (National Procurement Strategy for Local Government) 15

16. The stages of the procurement cycle

17. CLES research in Manchester 17

18. Key results of 2010 research • MCC spent £357,382,215.03 upon its top 300 suppliers (08/09) • MCC spent £183,967,557.15 upon Manchester based suppliers (51.5%) • £43,164,744.32 is spent in Ardwick • £87,541,509.18 is spent in Manchester neighbourhoods in 10% most deprived nationally • £309,055,609.74 (86.5%) is spent in Greater Manchester • All suppliers re-spent £89,345,553.76 in the Manchester economy • This equates to 25p in every £1 received • Manchester procurement contributes towards the support of 5225 jobs in the Manchester economy • Range of wider local economic, social and environmental benefits

19. Conclusions of Manchester research • Good evidence of policy and practice BUT: • More gain could be achieved for Manchester economy • MCC could influence the practices of the supply chain further • Procurement still viewed as complex and silo-ed • Economic and procurement functions not always linked • Geographical and sectoral gaps in delivery • Significant challenges facing the City

20. Implementing recommendations • Cross-departmental procurement working group • Network of suppliers • Engagement with suppliers in area regeneration localities • Spend analysis for financial year 2010/11 • Cost-benefit analysis study with Capital Programmes • Outcomes framework development

21. Key results of 2011 research • MCC spent £547,382,215.03 upon its top 300 suppliers (53% increase) • MCC spent £294,836,725.96 upon Manchester based suppliers (53.9%) • £68,709,428.04 is spent in Harpurhey • £154,770,295.70 is spent in Manchester neighbourhoods in 10% most deprived nationally (77% increase) • £497,712,492.26 (90.9%) is spent in Greater Manchester • All suppliers re-spent £233,422,039.95 in the Manchester economy • This equates to 43p in every £1 received

22. Key thoughts • Procurement is changing – local authorities need to: • Assess the cost benefits of procurement decisions and delivery • Further influence suppliers in delivering community benefit • Adopt centralised procurement but work cross-departmentally • Recognise the importance of small business and social enterprise to local economies • Embed monitoring of spend of part of the process

23. The challenges for the sector and barriers to tendering

24. Task 1 How we have done policy in last ten years? • What do you think are the key barriers to the VCS engaging with contracting? 24 24 24

25. Barriers to tendering How we have done policy in last ten years? • Public sector procurement cultures • Knowledge of vcs capability • Complex PQQ and ITT documentation • Size and scale of delivery contracts • Organisational capacity to bid and deliver • Demonstrating cost efficiency and effectiveness • Desire and Drive from within the community • Professionalism? 25 25

26. Overcoming barriers to tendering

27. Task 2 • How do the VCS overcome the barriers to tendering? • What support is needed? 27 27

28. Overcoming barriers How we have done policy in last ten years? • Demonstrate impacts • Quantitative and qualitative • Promote and communication activities and outcomes • Engage with procurement officers and commissioners • Embed an outcome culture into the organisation • Develop effect consortia • Capacity building within the sector 28 28 28

29. Measuring impact 29

30. Effectiveness Efficiency Economy Market failure Outcomes (including Strategic Added Value) Impact on original conditions Rationale Net outputs Additionality adjustments Value for money Objectives Gross outputs Inputs (staffing & resources) Activities

31. Measuring impact The LM3 model Round 1 – total spend Round 2 – spend upon (local) suppliers Round 2 – spend upon (local) direct employees Round 3 – re-spend of local suppliers upon their own local suppliers and their own local employees Round 3 – re-spend of direct employees in the local economy LM3 = Round 1 + Round 2 + Round 3 Round 1 For every £1 invested £x is re-invested within the local economy

32. Measuring impact • Cost benefit analysis / Social Return on Investment • Aims to capture the social, economic and environmental value of outcomes • Based around a ‘Theory of Change’ – identification, measurement and assessment of outcomes and their financial values (shadow price). • CBA can be forecasted or retrospective: • What value is a project generating / Is a project actually worth doing? • Which delivery option would generate the greatest level of return? • For every £1 invested £x is generated in social, economic and environmental value

33. Questions? • For further information on today’s session: • Matthewjackson@cles.org.uk • Tel: 0161 236 7036