Social Value and Public Services Procurement

Social Value and Public Services Procurement

Chi Maher (St Mary's University Twickenham, UK)
DOI: 10.4018/978-1-5225-6298-6.ch015


The UK government aims to increase the role of social enterprise as a vehicle to deliver public services directly to citizens and local communities. This chapter explores small social enterprises' experience of public service procurement in the UK including the introduction of the Social Value Act 2012. To understand small third sector social enterprises' experiences of gaining access to public services contracts, face-to-face interviews were conducted with 11 chief executive officers (CEOs) using an interview guide. Empirical evidence obtained suggests that some procurement policies and processes are impacting on these organizations' developments, growth, partnership arrangements and value creation.
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Social enterprises are businesses that trade and use their profits to bring social, economic and environmental benefits to our society; they are designed to meet social needs as well as to achieve commercial viability (Weisbrod, 1997; Crossan, Ibbotson, and Bell, 2011). As such, they are largely independent of both the public and private sectors. Although there has been acceleration in the development of social enterprises in the UK, most are small (Social Enterprise UK, 2016). Nevertheless, they make important contributions to the economy and are embedded in their local communities. This ‘embeddedness’ brings with it several advantages to their constituents, such as, responsiveness to the needs and priorities of local communities, providing stability and flexibility and responding to local needs. They have the ability to identify and understand the needs of local people and their community. They shape their services around the service users’ immediate needs, working ‘holistically’ or in a ‘person-centered’ way that is responsive to individuals’ needs. They often engage directly with those who are hardest to reach, bringing positive changes that people want and need. Furthermore, they provide routes to mainstream employment and create sustainable jobs to retain wealth within the local community (Maher, 2017b).

These organisations can also bring significant long-lasting and sustainable positive changes at a community level, supporting the life of local people (Lyon and Sepulveda, 2012; Maher, 2015a). They are often valued by both the state and service recipients because of the distinctive approaches and values they bring to the provision of public services. However, the increasingly competitive environment in which small social enterprises are working, brought about by changes in public policies, particularly competitive tendering processes, has brought success for a few small social enterprises who gained new funding that enabled their organisations to expand and develop new services; but for many small social enterprises this has been very challenging (Maher, 2015a).

The UK government endorses the view that social enterprises are a useful model for closing the productivity gap with other nations and has been creating various strategies and policies for this purpose. This was integrated in the public policy agenda starting with The Labour Party (1997–2010) and the coalition Government (2010-2015) pledged that it would support the third sector (including social enterprises) in having greater involvement in the running of public (Alcock, 2010).

Background: Public Procurement

Public procurement refers to the process by which public authorities, such as government departments or local authorities, purchase work, goods or services from third parties. It ranges from routine items (e.g. stationery, furniture or IT equipment); to complex spend areas (e.g. construction, Private Finance Initiative projects, aircraft carriers or support to major change initiatives).

It also includes a growing spend where the private and third sectors provide key services directly to citizens in areas such as welfare-to-work, special education, housing health and social care. Such services may also be provided by a public-sector body (e.g. a local or county council) directly. A public body may bid for government work against private and third sector organisations through a formal competitive process. Government must apply the highest professional standards when it spends this money on behalf of taxpayers, to ensure it gets best value and to provide appropriate and necessary goods and services to the quality required to meet user needs. Procurement is increasingly seen as the key to delivering desired outcomes: Good procurement is essential to the success of the government’s programmes; it provides the link between policy and delivery.

Key Terms in this Chapter

Best Value: The performance framework for regulating local government and health services, which includes the need to consider whether services are being delivered in the most appropriate way, and by whom, and the need to secure continuous improvement.

The Third Sector: The Third sector is a collective term used to describe those organisations which exist outside of the public and private sector domains.

Value for Money: The optimum combination of whole life cost and quality (or fitness for purpose) to meet the user’s requirement, i.e. getting the best possible outcome from any given level of input.

Procurement: Is defined as being the acquisition of goods and services from third party suppliers under legally binding contractual terms where all the conditions necessary to form a legally binding contract have been met.

Clinical Commissioning Groups: Are groups of GP practices that come together to commission health services for their population.

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