Is the Public Services (Social Value) Act a no go for small contracts?
Allison Ogden-Newton fears that social enterprises with local knowledge will lose out to larger deliverers that can achieve scale
Will the Social Value Act favour larger organisations? Photograph: Corbis Super RF/Alamy
The government's target of enabling over one million former public sector staff to achieve mutual status by 2015 echoes the aspirations of many in the public sector who want to carry on doing the job they love and are interested in more independence – but only if the deal is right. For them, the choice between moving, via the TUPE process, to work for a large listed company with a reputation for stacking it high and selling it cheap, or clubbing together with trusted colleagues to 'go it alone', is an easy one.
At the Transition Institute we believe these public servants could be heroic innovators and should be able to secure the necessary contracts to finance their services. However, following a recent statement from the Cabinet Office, we fear smaller, less protected entities face an obstacle that could halt them in their tracks.
In a recent statement, the Cabinet Office told us that European Union rules will preclude some public sector contracts from compliance with the Public Services (Social Value) Act, passed by the government earlier this year. They identified two thresholds: £113,057 for service contracts awarded by central government and the NHS, and £173,934 for all other contract bids, below which, they said, tests for social value could not be applied in commissioning: "The act (public services 2012), when it comes into force, will apply to public services contracts whose value exceeds the relevant financial thresholds in the EU Directives and Public Contracts Regulations."
If this is the case, we ask: how will mutualisation for smaller spin-outs work? Will we see commissioning frameworks reward large deliverers which can achieve economies of scale, while smaller entities with local knowledge and strong track records lose out?
We are seeking further clarification from the Cabinet Office as it is not obvious, even to the commissioning experts at the Institute, how the act can be applied to the heavily-regulated procurement processes over the threshold, and not to the more lightly regulated procurement space below. Nor can we identify what has changed within the EU to move the goal posts since the act was drafted and passed.
One thing we do know is that the need to build a much clearer picture about what is happening in the vanguard of this public service transformation is vital.
The Transition Institute is the UK's first and only advocate body for public sector providers that make social value their business, and we intend to build an accurate set of social value commissioning guidelines, based on information from the sector that accurately describes the size, aspirations and climate in which spin-outs are operating. We've just launched the UK's first survey to ask all independent service providers and spin-outs what affects them when it comes to commissioning. This survey will map who the new providers are, their size and scope, and the commissioning processes that operate in their working environment. This information will be vital in educating the government about how this issue in particular affects social value organisations.
Allison Ogden-Newton is chair of the Transition Institute. To contribute to the survey, click here. For more details of a social enterprise network live debate on the social value act on Friday 11 January 2013, click here
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