Acevo to probe DWP procurement system

Chief executives body Acevo is to launch an independent enquiry into the Department for Work and Pensions' procurement procedures, after just two out of 16 Pathways to Work contracts announced last week were awarded to sector organisations.

Disability and employment charity the Shaw Trust won Pathways contracts to run employment and health support schemes for people claiming incapacity benefits in Greater Manchester and East & West Norfolk. However, it lost out to private sector firms in another 14 Jobcentre Plus regions, including several it currently serves under existing New Deal arrangements.

Paul Bristow, the trust’s director of corporate communications, said the charity was delighted to have won the two contracts. “Manchester is the second-largest contract, so if you look at the before and after figures, we will serve more clients,” he said.

However, he admitted the trust was disappointed to have lost out in the regions and was concerned that its staff were “looked after properly” when they transferred to the private firms. He said: “These are very difficult times for them. Our HR department is liaising with the successful bidders.”

Stephen Bubb, chief executive of Acevo, said the sector had been “comprehensively stuffed” by the DWP’s procurement practices, with many voluntary organisations having missed out on contracts.

“There is huge anger in the sector with what seems to be serious problems with the process,” he said. “This is a natural area for the talents of the third sector. We have been doing some brilliant work and it is implausible that hasn’t come through in the tendering process. The Government has said it wants the sector to play a bigger role in delivering public services, but there is a huge gap between that rhetoric and reality.”

Acevo has organised an inquiry to “get to the bottom of what went wrong”, which will be chaired former permanent secretary of the Office of the Deputy Prime Minister Dame Mavis McDonald.

“We wanted an insider to do it to show we are serious; someone who understands Government contracting processes,” said Bubb.

He denied the inquiry would be an “exercise in kicking the DWP”, saying it was about highlighting “what lessons there are for the sector and for procurement practice across Government”.

He said it was vital for procurement to be reviewed before the second phase of Pathways to Work tendering was completed. “We have been told of serious inconsistencies that cannot be ignored,” he said.

Bristow said the Shaw Trust shared Acevo’s concerns about the procurement process. “We hope this is not part of a trend to remove the voluntary sector from delivering these essential services,” he said. “It’s a question of watching this space.”

Karin Pappenheim is chief executive of disability employment charity Employment Opportunities, which also missed out on a number of Pathways contracts. She said: “Organisations like ours have proved we can generate great results, and we are extremely concerned about the bias shown to the private sector. We need to look into whether the sector is getting a real opportunity to engage.”

A DWP spokesman insisted that all of the contracts had been won through open and fair competition in accordance with public procurement policy and EU regulations.

He said: "Bids were welcomed in both tendering rounds from the private, public and voluntary sectors. On this basis, the second tendering round will remain on schedule, to ensure the service is available nationally from April 2008."

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