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Public contract wins by social enterprises at lowest level for two years

Melanie May | 3 January 2019 | News

The number of social enterprises winning public sector contracts has fallen to its lowest level for two years, according to analysis by Tussell for Social Enterprise UK.
According to official procurement notices analysed by Tussell, Q2 2018 saw 41 Community Interest Companies (CICs) win contracts compared with 57 in the previous quarter – a fall of 28%. This is the lowest level since Q2 2016 when 32 CICs won public sector contracts. In addition, one health and social care contract accounted for 90% of the total value of all contracts won by CICs in Q2.
The proportion of contracts won by social enterprises was also lower than the previous quarter with only 0.3% of all public procurement contracts are won by CICs. Contracts deemed suitable for social enterprises and charities were also not being won by them on a large scale with 11% of contracts deemed suitable for voluntary, community and social enterprise organisations won by them, down from 12% in the previous quarter.
Only 10% of contracts won by CICs come from central government. Local government however is responsible for 60% of all the contracts won by CICs, repeating the pattern from the previous quarter.
While only 20% of social enterprises are registered CICs, according to Social Enterprise UK, this report is indicative of the challenges reported by social enterprises across the country. It cites lack of knowledge of social enterprises by procurement teams, risk aversion and the poor use of social value procedures as factors frustrating social enterprises that want to deliver public services.
Separate analysis from Tussell shows that the proportion of public sector contract award value going directly to SMEs was only 13% in Q2 2018. This metric has been broadly flat since 2015 and, it says, suggests that the government is not currently on track to hit its target of spending £1 in every £3 of its procurement budget with SMEs by the end of 2022.
This is this second piece of research by Tussell on behalf of Social Enterprise UK, which will be published every quarter to monitor inclusion of CICs in the government’s supply chain.
Charlie Wigglesworth, Deputy Chief Executive, Social Enterprise UK said:

“We are pleased that the government has recognised the important contribution that social enterprises can play in improving the quality and diversity of public service markets. But as this data shows, we have a long way to go if we want to see social enterprises as a major force.”
“More needs to be done by the government to signal to procurement teams that social enterprises should be taken seriously when they are bidding for contracts. This will also influence major suppliers and encourage them to do more to work with social enterprises.”
“At a time when the public is concerned about the involvement of businesses in public service markets following the collapse of Carillion, the government has an opportunity to ease these concerns through working with social enterprises. We will work with government over the coming months to see what more can be done.”

Gus Tugendhat, Founder of Tussell added:


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“Only 1 in 10 contracts published in the first half of 2018 were flagged as suitable for VCSEs in Contracts Finder. Of those contracts with the VCSE flag, only 11% were actually won by a VCSE. This tells us that there is plenty of room for improvement. The first step to addressing this challenge is having consistent data to measure it. This is why we are pleased to work with SEUK to bring more visibility to the topic of VCSE inclusion in public procurement.”