Charities failing to secure government contracts

27 Apr 11
Voluntary organisations are suffering from inbuilt biases against them in the award of government contracts, a think-tank has warned.

By Richard Johnstone

27 April 2011

Voluntary organisations are suffering from inbuilt biases against them in the award of government contracts, a think-tank has warned.

A report by Centre Forum examined the Ministry of Justice’s plans for a ‘rehabilitation revolution' that would ‘harness the innovation of the private and voluntary sectors, including options for using payment by results, to cut re-offending’.

It found that the plan to encourage a diverse range of providers was at risk of being squashed by ‘an inbuilt bias towards larger well-capitalised firms and against the voluntary sector’.

The warning follows the announcement earlier this month of the successful bidders in the Department for Work and Pensions' payment by results scheme. Only three out of 40 contracts have been awarded to voluntary sector organisations.

Report author and Centre Forum chief executive Chris Nicholson said that the results of the DWP Work Programme competition were a cause for concern. The DWP target is for all contracts to exceed the current level of 30% or more of the supply chain being provided by the voluntary sector. But, Nicholson said: ‘Shockingly, only ten of the 40 contracts have exceeded the target.

‘In contrast to government claims that this will be a great opportunity for the voluntary sector, it looks like the position has got worse.’

To ensure more successful competition for contracts to rehabilitate offenders, the report recommends changes to the payment by results scheme. These include a five-year phased introduction and government support for the development of new kinds of equity funding to social enterprises and third sector organisations.

Social enterprises should also look to collaborate in bids for contracts, the report states.

‘Unless the Ministry of Justice adopts a different approach [to the DWP] our fear is that exactly the same will happen in reducing re-offending,’ Nicholson added.

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