[WiLT] Contracts are killing the voluntary sector says DSC Policy Officer

Thu Jul 17 16:55:16 BST 2008

Contracts are killing the voluntary sector.

Why?

Because the system that government is increasingly using to fund us -
tendering for contracts - has not been developed with us in mind.  It
is flawed and we are ill-equipped to adapt to it.  This puts us at
risk, and jeopardises the services we can provide to people.

The government's ideology holds that open competition with a 'level
playing field' of providers delivers value for money and the best
outcomes for people.  In fact, the existing tendering process does
neither.  It is a bureaucratic and inefficient mechanism that bears
little resemblance to real market competition.  It claims efficiency
but ignores the huge costs expended in the tendering process itself.

Any businessperson will tell you that the way government tendering
works shares little with the way businesses conduct deals with each
other or attract customers in the real market.  However, they're
willing to invest the time and money into what can be a lucrative
business opportunity, providing the risk is acceptable.  And fair play
to them - following the logic of the profit motive is what they're
there to do.

Charities however aren't concerned with profit, they're concerned with
people, communities, important causes.  Fundamentally different
motivations govern our decision-making.  Why should we have to play
this game, if it isn't in our beneficiaries' best interests?  Why
should we be forced to spend precious reserves on fees for legal
advice and consultants or risk losing the bid?  Why should we divert
huge amounts of staff time towards bidding when they could be doing
things that directly help people?

Some say that it's down to us to 'police our own behaviour.'  Nobody
is forcing a gun to our heads and making us bid for bad contracts.
Strictly speaking that's true, but the decision to say 'no' is not an
easy one.  If we do say no there is the real prospect that people will
suffer as a result.  And we really do care about that - that's why we'
re here.  This means there is real pressure for us to adapt to the
demands of the tendering system.

Many charities in the advice field - local institutions that are
absolutely vital to communities across the country - are finding that
core grant funding which supported their work for years or even
decades is being replaced overnight by a contractual regime.  Or take
the case of Shelter, for example - a long established and
well-respected organisation now under pressure to make decisions about
workforce issues because of the specific demands of the tendering
system.  The effects are real and they are bad, even if the government
wants to pretend they aren't happening.

Contracts in theory are not inherently wrong; if they are used in the
right circumstances and in the right way they can be a useful tool.
In fact, they can even offer advantages over grant funding, such as
the ability to retain a surplus or clauses that provide a legal basis
for payment on time.  But the realisation of these advantages depends
on many factors, including:

- the ability to negotiate the terms of the contract

- the ability to win the bid and still cover the full costs of
delivery

- the ability to define the contract in terms of outcomes achieved,
not in terms of inputs/outputs and specific processes

- the ability to demonstrate how our 'added value' (i.e. involving
volunteers) improves not just the service but wider society

The reality is that most public sector contracting doesn't look like
this.  Contracts are not negotiable; there is pressure to subsidise
delivery from charitable funds; inputs and outputs rather than
outcomes are what gets measured; and the added value or social capital
of our work is usually out of scope.

The system is, if anything, designed to inhibit negotiation.  It is
mostly concerned with ensuring control, minimising risk, driving to
scale and standardising processes across the board.  It isn't
interested in any benefits that sit outside of the narrow
specifications of the tender.  How can this be the best for people?
How can it be the best for society?

We acknowledge that grants are not perfect either, especially when
they are the tightly-specified government variety.  And of course
there often is competition for grant funding.  But we think that in
general they are a much better way of funding voluntary
organisations - and that's what DSC is fighting for - more and better
grant funding for charities.

by Jay Kennedy, Policy Officer, Directory of Social Change

http://www.dsc.org.uk/NewsandInformation/News/Contractshindercharities