Connecting to the social sector: Bold commissioners
At a time of austerity in public services, there is an even stronger case to work collaboratively. How can we get local authorities to buy into what we do as investors? Who are the commissioners enabling positive change and what can we learn from them or do to support them?
The Bold Commissioners session at The Gathering brought together perspectives from both the social enterprise sector and local authority commissioners to discuss the stumbling blocks of public service contracting and how some are forging a path to a better way of working.
The session was informed by Social Business International’s work through its E3M network of large social enterprises over the last three years, exploring how better outcomes can be achieved for the end user by ‘bold commissioners’ willing to push the boundaries.
The challenges of the public procurement process are a persistent issue highlighted when the topic of commissioning arises. However, it was clear from the discussion and examples – such as Leicestershire County Council’s approach to re-commissioning its Children’s Services work – that the problems in this area do not lie with the procurement regulation itself but with the culture around how it is interpreted, and the willingness of the purse-holder to challenge the status quo. E3M’s report from 2016 on The Art of the Possible in Public Procurement speaks to this issue in greater detail.
The huge demand and insufficient provision for looked-after children led Leicestershire County Council to look at the challenge differently. It wanted to put end users at the heart of everything it had planned to ensure the best possible journey for a child in care in Leicestershire.
The council identified that a partnership approach was needed to help the local authority act in a more agile way and align better with the needs of those it was looking to serve. The pitch to procurement was a long-term contract, an undetermined maximum value and very broad scope which would enable the collaborating partner to deliver contracts, sub-contract or procure from other organisations in the sector. It required negotiations, reworking the tender and a significant amount of problem solving from the commissioning team – but the result allowed the council to bring a partner on board with the skills, values and expertise to help it fulfil its vision. The message was: it can be done, you just have to be tenacious.
But even with commissioners starting to work differently, other problems for social enterprises still linger on when it comes to with public contracts. One of the most damaging is the issue of late payments.
Social enterprises often suffer major cash flow issues waiting to receive funding for their contracts. The experience of social enterprises in the room was that payment in arrears is commonplace for most public sector contracts, leaving providers trying to cover shortfalls while payments trickle through, sometimes taking as long as three months. This limits the ability of social enterprises to innovate or scale their work, preventing them from taking the next step in their development and in some cases affecting the long-term sustainability of the business.
• There needs to be more recognition that better dialogue between purchaser and provider will lead to better outcomes.
• While councils can think differently about how funding is allocated internally to ease pressure on social enterprises providing services, this is possibly where social investment can be most valuable in the commissioning sphere.
• If a constructive and ongoing relationship can be established, social investors can act as a critical friend to an enterprise – testing their business models and asking difficult questions, while providing a product that allows them to stabilise and strengthen.