Smaller charities are being shut out of competition for government and council contracts by “shockingly complicated”, bureaucratic and inappropriate processes, a study of 120 contract tenders has found.
The future of many smaller charities with priceless local knowledge and connections is being put at risk by their inability to comply with the myriad requirements and paperwork that typifies official tendering, the analysis suggests.
In one case, an invitation to tender for a contract worth less than £350,000 a year was found to require answers totalling 27,000 words to 44 questions. In another, a four-stage tendering process included a third stage alone comprising six separate meetings over eight weeks.
One charity bidding for a mental health contract was found to have been marked down for not having a hard-hat policy – the process being used to decide the contract was the same as for procurement of building work.
Paul Streets, chief executive of grantmaker Lloyds Bank Foundation, which carried out the study, says it seems that “common sense has failed” in commissioning of services. “We are alarmed at the scale of the commissioning crisis which is engulfing small charities and threatening their very survival.”
The foundation, which specialises in supporting smaller charities, says in the report [pdf], Commissioning in Crisis, that many of society’s most intractable problems can be solved only through the reach of grassroots organisations and their application of bottom-up solutions.
The survival of such groups is imperilled by their growing failure to win or retain service contracts, however. Usually without dedicated bid-writing teams or business development departments, they cannot compete with national charities, housing associations and for-profit service providers in increasingly onerous tendering processes.
Although most of the tenders analysed had an annual value of between £100,000 and £600,000, with many falling below £150,000, the foundation says the processes “often appeared more suited to multimillion pound contracts for no discernible rhyme or reason”.
In addition to this, some tenders stipulated minimum turnover sizes for contractors that barred smaller charities from even bidding. In other cases, charities were informed they would have to work in partnership with another organisation not of their choice. One was even told it would have to merge its “back-office” administration with that of another bidder.
Streets insists that the foundation is not “commissioner-bashing” and that it recognises the pressures commissioners are under to get the best value from service contracts.
“It’s about change,” he says. “Change that is needed now and at every level. Both commissioners and government need to change the systems that govern processes, with corresponding work in the voluntary and community sector to increase smaller charities’ capacity to meet commissioners’ needs.”
The foundation’s report is calling on councils and government to adopt a more collaborative approach to commissioning, to take a proportionate view of necessary process and to place more emphasis on the social and long-term value of contracts.
Poor commissioning practice should be challenged by ministers, the report says. There needs to be greater transparency in process and a measurable target should be introduced to oblige commissioners to work with small and medium-sized charities.
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