Case study: Winning the contract race

Hackney Community Transport's success in winning contracts to run commercial bus routes is pushing the boundaries of what social enterprises can expect to achieve.

Eric, one of the drivers on HCT Group's latest London red bus route. Photograph: Christine Boyd
Eric, one of the drivers on HCT Group's latest London red bus route. Photograph: Christine Boyd

The background
Registered charity Hackney Community Transport (HCT) had been providing specialist community transport and related training services since 1982 in line with its mission to make public transport available to all. Since the mid 1990s it had been entering into contractual arrangements with transport commissioners, including beating off competition from much larger organisations to run mobility bus routes for Transport for London.

Rather than continuing to rely on grants to support its core activities, HCT decided, in 2001, to bid to run a mainstream red bus route.

The process
HCT had been reliably operating buses between Islington and Homerton Hospital for a number of years, so when TfL decided to make the route into a red bus route, the company was well placed to bid.

Spokesman Tim Purcell describes the process of acquiring the expertise necessary to make a successful competitive tender as an organic one. “Our approach has developed over time and to a significant extent we’ve acquired the relevant knowledge through experience,” he says.

Nevertheless, applying for commercial contracts rather than grants involved a significant culture shift in the organisation, forcing it to “become more aggressive and professional”.

“It was about thinking business first,” says Purcell. “The most important thing was that HCT had to have a great product – actually a better product than our competitors. To get work initially you have to be better than the established companies.”

Since HCT’s charitable status restricted its commercial activity, a separate trading arm, CT Plus, was set up to operate the red bus route. HCT’s head of business development, Julie Gilson, explains: “Although we had started to get commercial contracts under the charity HCT, getting a large multi-million contract meant that it was appropriate to set up a commercial trading company.” This meant more bureaucracy and auditing costs as the organisation was reporting to both the Charity Commission and Companies House.

The vehicles themselves were leased and the decision was made not to carry advertising in order to make the company’s buses look distinctive.

The results
Building on its success with that first red bus route, HCT now runs another three such routes, the latest contract having commenced this month.

“We are regularly ranked in the publicly-available monthly performance statistics as being one of the most reliable service providers for TfL,” says Purcell.

The group has also won a number of other commercial contracts in recent years, including running social services transport in Kensington and Chelsea and over forty school bus routes in West Yorkshire. The latter required the setting up of another trading arm, which is registered as a CIC. The group are also in the process of converting the original CT Plus from a company limited by guarantee into a CIC.

HCT has also improved its commercial expertise in recent years by recruiting staff with experience of tendering for contracts. However, it has taken pains to make sure its new recruits share its social ethos – partly since, according to Purcell, that ethos is the key to its commercial success.

“Because HCT is a grassroots organisation with stakeholder involvement and its ear to the ground, it can offer a better service than its commercial competitors,” he says.

The organisation continues to provide local community transport services in various London boroughs, as well as running training programmes to raise local employability levels. “Being a social enterprise gives you an advantage, especially in an area like transport which obviously has a service as well as a commercial aspect,” says Purcell.

HCT Group now has an annual turnover in the region of £15m, and is keen to see that grow even more. “We are regularly approached to tender for other contracts and we look forward to furthering the significant rate of growth that our businesses have shown over the past few years,” says Purcell.

HCT’s success was recognised in 2004 when it won the Social Enterprise Coalition’s Enterprising Solutions Award. SEC chair Baroness Glenys Thornton said: “It was a groundbreaking achievement for a community-owned bus service to win by competitive tender a brand new bus service. It shows that, given a level playing field and an understanding of social enterprise, there are no no-go areas in the public sector for socially-owned businesses.”

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