Procurement practice

A focus on value for money and efficiency has led to procurement practices that favour contracts over grants, economies of scale and competitive tendering processes despite policies that emphasise the importance of supporting local voluntary action. However, procurement practice is slowly improving with a better understanding of the different types of support available (grants, contracts, loans, advice and support) and improved implementation of full cost recovery, though implementation on the ground is still patchy. Procurement and commissioning have also become more professional and are emerging as distinct professional disciplines.  With substantial funding cuts being announced in the upcoming 2010 budget, there is likely to be further pressure on procurement practices and even potential changes.

What are the implications?

  • Increased complexity for financial managers as procurement becomes more professional, particularly in small organisations, where they are often responsible for many other roles.
  • As procurement and commissioning emerge as distinct professional disciplines there is a risk that each has a different set of priorities; the commissioners looking more at added value and procurers going for the best price.
  • Bureaucracy associated with procurement can divert organisational resources.
  • Moves towards full cost recovery across the third sector could be hampered by an increase in competitive tendering contracting processes.
  • With large cuts to public service spending due to be announced, the VCS will face increasing pressure and competition in bidding for contracts and grants.

Moving forward

Managing contracts and loans present challenges for organisations in terms of financial management skills, but offer opportunities in terms of potential sustainability.  The tendering process for is often complicated and the VCS is likely to face more competition due to upcoming funding cuts.

  • Is your organisation ready to bid for and manage contracts?
  • Do you know what is involved or where to go to find out more about the skills you will need?
  • What role does your organisation play in helping to design local services? Does this need to change?
  • How can you develop your negotiating skills to improve your discussions with funders (potential and actual), and your chances of securing a good deal? There are a number of sector initiatives to help you build your negotiation skills and confidence (e.g. the Association of Chief Executives of Voluntary Organisations (ACEVO) full cost recovery template).

Recovering the full costs of a service could help to make your organisation more financially sustainable.

  • How much does your organisation know about full cost recovery?
  • Do you understand the true cost of new projects to your organisation?

Sometimes it is not possible to recover the full costs of a service.

  • What strategic questions do you need to consider before deciding whether to deliver a service for below (or potentially above) cost?
  • Are there other funding options, your organisation can consider? Could loan finance be an option for the future?

Want to know more?

Contract culture threatens community groups

Published by: Bassac – a national network of community based organisations

Date: 2006

Format: PDF

What is it? A press release highlighting the effects of contract culture on community organisations using quotes and statistics.

How useful is this? This piece discusses how the Government’s move away from grant funding towards a contract culture is putting the country’s community sector at risk.

Other comments:

Compact Code of Good Practice on Funding and Procurement

Published by: The Commission for the Compact– a body striving for effective partnership working between statutory and voluntary sectors

Date: 2005

Format: PDF

What is it? A detailed code for funding and procurement involving Government departments and VCOs.

How useful is this? This document provides guidance on agreed practices for Government departments and VCOs on each stage of the procurement process from the application and tender process to concluding the financial relationship.

Other comments: The Compact is the agreement between the Government and the VCS to improve their relationship for the benefit of each other and the communities they serve.

Before signing on the dotted line - all you need to know about procuring public sector contracts

Published by: NCVO

Date: 2006

Format: PDF

What is it? An in-depth guide to procuring public sector contracts for VCOs.

How useful is it? This guide starts by outlining how potential public sector purchasers can be found and how contracting fits together.  Part two goes into more detail about the processes involved including the main legal framework and other technical matters.  The third part provides case studies.

Other comments:

Last updated at 14:26 Wed 09/Jun/10.

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