Charities still face barriers to winning public sector contracts, says NAO report

National Audit Office
National Audit Office

Charities still face significant barriers to winning public sector contracts, despite government efforts to increase participation, according to a report from the National Audit Office.

The document, published today, examines what the government is doing to make the public sector marketplace more accessible for small and medium-sized enterprises, including charities.

It says the government has introduced measures to make it easier for SMEs to bid for public service contracts and managed to meet its target of ensuring that at least 25 per cent of the government’s procurement spending reached SMEs by 2015 a year early.

But it says that SMEs across the board still face barriers to contracting with government because of issues such as delays in payments, which smaller organisations are less able to absorb than larger ones, disproportionate bidding requirements and the difficulties smaller organisations have in finding contracting opportunities.

The government defines an SME as an organisation that employs fewer than 250 people, has an annual turnover of £39m or less and a balance sheet of £33m or less, which would include most voluntary, community and social enterprise organisations, the report says.

It says voluntary sector organisations have had to adapt in recent years to an evolving government funding environment and a significant reduction in the proportion of funding that comes from grants.

This has meant that in some instances a charity has found itself competing with other organisations to win a contract for a service for which it previously received a grant to run, but lacks the skills or experience necessary to submit a competitive bid.

The report says research carried out for the project included semi-structured interviews with voluntary sector stakeholders and a focus group with voluntary sector organisations, organised with the help of the National Council for Voluntary Organisations.

"Our VCSE [voluntary, community and social enterprise] focus group expressed frustration at the impact that increased contracting has had on government’s approach to commissioning services," the report says.

"They told us commissioners develop contract specifications that do not fully understand or reflect users’ needs and may restrict providers’ ability to engage the hardest to help.

"They also believed the contribution of the voluntary sector in some areas can be taken for granted, with the government assuming that charitable organisations will step in, even if not funded to do so."

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