The experience of third sector subcontractors in the

European Social Fund 2007-13 Programme

Richard Crisp

Centre for Regional Economic and Social Research (CRESR)

Sheffield Hallam University

The European Social Fund Approx. €6.bn will be allocated in current programme (including €3.bn

match)

Two priorities: ‘Extending employment opportunities’ ‘Developing a skilled and adaptable workforce’

Single, national Programme but funding – prime contracts - awarded at the regional level by Co-Financing Organisations (CFOs) either to:

prime contractors who directly subcontract delivery consortia of organisations that submit a joint bid with nominated ‘lead’

Research aims

How much funding goes to third sector subcontractors

The experiences of third sector organisations as subcontractors:

Applying for funds Delivery Meeting targets Relationship with lead contractors and partners

Research methods postal survey of all third sector

organisations awarded ESF subcontracts

in-depth telephone interviews with 19 subcontractors

How many subcontractors are there? ESF website lists 1,266 subcontracts and 706

unique subcontractors…

…but a number of TSOs we contacted had no subcontract

We estimate there are 488 subcontractors

And surveyed 137 of these (28 per cent)

Third sector squeezed out? Mean average of contracts held = £275,754 but the

median average = £87,000.

Total value of subcontracts = £134.6 million 4 per cent of the estimated £3.4 billion awarded

through ESF

Previous review found third sector receives 17.7 per cent of the total value of prime contracts

Third Sector squeezed out?

And smaller TSOs squeezed out the most? Subcontractors are much larger than the 'average' third sector

organisation.

Nearly half of responses (48 per cent) were from large or very large organisations (annual income of £1m plus)

But consortia do offer one route in for smaller TSOs:

67.7 per cent involved in a consortium 56 per cent entered a consortium because too small to deliver

on their own 63 per cent found as part of a consortium a positive experience.

Overall experience positive 63 per cent satisfied and 20 per cent dissatisfied Most felt subcontract enabled them to able to draw on

organisational strengths, work with disadvantaged clients and deliver a high quality service

Largely positive about relationship with prime contractors:

75 per cent had clear lines of communication 64 per cent felt the prime contractor provided appropriate

support and guidance 79 per cent reported that they had a good relationship with

the contract manager

What makes a good prime? support in managing administrative demands

regular communication

responsiveness to concerns or queries

a genuine sense of partnership

Satisfaction with experience

Income Sector of prime

Overall

Per cent

Some notable criticisms Delays in starting contracts Excessive paperwork Lack of flexibility within contracts Payments delayed or end-loaded Insufficient funds: a ‘Mickey Mouse’ service? Lack of time to work with ‘hard-to-reach’ clients Demanding targets encourage ‘cherry-picking’

Some examples Payment delays: 12 weeks for enrolment claims to be rewarded

End-loading: 10 per cent for enrolment and 90 per cent for achievement of NVQs that took up to six months to achieve

Inadequate time to support clients: ‘you can’t take someone on with no English and get them an entry-level certificate in 30 hours. You could do it six months’.

Cherry-picking: 'Would we go for the most in need in the future? We would be wary of it and that’s not ideal as we work with the hard-to-reach’.

Final reflections Some evidence that TSOs are squeezed out at the bidding

phase… ...but largely positive about their experience once they are in.

Key concerns around contract specifications and systems rather than relationship with prime contractors.

TSOs feel able to deliver a valuable service that meets needs of the ‘hard-to-reach’.

92 per cent said they would apply to ESF again.

The Work Programme Explicit support for Third Sector:

‘We have been very clear to all of the organisations on the framework that they must demonstrate their ability to address the specific needs and barriers of each customer in every locality. In order to do so, they will need to engage with a range of smaller local and specialist organisations including those from the voluntary sector’. (Grayling, 2010)

Lessons for the Work ProgrammeThe challenge for prime contractors:

Ease the burden of paperwork Minimise financial risk Provide flexible subcontracts that support innovation

The challenge for third sector subcontractors:

Be ‘reasonably commercial’ Keep focused on outcomes without losing sight of social aims Can ‘do-gooders, pink or fluffy, social workers’ survive?