Will tendering ever work for social enterprise?

I've been mulling over the stream of research findings over the last year or so around the way excessive public sector bureaucracy hampers the effective delivery of services – for example Professor Eileen Munro's recent finding that the safety of children is being compromised because social workers spend too much time on paperwork and targets.

I don't want to repeat here any of those Daily Mail kind of stories about the absurdity of some health and safety bureaucracy – though it is perhaps worth drawing attention to the government's recent attempt to get a sensible grip on all this through the Common Sense Common Safety report.

We all know about the inherent tendency of the public sector to get bogged down in bureaucracy.   It's hard to find anything new to say about it.  But one area in which social enterprise must keep on raising this issue is public sector tendering.

I know of course that there is a lot of on-going work around gearing social enterprise up to tender, simplifying tender procedures, and building in added-social-value criteria.  But this work may prove to be more than a little self-contradictory, and I still don't think we are strong enough in questioning whether bureaucratic tendering is usually the right kind of selection process at all.

I was talking to a colleague very eminent in her field last week, who had taken the decision not to pursue any more tenders.   She was turning away customers without any costly tendering, so why bother?

In the subsequent discussion we isolated 7 clear negative results of tendering - for both sides of the tender:

  1. Any business that is really good at what it does will build a loyal customer base – who will recommend others - so those that respond to tenders are likely to be those with least work on, or those most motivated by ambition, rather than those that are really best at what they do
  2. Social enterprise is more likely than conventional business to lose out in this situation, since it is likely to focus more on delivering social value, or on a work-life balance that is not financially driven, than on growth
  3. Tendering – and especially the kind of excessively bureaucratic tendering procedures often favoured in the public sector – tends to select those that are good at tendering, rather than those that are good at actually delivering
  4. And again, precisely because of its focus on delivery, social enterprise will suffer disproportionately from this
  5. Building in additional criteria meant to favour social enterprise might actually compound this problem - more criteria often means more forms
  6. Sometimes it all really is a costly paper exercise anyway (most of us have been to selection panels both for tenders and indeed for jobs where the winning candidate was always obvious to everyone, and we were all just going through the motions)
  7. And last but certainly not least, large organisations will generally have more capacity to engage in these tendering procedures – and most social enterprises are small.

In this perspective, tendering begins to look like a way of weeding out the best candidates, rather than selecting them!

Of course in many areas, for large contracts, public bodies are tied by EU and other regulatory frameworks – so there's a rather larger lobbying job to be done – but in many areas, such as health and social care, there are only limited legal requirements for excessively complicated tendering procedures, and the fondness of the public sector for them is underpinned not by regulation, but by habit - and the misguided belief that they actually work.

It might be objected that there is no other way of avoiding discrimination, or the old 'deal done on the golf course' mentality.   But is discrimination in areas such as this really best dealt with through excessive regulation? – or is it more a question of 'hearts and minds'?

I've also recently been involved in developing a project team for a new social enterprise. It was done entirely by 'head hunting' – no advertising costs, no forms, no interviews, no equal opportunities paraphernalia - a process common in the commercial world, but one that many in the public and voluntary sectors would frown on. Yet it is hard to find any good evidence that the bureaucracy surrounding equal ops in the public sector has made any difference. If it had, we should be able to point not only to higher proportions of women employed in the public sector (which we can - in fact disproportionately high) but also of disabled people - which we can't.   In fact the proportion of disabled people employed in the third sector – about 18% - is much better than either the public or private sectors - which do no better than each other at about 13% each (according to Jenny Clark, NCVO, September 2006).

I wonder if what really made the difference for women in the public sector, and disabled people in the third sector, was nothing to do with legislation or formality, but everything to do with cultural transformation.  And conversely, the fact that the formalities don't seem to have addressed the exclusion of disabled people in the public sector may demonstrate the cultural distance some public bodies still have to go to see what abilities people with disabilities can, in fact, offer.

On excessive bureaucracy -

On excessive bureaucracy - the Charity Commission has recently been criticised a lot for inappropriate/ineffective performance - I've just submitted a charity registration for an organisation that changed its name/constitution (to become a charity) and sent in the Articles and Certificate on Change of Name.  The Charity Commission responded with a request for the original incorporation Certificate and original Memorandum of Association!  Neither of these documents (post 2006 Companies Act) have any significance at all.  No wonder the Commission doesn't have time to do the work it should be doing to standard, when the staff are spending their time in pointless box-ticking...