The bidding process for government contracts is “burdensome” and does not favour smaller charities and social enterprises, according to new research.
A report published earlier this month by Social Investment Business (SIB) found that smaller charities and social enterprises face more barriers than their larger counterparts when trying to access government contracts.
SIB conducted interviews with eight organisations of different sizes, ages and locations from its portfolio to look at their experience of public procurement and understand how social investment could be better utilised to support the social value agenda.
One of the challenges highlighted in the report is the “burdensome” bidding process, which can be off-putting for smaller charities.
The report also argued that there are not enough contracting opportunities to enable organisations that are looking to scale up their operations to grow through the delivery of public services.
Since 2016, only 5% of government contracts have been awarded to voluntary, community and social enterprise organisations, according to analysis published this year.
‘Burdensome’ bidding process
The report said that the current bidding process is “burdensome, bureaucratic and resource-intensive – which could be off-putting for smaller charities and social enterprises”.
One of the biggest issues for smaller charities is the “lack of capacity and confidence in writing bids and responding to multiple tenders”.
The report said: “This is a structural disadvantage that smaller charities and social enterprises face: a resource-intensive bid could require several senior staff members to be taken away from day-to-day delivery to concentrate on drafting a bid. Larger organisations, on the other hand, will often have professionalised bid-writing teams that understand the system and are able to respond to tenders as they arrive.”
One respondent commented: “It doesn’t make sense to have a cumbersome, difficult mechanism. It would have put off a lot of organisations who would even attempt it.”
Another pointed out that some forms are “worded in a way that is hard to decipher”. “The questions are not as easy to understand,” they said. “They know what they are looking for but don’t make it clear when you have to fill it in.”
Commissioning landscape does not support organisation growth
The report also found that most available contracts are low-value and short-term, with some forcing charities into subcontracting relationships where they might not get what they need from the partnerships.
It read: “For the most part, there simply aren’t the range of contracts available to help organisations grow through delivering public services. Our analysis of national contracting data shows that commissioning is not graduated. Rather, there are large numbers of very small contracting opportunities, and many large-value contracts but few that could be classed as supporting growth by allowing for capacity development at a reasonable pace.”
Respondents told SIB that contracting activity has fallen since 2015, with factors such as Brexit slowing down the procurement process.
The report noted that smaller contracts tend to be renewed or retendered every 12 to 18 months, “making strategic planning more difficult”.
Other issues highlighted in the report include the lack of visibility and poor timing around contracting opportunities as well as the cost of delivery and slim margins.
One respondent commented: “Contracting from a local authority is notoriously difficult [because] they don’t know what budget they will have in the long term… A frustration is [when local authorities] realise they have got some funding and need it out of the door. You have a mad scramble for what you want to do, trying to match it with our strategy… that’s not helpful. In those circumstances, [the contracts] are less than 12 months and it’s not the best use of funding and very stressful.”
Close relationship with commissioners useful
The report concluded that building a trusting relationship with councils and commissioners might help smaller charities win more contracts.
It said: “The majority of the organisations we spoke to have a close relationship with their local councils or commissioners. This helped them navigate the maze of opportunities that were available.”
However, it acknowledged that “lacking longevity or a strong track record” could be a barrier to engaging with local authorities.