Tendering for Service Delivery Contracts

Make sure you get full cost recovery

Commissioners have all too often seen charities as a cheap option and relied on the sector to prop up services when their contracts don’t meet costs. Since the cross-cutting review, ministers have attempted to make it clear to commissioners that failure to meet the full cost will not be tolerated, and more public sector commissioners are now aware of the issue. This leaves charities with a big decision to make. Should it carry out the service it thinks is appropriate even if it has to end up paying for some of it, or does it stick to its guns? A good bargaining tool is to offer ‘cost transparency’. You can clearly show what each stage costs and why the cost is there.

Use your charitable status to your advantage

The Government’s drive to involve charities in the running of public services is part of a commitment to opening up service provision to a range of providers. This means charities can be up against established in-house providers, as well as large firms. Charities must rely even more on the unique selling points of the voluntary sector.  Many charities can find the culture and language of the public sector intimidating. There is no need to feel intimidated.  If in doubt, call them up and ask things like ‘exactly what do you require?’ Remember a tender document isn’t the final contract, it is still open to negotiation. Tackle any problems early on, and don’t be afraid to talk to them. An assertive stance can be vital during negotiations, and can give charities the confidence to improve their terms. If you are unsuccessful ask for feedback, this will help you identify any weakness.

Know your limitations

A major factor that charities need to be aware of is mission drift – this is where a contract takes a charity away from it’s core aims into an area where it doesn’t have the same expertise. It is important that the contract fits in with the charitable organisations aims. Another problem for small organisations, including charities, is that they can lose sight of their financial limits, especially the large overheads involved in handling public service contracts.A charity is often also taking on a workforce when taking on a public sector contract and needs to understand Employment Law.  Under the Transfer of Undertakings regulations (Tupe), staff must be offered at least the same pay and conditions when they are transferred. You should also have a firm grasp of pensions, as many local authorities are looking to outsource their services and staff so that someone else can take the responsibility for their schemes.

Who can help

Futurebuilders is a government backed £125m investment fund, offering grants and loans directly to the voluntary and community sector to improve its ability to deliver public services and win public service contracts. Visit https://www.sibgroup.org.uk/futurebuilders-england

The NCVO’s Sustainable Funding Project runs a procurement network offering support for the tender process. It also offers advice about full cost recovery. 

Official Journal of the European Union -- Many public service commissioners post tender documents here. Online, it is called Tenders Electronic Daily. 

Tenders Direct Run by a private firm Proactis, this service offers users tailored updates on contracts up for tender. 

Unite (formerly the Transport and General Workers Union) --  is one of the UK’s largest voluntary sector unions. It runs campaigns on fair terms and conditions and offers useful information on employment law and pension issues.