Social clauses in public procurement and public - social partnership "NETWORK FOR BETTER FUTURE OF SOCIAL ECONOMY", co-financed from the ESF

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1 Mikołaj Gurdała, August 2011 Social clauses in public procurement and public - social partnership "NETWORK FOR BETTER FUTURE OF SOCIAL ECONOMY", co-financed from the ESF SWOT ANALYSIS - INTRODUCTION The following analysis was made for the purpose of discussing conclusions which appeared from the findings of the Working group on public-social partnership (PSP) and socially responsible public procurement (SRPP) within the project Network for better future of social economy co-financed under the European Social Fund. Due to the fact that taking account of social considerations in public purchase usually co-exists with the support for close interactions between public administration and social economy entities, the SWOT analysis consists of these both approaches together. The SWOT analysis bases on two good practices of fostering development of public-social partnerships and socially responsible public procurement - piani di zona 1 from Italy and action plans 2 from Belgium. 1 The Area Plans (i.e. a tool for private-public collaboration) represent a well-established good practice for the programming of social services through PSP. With the recent welfare reform (law 328/00 and further regional organizational laws such as the Lombardy law number 2/2008), all municipalities have been involved in a process of political transformation which determined the re-organisation of provincial territories into sub-area (corresponding to the territories of the Area Plans) covering a number of municipalities with decision-making at regional level. Such municipalities must work together in the planning of social policies aiming at implementing an integrated system of services. At the operational level, this system needs a unit for institutional coordination, a specific administrative and management apparatus as well as structures for the recognition of citizens` needs and also organisations/ social workers for the delivery of services. The institutional coordination is generally made up of: an Institutional Coordinator, the Area Plan Coordinator, all the mayors involved in the Plan, the President or the representatives of Mayors Consortiums (if exists), a manager from the Local Health Authority ( ASL ), representatives of Mountain Communities (if relevant to the Area Plan) and delegates from the Third Sector. This institutional coordination represents the core of Area Plans where all strategic decisions concerning priorities to be tackled and the operational aspects of service implementation, are taken. Hence, this represents a stable tool of collaboration between private and public entities. Currently, within the Lombardy Region there are 98 Area Plans. 2 The federal action plan on sustainable (green, social and economic) public procurement was prepared by public service for sustainable development and approved by the Council of Ministers in Out of 17 actions, the one focused on social considerations in public procurement, was performed essentially in collaboration with the Flemish Region. The action plans, like those presented in 'Flemish Action Plan for sustainable public procurement ', specify in great detail the rules for implementation of public procurement in different sectors. They give an exemplary pattern of cooperation between institutions involved in the implementation of individual components of each plan. Action plans provide a detailed schedule setting out the tasks, subtasks, the initiator of individual tasks/ subtasks, co-operating institutions, finance and time framework. The very mechanism is not of great innovation, but division of tasks between different sector partners and precision in diversifying funds as far as individual tasks are considered is worth following. Each 1

2 Both practices illustrate governmental legislative initiatives of giving different institutions a possibility to cooperate while planning public services and public purchasing at national, regional and local levels. Such actions correlate closely with the concept of socially responsible public procurement by thorough tendering of social services (IT) or attempts to integrate social clauses into tender documents (BE). Each practise deals with the consultation communication and training phase, then mainstreaming, implementation and evaluation of actions. The presented examples, even if implemented in the EU Member States with different regional and local background, are working tools for cooperation between stakeholders. They are available as universal patterns of reasonable and sustainable cooperation between public sector and social economy entities. Regarding the SWOT analysis, one should remember that social economy eludes clear definitions describing the variety of its stakeholders. It also lacks indicators that could measure social values of the activities performed within each practice and, what is even more important, prove them being more effective than the business ones. This is why presented SWOT analysis may probably not evaluate the strengths, weaknesses, opportunities, and threats of particular practices precisely. It rather stresses main features of the general process of facilitating social considerations in public procurement and acts as a starting point for further dicussions. As mentioned above, following SWOT is not a typical one. In the first part you will find analysis of strong and weak points of presented examples: piani di zona and action plans. Taking them into account I enumerated opportunities and threats for socially responsible public procurement. Special attetion is paid to the use of social clauses and setting up conditions for their implementation. action plan comprises an initial analysis of the problem (economic, social, environmental) and proposed solutions, which are next recorded in a table presenting a detailed description of their implementation, namely actors, cost and time. The actions plans consist of developing instruments for public buyers. The work on instruments was essentially based on: a) Life Cycle Costing research, b) definition of green criteria and the discussion with the Belgian stakeholders for several products and services c) integration of social clauses into framework tender documents. In this context more generic recommendations on socially responsible public procurement and more specific recommendations (subject of tender documents, social regulation clauses, ILO - conventions) for specific products or services was made. Action plans also integrated other social issues as fair trade labeling for food products and catering and did refer to the contracts reserved for social economy entities. 2

3 SWOT ANALYSIS Strengths 1. Broad consultation process always results in partnerships making profitable and effective decisions. a) This process is mainly seen in piani di zona, where consultation is a very pre-phase of each plan; consultation process is initiated by local authorities but then all local stakeholders are involved in this process: third sector organizations, public health and social care insitutions, citizens` organizations, etc.; the consulation concerns choosing the area of intervention, identifying stakeholders and operators, planning actions, milestones, timetable and costs. Afterwards, decision about implementation of "piani di zona" may by taken; b) Federal action plan was developed inter alia on the basis of bottom-up consulations (workshop). This is why, it partly responds to the needs of such stakeholders as social economy entities or ngos; 2. Each piani di zona has a very structured implementation roadmap, including stages like preparation, consultation, training, promotion, implementation, evaluation. For each stage there is an indicated number of meetings, persons engaged, working hours etc.; 3. Each action plan is strongly connected with national or regional polices which makes it more general and sustainable tool; 4. Piani di zona is not only a tool for particular area covering certain community, but it enables groups of communities to co-operate for better analyses of local problems and more effective implementation of solutions. In this way such a tool impacts on regional policies 5. One may find a variety of piani di zona, having different attitude to similar problems to be solved; Piani di zona answer to the same problems but they can by implemented individually by community or by a group of communities in the region; this makes interesting comparision at evaluation level; 6. Piani di zona have a strong reference to the third sector organizations (in this case social cooperatives may play an active role), but also citizens` organization have a lot to say in the whole process; 7. In economical terms, action plans are covering mainly all sectors, which makes them strong and effective policy-making tool; 8. Action plans refer to putting social considerations into public procurement, which enables the easier implementation of social clauses in Belgium. 3

4 a) "Action plans" include specific instruments for social buyers with reference to specific sectors and services. They include information about the existing social clauses and means of their practical implementation; 9. Piani di zona may use various approaches in order to reach forseen goals. This contains also organization of tenders with social clauses dedicated to social cooperatives; 10. Federal "action plan", due to the Flemish Region involvement, have connection with the regional policy, even if planned at central administration level; 11. "Action plans" refer to additional acpects like "green clauses", fair trade labelling for foods and products, which makes them more complex and universal tools adaptable for other socio-economic values of modern societies. 4

5 Weaknesses 1. Very complicated management structure in piani di zona ; lots of different co-ordinators and operators; 2. Action plans are not so detailed. They are mainly dedicated to whole sector not a single social-economic problem like piani di zona. They also do not have strong area connection (apart from the one made with Flemish Region); 3. Piani di zona is a very locally-oriented initiative, which may lead to losing some more general development aspects and looking very narrowly at the particular community aspects; 4. Construction of Piani di zona corresponds stronly with the Italian tradition of independent and self governed communities and regions. It may be hard to multiply them directly into other muninicipality systems, where the level of community independence is much lower; 5. Both piani di zona and action plans are dedicated to either certain sectors or socioeconomic problems and communities set at a particular time framework, when existing problem shall be solved. Thus, they become task partnerships, not PSP for permament or systemic cooperation; 6. Social economy entities are involved in both practices but they are not main actors or receivers of the actions; 7. Still, it s not enough data about evaluation process concerning effectiveness of action plans. The available documentation seems to be complex description of forseen actions, but doesn t give answer how they work in practise; 8. The large number of piani di zona" makes them difficult for comparative analysis. "Piani di zona" differ from each other taking into account their geographical and socio-economic backgrounds, (e.g. in case of north and south Italy) 5

6 Opportunities 1. Social economy can be an answer for global crisis in terms of innovation in employment and economic growth; 2. There are at least a few good examples of existing public - social partnerships way of actions like piani di zona and action plans (Italy, Belgium). Both illustrate the way to develop multi-sectoral or multi-actor partnerships at different territorial levels; 3. Some institutions responsible for public procurement are already dealing with the specifics of social economy by training and education (UK, Sweden). Those actions refer to internal trainings/courses taking into consideration actual legislative background and specificity of institution; 4. There are a few models for measuring value of using social clauses (also social added value) available or under construction and sets of guidelines for public procurers e.g. "Eight principles of commissioning services at tender": use of expertise prepared by social economy organizations; need for assessment, evaluation, performance planning and review of the service; mapping of potential suppliers of resources, including their operational ability, to ensure transparent and fair process of concluding contracts with the appropriate level of risk (Great Britain) 5. There are symptoms of treating a tender as a process, where all steps and impacts are being taken into account (UK, Sweden, Flanders, Italy) 6. Performance of many services below threshold level in EUR net (14000 EUR for Poland) is being addressed to social economy entities without applying public procurement procedures (it usually concerns services like: elderly care, cleaning, gardening, catering); These contracts are made under the framework of community financial resources for services of general interest, like social - care fund. 7. Establishing close links with local and regional financial instruments in order to make social economy sector more effective in competition are being developed (by offering ventures, loans and guarantee funds); a) In Poland, e.g. governmental programme dedicated to social cooperatives which enabled the regional fund operators to loan and guarantee the tender vadium (tender bond or deposit) for social cooperatives; 8. Preparing a toolkit for administration at national level illustrating in practice how to implement social clauses into different tenders; a) Such a toolkit must include an example of applying social clauses via complete tender documentation accepted by national or regional public procurement office and control 6

7 bodies in order to make public procures and bidders feel secure with their usage. Documentation should include: announcement about the tender, terms of reference stressing social clauses, description of the boject of the tender/contract, awarding criteria, etc. 9. Mainstreaming of good practices on country and cross-country level, especially practical tools for applying social clauses (see above and p. 8) 10. Closer cooperation between public procurement officers and all stakeholders involved in the implementation of social clauses 11. Many educational and promotion programmes for SRPP a) Such programmes are e.g. developed in Poland, United Kingdom and Sweden (educational action plan for officers), Czech Republic (promotion action plan connected with survey on social clauses and analysis of social economy sector). They are addressed to the officers responsible for public tenders in the municipalities; some trainings are also dedicated to social economy representatives in order to inform them about the possibility of proceeding tenders (Sweden). Above-mentioned actions are designed at national level contrary to p SRPP may work not only at local level, where cooperation between social economy and public bodies escapes some barriers and stereotypes. a) This conclusion is based on experience coming from countries with strong tradition of independent and self governed communities and regions; some practices developed at EU or national level, such as practical toolkits for socially-orienteted purchasing, lead to more optimistic conclusion SRPP may become a general idea for public procureres also on upper territorial levels and so social economy sector could be engaged in greater number of tenders. b) Similarily, countries without a decentralized structure, would primarily need actions launched at the central level, similar to those initiated by the EU in the field of education, textbooks, guidelines etc. Activities at the central level, however, should be supplement by e.g. the creation of regional and local partnerships to deal with their actual implementation and adopting them to the local conditions. 7

8 Threats 1. Lack of knowledge on the part of public procurers, decision makers and social economy entities about possibility for using PSP&SRPP; 2. Lack of innovation a) Both government and social economy operators do not have enough expertise to set up partnerships. They are not familiar with the benefits that partnerships bring and do not perceive the potential for innovation in solving problems through simetric engagement of both sides, difussion of potentials and exchange of institutional cultures. Innovation in this sense means not only solving the socio-economic problem in an innovative way, but also to engage external partners that may bring added value or new quality in common actions; 3. Social economy entities are not treated as a serious business partners due to the lack of professional knowledge and experience in organization and finance management, actual legislation and binding procedures; 4. Social economy entities usually do not have adequate financial resources to participate in such ventures as public procurement contracts; 5. There are few systems gathering data about the use of social clauses and number of partnerships. The existing ones are still to too weak to bring significant change to whole process of social clauses usage. a) Such system exists in UK (The National Survey of Charities and Social Enterprises), but it mainly consists of data about NGOs and their possibilities to access public funds or form partnerships. Public Procurement Office in Poland implemented a system gathering information about the tenders with applied social clauses, but because of a low feedback it is hard to get any generalization about it; 6. Social clauses are treated as a tools themselves without seeing a wider perspective for the devlopment of social economy and still existing legislative barriers for officers, especially at the regional and local level; 7. Public bodies will not be interested in application of social clauses, when procedures are difficult and risky for them, especially in times of economic crisis while cutting down the administrative costs. They are also afraid of implemenation of innovative methods of tendering (such as use of social clauses), especially if control bodies supervising them do not familiarize with their application; 8. Legislative initiatives tending to add another duties to public procurers without any reasonable analysis of the real impact of using social clauses 8

9 a) Completing and proceeding existing tender documentation brings lots of effort to procurement officers at normal level even without applying social clauses, while EU and national legislation recommends using social clauses which could be treated as another burden. Apart from very brief and general information about the necessity of using social clauses in tendering, public institution didn't receive any clear message that would connect application of social clauses with social economy entities treated as potential bidders for this type of tenders. This causes many stereotypes and does not make any progress in using social claues for the benefits of further development of social economy entities; 9. Low feedback of available courses and promotion actions of SRPP a) Educational and promotion actions do not give any visible progress in the number of using social clauses as far as collected data say, e.g. in Poland; b) Spreading information about the possibility of setting up partnerships between public and social economy entities do not have strong impact on performed public actions, e.g. Sweden 10. If the social criteria really fit their actual mission towards social economy, private business will quickly get on with the new environment and will become more competitive in traditional fields of social economy operation. In other words, private business will be shortly ready to prove their social value, which will cause serious problems for social economy entities by loosing their basic advantage - social orientation. 11. There is a question if social clauses are really necessary tool for making social economy entities more competitive in the market; a) Perhaps social economy entities should stay equal in tenders, but support should be provided to them at the initial stage of their development; 12. Time-consuming public procurement procedures may cause problems for financial liquidity of social economy entities. The project is co-financed from the resources of the European Union within the framework of the European Social Fund 9

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