Proactive Procurement V2

Proactive Procurement
Achieving quality services and implementing policy

objectives by procurement from social enterprises
Guidance note by Mark Cook and David Alcock of Anthony Collins Solicitors
October 2004
Further copies of this document are available from the Provide project.
Either email your details to provide@co-operatives-uk.coop
or write to Provide project, Co-operativesUK, Holyoake House, Hanover Street, Manchester M60 0AS
or go to www.cooperatives-uk.coop/provide
Contents
EXECUTIVE SUMMARY
INTRODUCTION
WHAT IS SOCIAL ENTERPRISE?
LOCAL AUTHORITY PROCUREMENT REQUIREMENTS - THE FRAMEWORK
10
EUROPEAN PROCUREMENT RULES
15
STAGES OF PROCUREMENT
16
ALTERNATIVES TO COMPETITIVE PROCUREMENT
20
APPENDIX 1
Legal Structures used by Social Enterprises
22
APPENDIX 2
EU Directives - Part B
24
APPENDIX 3
Detailed Case Studies
25
APPENDIX 4
Support Organisations
28
APPENDIX 5
Resources
35
The assumption in procuring public services that the choice is just between public and private sector providers
must be challenged.1
Fiona Mactaggart MP Parliamentary Under Secretary for Race Equality,
Community Policy, and Civil Renewal, Home Office
Social enterprises are close to their customers and are not concentrated on maximising profits for their
shareholders. They are often well placed to be able to deliver good quality, cost effective public services.2
Government Strategy for Social Enterprise, July 2002
We need to enable purchasers to rethink the impact of contracts on the community and on their social inclusion
objectives, and allow them to move beyond narrow interpretations of service delivery isolated from all other
strategic objectives. For local authorities, I believe Best Value - used well and supported by the development of
corporate procurement strategies - offers a tremendous opportunity to release the diverse range of skills and
services social enterprises have to offer.3
Stephen Timms MP Minister of State for Energy, e-Commerce and Postal Services-DTI
Acknowledgements
We would like to thank Sipi Hmeenaho of the Provide project for commissioning the work and managing the
publication and Provide and Social Enterprise East of England for funding it, Mick Taylor of mutualadvantage for
his contribution to Section 2, and Nicky Stevenson of The Guild, Chrissie Pearce of the Care Working Group and
John Goodman of Co-operativesUK for reading and commenting on the drafts.
Authors note
While every effort has been made to ensure that accuracy of the report content at the time of completion
October 2004, advice should be taken before action is taken or refrained from in specific cases.
Abbreviations used
ALMO
EU
NAPP
BME
CDA
CIC
CITB
DTA
DTI
FSA
IPS
LLP
ODPM
OGC
SME
TUPE
1
2
3
Arms Length Management Organisation

European Union
New Approaches to Public Procurement Network
Black and Minority Ethnic
Co-operative Development Agency
Community Interest Company
Construction Industry Training Board
Development Trusts Association
Department of Trade and Industry
Financial Services Authority
Industrial and Provident Society
Limited Liability Partnership
Office of the Deputy Prime Minister
The Office of Government Commerce
Small or Medium size Enterprise
Transfer of Undertakings (Protection of Employment)
From the foreword to Think Smart ... Think Voluntary Sector, Home Office and OGC, 2004, page 2
Social Enterprise: a strategy for success, DTI, 2002, page 49
Stephen Timms MP, in Public Procurement, March 2003 on the launch of Community Interest Companies
Executive Summary
This guidance has been commissioned by the Provide Project of Co-operativesUK and the Social Enterprise East of
England network, through the EQUAL programme. It explores how it is possible for local authorities to meet
their policy objectives and to achieve service improvements by procurement from social enterprises.
Social enterprises are trading organisations with social objectives. They often have accountability mechanisms
to customers, service users, staff or communities. They include co-operatives, social firms and development
trusts, and they are now frequently involved in working with public bodies to provide services, including leisure,
housing, recycling, education and social care.
Their closeness to communities and service users, their entrepreneurial nature and their commitment to social
values bring a range of advantages, particularly in the achievement of wider policy objectives or community
benefits, including regeneration, community planning, equalities, sustainability, active citizenship, lifelong
learning and social inclusion.
Current guidance from a variety of government sources, particularly the National Procurement Strategy for
Local Government, confirms the commitment at a national level to procurement from social enterprises.
Under both UK and EU rules, community benefits can be incorporated into the procurement process. In
principle, councils are free to determine what they wish to purchase, as opposed to how:
the well-being power enables authorities to take a holistic approach to procurement including the
promotion of community benefits;
even where a procurement is subject to the EU procurement regime, community benefits can form part of
the core requirements of the contract, as long as they are relevant to the subject matter of the contract,
comply with equal opportunities, are able to be evaluated, add to the achievement of value for money,
and do not disadvantage non-local firms;
the inclusion of such benefits will be strengthened by reference to the Community Strategy, Best Value
Performance Plan or other strategic policies of the council, as long as those strategies mention the
benefits in question;
by 2005 local authorities will have to include a request for priced proposals to deliver community benefits
relevant to the contract that add value to the Community Plan; and
the new EU consolidated procurement directive, to be implemented in the UK by January 2006, clarifies
how and when they are relevant to a contract, social and environmental considerations can be included.
Whilst authorities cannot give unfair advantage to social enterprises during the procurement process, they can
do much to ensure that they have the capacity and opportunity to take part, including:
initiatives to develop the supply base through general support to the social enterprise sector, as long as no
individual enterprise gains advantage for a specific contract;
developing procurement strategies that make a direct link between the Community Plan and other
strategic objects and contract specifications, ensuring that community benefits can be fully integrated
into the procurement process;
consulting with the sector on its capacity, the benefits it can bring, the packaging of contracts and its
ability to take part in the process;
developing appropriate procurement processes, specifications, thresholds, pre-tender questionnaires and

other requirements, which are not excessively onerous, given the size, nature and scale of social
enterprises;
promoting tender opportunities widely, including through social enterprise sector networks, for example
Nearbuyou, ensuring compliance with EU requirements; and
developing opportunities for social enterprises to be sub-contractors in the supply chain.
To obtain some of the benefits of social enterprise provision councils may also consider alternatives to
procurement, which may in particular instances be a better route to best value, including:
Executive Summary
providing grant aid rather than procuring through a service contract;
establishing in-house provision with independence and accountability, perhaps as a development route for
genuine social enterprise; and
establishing a local authority company, using the well-being powers, or clause 96 of the Local
Government Act 2003, with key stakeholders on the board of directors.
All these routes would appear to avoid the requirements of both the UK and the EU procurement regulations,
but may have other disadvantages.
This guidance concludes that in the correct circumstances, authorities can do much to support social
enterprises, and that procurement can be used to gain for the public sector the community benefits that many
social enterprises are able to deliver.
1 Introduction
1.1
This guidance has been commissioned by the Provide Project of Co-operativesUK and the Social Enterprise
East of England network, through the EQUAL programme.
1.2
It aims to consider the opportunities that exist for local authorities to meet their policy objectives and
achieve service improvement goals by procurement from social enterprises, and to explain how this can be
done in practice within the requirements of the UK and European procurement frameworks. The guidance
takes a broad definition of procurement, one that includes the whole process of obtaining a particular
product, works, service, community benefit or other benefit, from the identification of needs, through to
expiry of contracts.
1.3
It has long been the aim of many public bodies to achieve social aims and maximise the benefits for local
communities in the way they buy goods and services. The growth of the social enterprise movement
provides the public sector with an excellent opportunity to combine the achievement of quality services
and significant benefits for communities. As this guidance shows, this is reinforced by a new
acknowledgement at both UK and European levels of the legality of achieving community benefits
through procurement.
1.4
Local authorities have, within current legislation, considerable scope for taking proactive action to
promote and encourage social enterprise involvement throughout the procurement process. However,
local authorities cannot guarantee social enterprises their business. Social enterprises cannot expect local
authorities to favour them where there is no clear value for money benefit.
1.5
The guidance examines the possibilities open to local authorities in relation to social enterprise at each
stage of the wider procurement process including:
developing a supply base;

policy and strategy development;
contract opportunities;
pre-qualification;
drawing up tender specification; and
awards of contracts and contract management.
1.6
The guidance also shows how procurement can be at the heart of delivering the authoritys wider policy
objectives including regeneration, economic development and provider diversity. It has emerged from
work carried out by the New Approaches to Public Procurement (NAPP) Network and associated work
with local authorities and social enterprises. The guidance also builds on the research work carried out by
Richard MacFarlane and Mark Cook for the Joseph Rowntree Foundation and published in Achieving
community benefits through contracts: Law, policy and practice.4
Published by the Policy Press, November 2002
2 What is Social Enterprise?

THIS SECTION
defines social enterprises; and
shows how they can assist in meeting policy objectives and deliver community benefits.
2.1
Like other successful businesses, social enterprises have the potential to deliver excellent quality cost
effective goods and services to the public sector. However, they can do more than that. Along with other
organisations within the voluntary and community sectors, they are part of the social economy, in that
they have social objectives, are socially owned, often accountable and frequently do not distribute profits.
Along side these principles they have many of the characteristics of the private sector, in that they are
entrepreneurial, user or customer focused, and earn their income from trading. They may create a surplus,
but this can only be used to further their social objectives.
DEFINING SOCIAL ENTERPRISE

2.2
The Department for Trade and Industry defines social enterprise as:
...a business with primarily social objectives whose surpluses are principally reinvested for that
purpose in the business or in the community, rather than being driven by the need to maximise
profits for shareholders and owners.
An argument can be made for a narrower definition, including only those organisations that have
democratic ownership. These democratic structures deliver accountability to customers, service users,
purchasers, staff, employees or communities.
2.3
Social enterprises cannot be defined by their legal form. They may be unincorporated, a company limited
by shares or guarantee, or an industrial and provident society. Details of legal structures are provided in
Appendix 1.
2.4
Social enterprises therefore have three defining characteristics:
social ownership - independent, neither privately owned, nor owned by public sector bodies;
trading as their primary means of income whether from individual transactions, or by contract
delivery; and
social objectives - a clear purpose that directs their activities and defines how surpluses are
invested.
In addition they may have a membership or accountability structure based on users, staff or communities
or a combination of the three.
THE RANGE OF SOCIAL ENTERPRISE

2.5
Within this definition, the range and diversity of social enterprise

is extensive. They are diverse in legal structure, size and function,
reflecting the needs of communities, members and public policy
developments. This diversity reflects their ability to respond to
local needs and is a major strength. There are many examples of
successful social enterprises, at one end of the scale a
community caf based within a council facility, a credit union, a
nursery, a community recycling scheme, or an employee-owned
homecare service could all be social enterprises. In contrast,
social enterprises can also be substantial businesses or large-scale
service providers, for example a major national provider of notfor-profit leisure services, or one of the largest specialist kerbside
collection and recycling organisation in the UK.
Somerset Care is a non profit

distribution, independent company
established by Somerset County
Council to take on the
management of their residential
care, nursing homes and in-house
domiciliary care. As a social
enterprise it manages 25 care
homes throughout Somerset and
through a subsidiary has expanded
to take responsibility for 19 homes
for the elderly and people with
learning disabilities on the Isle of
Wight.
www.somersetcare.co.uk

2.6
The main forms of social enterprise in the UK from which public authorities may procure goods or services
are:
co-operatives;
social firms;
development trusts;
community businesses;
community or other types of trusts; and
subsidiaries of charities and voluntary organisations.
THE BENEFITS OF PROCUREMENT FROM SOCIAL ENTERPRISES

2.7
The benefits that social enterprise may bring to any specific procurement will only be formally recognised
at the point of evaluation. However, the essential nature of social enterprise, trading with social
objectives, provides the potential to deliver a range of benefits, both for individual services or
procurements and for the achievement of broader public goals. Many of these benefits are recognised by
government in:
Social Enterprise: a strategy for success;

The National Procurement Strategy for Local Government, ODPM (2003); and
Think Smart Think Voluntary Sector - Good Practice Guidance on the Procurement of Services from the
Voluntary and Community Sector, OGC and Home Office.
2.8
There is general recognition that widening the supply market to include social enterprise, along with
voluntary and community organisations, black and ethnic minority business and other SMEs can increase
procurement effectiveness and the achievement of value for money.
2.9
There are a number of specific benefits that social enterprises may bring to an individual procurement,
and these stem from the combination of the entrepreneurialism of the commercial sector, a public sector
ethos and close relationships with key stakeholders, staff, service users and communities, which are listed
below.
Community and users
Social enterprises are often organisations that have grown
out of communities and retain close links to them. They are
often deeply embeded in their communities and can draw
on resources, knowledge and sensitivity to community
needs and aspirations. They have the potential to draw into
active citizenship people from disadvantaged or excluded
communities.
Independence
The structure of social enterprises gives them operational
independence. They provide a practical accountability
structure in which management can get on with the task of
ensuring day-to-day high quality service delivery and
innovation.
Specialist knowledge and expertise
Social enterprises frequently have high levels of specialist
knowledge and expertise in specific service areas or niche
markets, sometimes developed from a long track record.
They may recruit from groups of service users, draw on high
level voluntary expertise from committed individuals or
have developed from groups of enthusiasts. Some are
Oxford, Swindon & Gloucester

Co-operative Society is a well
established retail consumer
co-operative. It has recently
diversified by working with the
local Neighbourhood Nurseries
Initiative to set up a network of
child care and education nurseries
called Imagine Co-operative
Childcare.
With both urban and rural
locations across its trading area,
the co-operative is based on a
partnership between parents and
children, its employees and local
communities, and employers.
www.osg.coop/live

highly effective at validating the skills and experience of
front line staff, and using this practical knowledge to
enhance services.
Profitability
Social enterprises can often operate at the margins of
profitability, in a way that would be unsustainable for the
private sector, drawing on the commitment of communities
and stakeholders. They are predominantly non-profit
distributional, all surpluses being reinvested in the services
or their social objectives.
Innovation and efficiency
With their independence, sensitivity to communities and
customers needs, and high levels of expertise social
enterprises are often innovative in delivering new working
practices or delivery methods. They may have access to
commercial capital to finance improvements. As staff are
often stakeholders, they can negotiate flexibilities and
changes to working practices outside the scope of other
organisations.
Sensitivity to customers
Social enterprises are close to their customers and often
have service users as members, contributing to their
strategic development and performance management. They
are an excellent vehicle for developing user-led services, and
can be highly sensitive and responsive to the changing
needs of service users.
Stakeholder engagement
By engaging stakeholders in the delivery and development
of services, social enterprises can fundamentally change the
relationship between commissioners and stakeholders and
between different groups of stakeholders.
Labour market
As staff are often members with an ownership stake, social
enterprises can have a significant impact on labour market
issues. In-house staff may be more likely to accept
externalisation, pay rates likely to match those in the public
sector, investment made in training and development,
recruitment issues addressed, flexible working practices
negotiated, quality of work life increased, family friendly
employment practices introduced, and staff turnover
reduced.
Economic impact
Because of their location and recruitment strategies, social
enterprises tend to keep economic benefits within a
community. They train and recruit local staff, they bring
individuals disadvantaged in the labour market back into
employment who spend wages locally, and they invest
surpluses into local communities.
Creation of social capital
Social enterprises and their members can contribute to
ECT Recycling, part of the ECT

Group, is a not-for-profit IPS
(society for the benefit of the
community). It has high levels of
expertise in recycling domestic
waste. With the largest facility of
its type in the UK at Greenford,
ECT has contracts to undertake
kerbside, or doorstep recycling for
a range of councils including
Hounslow, Brent, Vale of the White
Horse, Lambeth and Avon.
Having grown from a local
community transport scheme, ECT
has developed the capacity to
enter the competitive
procurement processes, and is able
to convince councils of the value
for money of its services, and wins
tenders against commercial
providers in the open market.
www.ectgroup.co.uk/group
Greenwich Leisure Limited is a

not-for-profit IPS (society for the
benefit of the community), which
for past 10 years has managed
leisure centres in the London
Borough of Greenwich for the local
authority. It has been highly
innovative in programming and
service development and has
significantly increased capital
investment whilst reducing the
councils costs by more than 50%.
It also runs leisure services for six
other London boroughs.
GLL delivers a range of community
benefits over and above its
management contract, working to
the authoritys wider agendas of
education, community safety and
health.
www.gll.org/index.asp

creating and sustaining social capital, by their proactive participation in local community activity
and networks, creating and sustaining neighbourhood connections, friendship and work relationships,
building trust and tolerance of diversity.
Wider policy objectives
Because of their social objectives, commitment to communities and sensitivity to stakeholders,
social enterprises can often contribute to the achievement of wider social goals providing a practical
joined-up contribution. These can include:
active citizenship;
environmental sustainability;
regeneration;
anti-poverty;
social inclusion;
community cohesion;
health; and
community safety.
2.10 If public authorities are to have the opportunity to consider these benefits in a procurement process, and
the supply market genuinely widened, then the legal framework must be clearly understood, appropriate
procurement strategies adopted (working within government guidance and the EU rules) and appropriate
support offered. These issues are addressed in Sections 3 and 4.
2.11 Social enterprises themselves must develop the capacity to take part effectively in procurement process.
Guidance is available in Public Procurement: a Toolkit for Social Enterprises, DTI October 2003.
KEY POINTS
Social enterprises are organisations that are in social ownership, trade as their primary
means of income, and have social objectives. In addition many may have a
membership or accountability structure.
They may be co-operatives social firms, development trusts, community businesses,

community or other types of trusts, and subsidiaries of charities and voluntary
organisations.
They may provide a series of benefits to procuring bodies, including:
close links to communities and users;
independence;
specialist knowledge and expertise;
profitability, innovation and efficiency;
sensitivity to customers;
stakeholder engagement;
labour market;
economic impact;
creation of social capital; and
the achievement of wider policy objectives.
10
3 Local Authority Procurement

Requirements - the Framework
THIS SECTION
describes the impact on local government procurement of:
the UK government procurement framework;
local government powers;
the Race Relations Act 1976;
EU treaties and directives;
state aid rules; and
the Competition Act 1998.
THE POLICY FRAMEWORK FOR PROCUREMENT

3.1
Under the UK procurement guidelines a public body is free to determine what it wishes to purchase as
opposed to how, provided that:
the purpose is within its statutory powers, its constitution and its agreed policy framework, for
example the community strategy; and
the requirements are needed, are cost-effective and are affordable.
3.2
The governments procurement policy defines value for money as the optimum combination of whole life
costs and quality (or fitness for purpose) to meet the users requirements. There is consistent support in
a range of government publications for taking a wide view of what can be achieved in procurement by
effective competition which ensures that the best range of bids are submitted. In setting requirements,
departments have considerable scope to decide how they draw up their specifications and can chose to
procure to reflect their social policy aims, their own policies and objectives, or those of the government.
3.3
This report uses the term community benefits to mean any social, economic or environmental benefits
which a local authority might wish to seek. It is an alternative term to social clauses and is used in the
context of procurement to cover a wide range of outcomes. It was originally used in Achieving community
benefits through contracts: Law, policy and practice5.as an
expression that was accepted by a range of consultees, including
the OGC.
Sheffield City Council asks
The inclusion of community benefits must be justified as part of
tenderers to consider how in the
the core purpose of the procurement, rather than them being a
delivery of their services they
secondary element that cannot be formally evaluated.
could:
assist the creation of
In October 2003 the Office of Government Commerce and
attractive neighbourhoods;
Department for Environment, Food and Rural Affairs published a
Joint Note on Environmental Considerations in Purchasing that
support the sustainability of
includes a section on social issues in procurement. Its reference
communities;
to opportunities for the consideration of social issues seems to
strengthen the economy and
recognise that there is nothing in principle wrong with seeking
the supply market;
social and community benefits through procurement as long as
provide education or training;

they are relevant to the product or service being procured and
provide recreation; or
consideration of these issues is made at the appropriate stages of
the procurement process.
achieve environmental
benefits.
In the same month the Office of the Deputy Prime Minister
3.4
3.5
3.6
(ODPM) published the National Procurement Strategy for Local

Government. Section 6 is entitled Stimulating markets and
achieving community benefits, and includes the following
statement:
5
Published by the Policy Press, November 2002
See Appendix 3 for an example of

Sheffield City Councils tender
information.
11

Under the Local Government Act 2000, councils are required to prepare a community plan and
have powers to promote economic, social and environmental well-being of their communities.
Provided that there is compliance with EC public procurement regulations and Best Value, councils
can work with suppliers to realise community benefits of this kind through their procurement
activities.6
3.7
The National Strategy states that by 2004 all corporate procurement strategies for local government
should address:
the relationship of procurement to the community plan, workforce issues, diversity and equality and
sustainability; and
how the council concerned will encourage a diverse and competitive supply market, including small
firms, social enterprises, ethnic minority businesses and voluntary and community sector suppliers.
3.8
By 2005 every local authority is required to include in invitations to tender or negotiate for partnership
projects a requirement to submit optional, priced proposals for delivery of specified community benefits
that are relevant to the contract and add value to the community plan.7
3.9
Further guidance on procurement from the voluntary and community sector was published by the OGC
and the Home Office in June 2004, and this emphasises the encouragement now given to public procurers
to engage with a variety of providers.8 This guidance seeks to ensure that public bodies recognise and
address the barriers facing the voluntary and community sector when trying to participate in the public
sector market. It aims to enable them to have the same opportunity to bid for public contracts as other
contractors, recognising the particular benefits and opportunities that working with the voluntary and
community sector can bring. The same principles apply to working with social enterprise.
LOCAL AUTHORITY POWERS

3.10 There are two new pieces of local authority legislation that can be used to support social enterprise and
the inclusion of related matters in local authority contracts.
Well-being powers
3.11 Section 2 of the Local Government Act 2000, the well-being power, is extremely useful. This gives local
authorities the power to do anything they consider necessary to achieve the economic, social or
environmental well being of their area, a part of their area or a group of people within their area. This is
an explicit power to take action to promote economic and social inclusion, and could be used to justify
support for social enterprises where authorities believe this will assist them in achieving these well-being
aims. Under Section 4 of the 2000 Act authorities must prepare a Community Strategy that sets out how
they proposed to meet these aims. This is an important
document, particularly as it can be used to support the inclusion
Nottingham City Council is
of social considerations or community benefits in contracts that
taking part in the Sustainable
are to be tendered under the full EU procurement regime.
Development Pathfinder Project,
However in doing so local authorities must not contravene other
which will examine the
legislation, including equal opportunities legislation.
opportunity to deliver sustainable
3.12 Section 3 of the Local Government Act 1999 names local
development through building
authorities as best value authorities and requires them to make
construction.
arrangements to secure continuous improvement in the way in
In principle, the well-being powers,
which their functions are exercised, having regard to a
enable the City to achieve both
combination of economy, efficiency and effectiveness. The focus
sustainability and workforce
for the improvement of services is to depend, in part, on the
objectives through its construction
Community Strategy and Best Value Performance Plans.
procurement.
3.13 A local authority could decide to include a wide range of policies
See Appendix 3 for the full case
in its Community Strategy, identifying them as the community
study.
benefits that it intends to seek to achieve through its
6
7
8
National Procurement Strategy for Local Government, ODPM, 2003, Section 6

as 6, page 41
Think Smart ... Think Voluntary Sector, Home Office and OGC, 2004
12

procurement. This group can include anything that an authority reasonably thinks will lead to economic,
social or environmental benefit for the area. Social enterprises should, because of their character and their
unique position in the marketplace, be ideally placed to offer some of these benefits.
3.14 As well as adopting policies for promoting community benefits, which social enterprises are well placed to
provide, local authorities can promote social enterprises over and above other forms of service provider. If
a local authority decides to do this, it must set out the justification, ideally in its Community Strategy.
Reasons which can be offered include:
the need to broaden the diversity of potential service providers in the market place;
community benefits cannot be easily achieved without the promotion of social enterprises; and
council staff likely to transfer under the TUPE regulations to a new service provider would welcome
the option of being employed by a social enterprise.
This approach can be taken as long as what is done gives social enterprises assistance in order to facilitate
a level playing field within the public sector market, but not as part of a specific contracting exercise. If a
social enterprise is better placed in relation to a contract because of its skills or experience then this
should be revealed in its tender.
Non-commercial considerations
3.15 Under Section 17 of the Local Government Act 1988 a number of factors are to be treated as noncommercial considerations and are prohibited from being considered in local authority procurement. They
are:
labour force matters, including the terms and conditions and composition of a contractors
workforce;
whether the terms of any sub-contract with individuals treat them as independent contractors or
not;
any political affiliations or interests of the contractor, or their involvement in any other areas of
government policy;
contractors sources of financial support;
the conduct of contractors in industrial disputes;
contractors country of origin; and
the use (or non-use) by contractors of technical or professional services provided by the authority
under the Building Act 1984.
3.16 Until 13 March 2001 this extensive list of non-commercial considerations was particularly important for
labour force matters as it specifically constrained the inclusion of labour force clauses. The Local
Government Best Value (Exclusion of Non-commercial Considerations) Order means that local authorities
can now include labour force (e.g. training and recruitment) matters in their contract requirements and in
their procurement procedures, as long as doing so helps them
achieve best value. Their inclusion is strengthened where this
Nottingham City Council takes
approach is explained in the Community Strategy, the Best Value
into account amongst other issues
Performance Plan, site development plans, Local Strategic
the composition and training of
Partnership strategies or other related documents.
contractors workforce when
establishing its approved
3.17 Any non-commercial considerations not listed by Section 17 may
contractors list for construction
be legitimately included as part of the subject matter of a
work. This can be done as long as
contract. The position is now, therefore, that a local authority for
the City Council considers that in
example
doing so it is facilitating the
could include a contract clause requiring the employment

achievement of best value.
of long term unemployed persons, as long as it could show
See Appendix 3 for the full case
this contributed to best value;
study.
could not specify that only contractors benefiting from a
13

social enterprise start-up grant could tender for a particular contract, because source of finance as a
criterion is listed as a non-commercial consideration under Section 17; but
could specify that the contractor must be able to meet recycling targets in a waste management
contract, because this is not covered by Section 17.
OTHER LEGAL SUBJECTS OF POSSIBLE RELEVANCE

Race relations
3.18 Section 71(1) of the Race Relations Act 1976 (as amended by the Race Relations (Amendment) Act 2000)
places a general duty on named public bodies to:
eliminate unlawful racial discrimination; and

promote equality of opportunity and good relations between persons of different racial groups.
3.19 This applies to a range of public bodies including local authorities. The aim of the general duty is to
mainstream the elimination of discrimination and the promotion of equality of opportunity by making
these an integral part of the way public functions are carried out. This means that listed bodies should
ensure that contractors carrying out functions on their behalf take action to meet the obligations of their
client under the new Act. Incorporating equal opportunities requirements in the contract conditions
would be one way of achieving this.
State aid
3.20 Article 87 (1) of the Treaty of Rome lays down strict rules on the use of state aid, for which there is no
definition in the Treaty. Examples of aid might include subsidies, provision of goods or services on
preferential terms or disposal of land at less than best consideration. The Article sets out four elements all
of which must be satisfied if a measure is to constitute state aid. These are:
the aid must be granted by the state or through state resources;

the aid must favour certain undertakings or the production of certain goods;
the aid must affect trade between member states; and
the aid must distort, or have the potential to distort, competition.
3.21 Aid for some social enterprises could fit under the terms of schemes that are exempt under block
exemption sales, including a de minimis9 threshold of up to 100,000 euros (around 65K). The European
Commission has the power, in cases of unlawful state aid, both to halt payments and to order repayment
of aid already paid, with interest. This would clearly be extremely damaging both to the authority
involved and, in particular, to any social enterprise it was supporting.
3.22 This is a complex subject, which requires careful planning. There is guidance on the DTI website at
www.dti.gov.uk/europe/stateaid. Help and advice is also available from the State Aid Team Branch at the
DTI, who can be contacted by telephone on 020 7215 4472/4452 or by e-mail at sapu@dti.gsi.gov.uk. In
addition, each Regional Development Agency and Government Office have local State Aid experts who
may provide an alternative first port of call for advice on State Aid.
Competition Act 1998

3.23 As with all contracts, authorities should also consider whether any proposed contracts between social
enterprises and themselves could breach the Chapter I prohibition contained in the Competition Act 1998,
which reflects Article 81 of the EC Treaty, and covers agreements between undertakings that have the
object or effect of distorting competition in the United Kingdom, or a part of the United Kingdom. These
terms are not defined further but might cover, for example, an arrangement between an authority and a
social enterprise, which significantly affected the market for a particular service in the authoritys area.
3.24 Detailed guidance can be found on the DTI website at www.dti.gov.uk/ccp/topics2/competition-act.htm.
9
The full expression is de minimis non curat lex. This is a Latin phrase which means the law does not care about very small matters. It can be used to
describe a component part of a wider transaction, where it is in itself insignificant or immaterial to the transaction as a whole, and will have no legal
relevance or bearing on the end result.
14

KEY POINTS
The well-being power enables local authorities to take a holistic approach to

procurement, including the promotion of community benefits, which social enterprises
are well placed to offer.
Local authorities may promote social enterprises, but have to provide reasoned policies
for doing so.
Especially in single tender processes, local authorities have to consider state aid and
competition law issues when dealing with social enterprise.
15
4 European Procurement Rules

EU TREATIES
4.1
The European Union Treaties enshrine the fundamental principle of an open market for public sector
contracts across the EU. A local authority may not, therefore, reserve contracts specifically for a social
enterprise or even for social enterprises generally, as to do so would prevent other organisations from
bidding, contrary to the principles of non-discrimination and equal treatment.
EU DIRECTIVES
4.2
There are currently three directives dealing with procurement of works, goods and services by local
authorities. Each directive has been implemented by UK regulations in the form of statutory instruments
that provide the UK interpretation of the directives. EU documentation refers to social considerations
rather than community benefits but for ease of reference we have used the same term throughout.
4.3
A particular contract may not be caught by the full EU procurement regime; the full rules only apply over
a certain value. For 2004 the threshold figures are:
for contracts for the supply of goods, 153,376;
for contracts for services, 153,376; and
for contracts for works 3,834,411.
4.4
Even over these thresholds not all contracts will be subject to the full advertising requirements of the
procurement directives. Contracts for social services, health, recreation, education and recycling are not
subject to the full regime. These are called Part B services, and the only requirement is the publication of
a contract award notice. Only Part A services are caught by the full requirements. A full list of those
services coming under Part B is listed in Appendix 2.
4.5
Even where the full regime does apply, it is becoming clear that community benefits can still be included
as part of the subject matter of procurement contracts. Community benefits do not have to provide a
monetary benefit or a specific service to the local authority to be a legitimate part of their core
requirements; it is sufficient for them to achieve a policy objective.
4.6
Five tests can be identified for the use of community benefits:
the requirements should be linked to the procurement (e.g. training requirements for the specific
contract can be included, but membership of the CITB could not be included);
the requirements must not contravene, or encourage others to contravene, equal opportunities
legislation;
the requirements must not disadvantage non-local firms in the procurement process (a requirement
of the EU Treaties and procurement rules);
the required outputs must be capable of comparative evaluation and measurement; and
any judgement about value for money must be applied to the whole procurement.
4.7
The final version of the new consolidated procurement directive, due to be implemented in the United
Kingdom by January 2006, expressly provides for inclusion of special conditions relating to the
performance of a contract, including social and environmental considerations.10
KEY POINTS
Authorities should carefully consider whether a particular procurement falls within the
Directives.
Community benefits can be incorporated in a procurement process under EU rules.
To adopt them as a core action of a procurement requires the satisfaction of the five
tests in paragraph 4.6.
The new consolidated procurement directive provides explicitly for the inclusion of
social considerations in a procurement.
10
See recital (33) and Article 26 of Directive 2004/18/EC of the European Parliament and of the Council on the coordination of procedures for the award
of public works contracts, public supply contracts and public service contracts.
16
5 Stages of Procurement
THIS SECTION
examines permissible interventions at each stage of the procurement process including:
developing a supply base;
policy and strategy development;
contract opportunities;
pre-qualification;
drawing up tender specification; and
awards of contracts and contract management.

5.1
Although this report aims to highlight permissible interventions in relation to social enterprises and public
procurement, the principles set out below are equally applicable to SMEs, BME businesses and voluntary
and community organisations.
DEVELOPING A SOCIAL ENTERPRISE SUPPLY BASE

5.2
5.3
Supply side efforts are entirely legitimate as long as no individual enterprise gains any advantage in
relation to any specific contract. This principle is endorsed, for example by the Audit Commission
publication Competitive Procurement:
North Tyneside Home Care
Where the market is weak, authorities are encouraged to
Associates is a newly established
see if they can develop the market and help new entrants.
homecare provider. The project
This may be especially necessary if small and medium
was initiated by Care and Share
enterprises (SMEs), social enterprises and voluntary sector
Associates (CASA), an offshoot of
11
bodies are to be encouraged to bid for contracts.
a well established home care
Local authorities can provide general support to existing and new
co-operative. Its development has
enterprises in their area. There are regional social enterprise
been facilitated by a partnership of
organisations in each of the English regions and Scotland and
the local social services
Wales, as well as a range of more local support organisations
department, North Tyneside
(Appendix 4). Regional Development Agencies and Business Link
Challenge, North East Social
are also charged with developing the social enterprise sector in
Enterprise Partnership, the
their regions. Local authorities should consider working actively
councils employment team and
with local social enterprise support organisations to promote
CASA.
opportunities for partnering and bidding for local authority
The council took a strategic view
contracts. Authorities can legitimately work with social
that it wished to increase capacity
enterprises generally to help them improve their ability to
in the independent sector, increase
respond to contract opportunities, provided this is not linked to
the number of providers and hence
any particular contract.
choice and competition, and
increase the pool of trained home
care staff. It offered similar
Authorities should take a strategic approach to their procurement
support to other providers.
as outlined in the National Procurement Strategy for Local
The establishment of the new
Government. Authorities should be building sustainability into all
social enterprise not only allowed
of their procurement, and specifically setting out how they will
the council to achieve its social
encourage a diverse supply market, including social enterprises.
care strategy, but also delivered
This approach should include, where appropriate, the seeking of
employment and regeneration
community benefits, within the Best Value Performance Plan and
objectives.
the Community Plan, and the inclusion of specific benefits to be
info@economicpartnerships.com
sought within particular contracts.
POLICY AND STRATEGY

5.4
11
Competitive Procurement - Learning from audit inspection and research, Audit Commission, 2003, page 9
17
5.5
If authorities are going to seek community benefits as part of the core requirements of a procurement
contract, then it is particularly important that the specific policies and their outcomes are included in the
Community Strategy. For example, if an authority wishes to promote the employment of people with
disabilities through its procurement, then it should ensure that there is specific mention of this objective
in the Community Strategy.
5.6
Authorities can consult with social enterprises, as they develop their strategy, to discover the possible
benefits that may come from working with them. Social enterprises should decide how they can deliver
the community benefits sought. Social audits or social accounting could be useful.
CONTRACT OPPORTUNITIES
5.7
It is important that social enterprises are enabled to find contracting opportunities with the public sector.
Authorities can use existing social enterprise networks (listed in Appendix 3) and electronic networks
(such as Nearbuyou) to publicise such opportunities.
5.8
If contracts are not subject to the EU Directives, authorities can advertise them wherever they wish; even
if they are, they can still be advertised locally provided no extra information is given in the advertisement,
and the advertisement is placed no earlier than the notice in the Official Journal of the EU.
5.9
Authorities should also consider whether particular contracts can be constructed so as to minimise the
procurement requirements. The aggregation of contracts is not always necessary and can mitigate against
social enterprises bidding; the consolidation of waste management and recycling services is a good
example, particularly as recycling services do not need full tendering under the EU procurement rules. The
OGC guide Aggregation is bigger always better?12 contains helpful guidance.
PRE-QUALIFICATION
5.10 It is important that standard pre-qualification procedures do not militate against social enterprises by
requiring excessive work to complete, or including requirements that are not necessary for the purpose of
the contract. The Home Office/OGC guidance on procurement from the voluntary sector emphasises
that contracting authorities should avoid asking for more than two years previous accounts, as this
mitigates against new or inexperienced organisations. Where community benefits and their delivery are to
form part of the contract requirements, then organisations expressing an interest should be asked to
demonstrate their experience or ability to meet these requirements.
5.11 When contractors are asked to consider subcontracting to social enterprises they can be asked to
demonstrate their relevant track record. Home Office guidance suggests that you can ask prime suppliers
during pre-qualification to demonstrate their track record of
achieving value for money through effective use of the supply
Social enterprise suppliers and
chain - including for example through sub-contracts or
local authority purchasers in
partnerships with VCOs or SMEs.13
England can register with
www.nearbuyou.co.uk. The
website provides a searchable
5.12 This is the key stage in enabling participation by social
online directory of social
enterprises and in ensuring that contracts actually achieve the
enterprises and their products and
local authoritys full purpose. As in principle a purchasing body is
services, and a facility for
free to determine what it wishes to buy, it can analyse the
purchasers to advertise
additional benefits it may obtain from provision by a social
forthcoming tenders. A complex
enterprise, and choose to make these part of the service
E-Alert system enables suppliers to
specification. Examples of the types of benefits are described in
receive tenders by email based on
Section 2. This may increase opportunities for SMEs and BME
their type of business and
businesses as well as social enterprises, but it does not reserve
geographical area.
the contract for them. It is quite possible that a commercial
www.nearbuyou.co.uk
contractor will be able to demonstrate that they can also meet
DRAWING UP THE SPECIFICATION
12
13
Aggregation - is bigger always better?, OGC 2004, available at www.ogc.gov.uk/sdtkdv/new-content/aggregat520304.pdf

Think Smart ... Think Voluntary Sector, Home Office and OGC, 2004, page 21
18
this part of the specification. The contractor must be selected so as to obtain the best service not on
their origin or legal structure.
5.13 The specification should be drafted to include the core requirements of the goods or services and the
linked community benefits. The community benefits must relate to the main contract and must not
discriminate against potential non-local bidders. All parts of the specification must also be capable of
being tested as part of a robust business case to ensure that they are deliverable, measurable,and can be
paid for and properly managed.
5.14 The procurement process could therefore ask potential contractors to show how they would engage
service users, staff and the community in the operation of the service, and could include this in the
evaluation criteria, as long as this aspiration is set out in the Community Strategy or is an approved
objective for the service.
5.15 Under the National Procurement Strategy tender invitations can, and by 2005 should, include a
requirement for bidders to submit optional, priced proposals for the delivery of specified community
benefits, as long as they are relevant to the contract and deliver the Community Plan.
5.16 In preparing specifications, authorities should focus on outcomes, not on methods, in order to leave room
for innovation in delivery. They can involve relevant stakeholders in drawing up the contract specification,
including appropriate consultation with potential suppliers, as long as this does not favour any particular
supplier.
5.17 Authorities should also avoid assigning risks inappropriately under the specification; asking contractors to
take on unnecessary risk could militate against social enterprises being able to bid. They could consider
holding a risk identification workshop to increase the likelihood of correctly assessing and assigning risks
in the best way.
5.18 An example of a specification, as used by Sheffield City Council, together with tender questions to be
adapted in the invitation to tender or negotiate is set out in Appendix 3.
AWARDS OF CONTRACTS AND CONTRACT MANAGEMENT ISSUES

5.19 At the stage that contracts are evaluated the community benefits should form part of the evaluation
criteria, including an appropriate weighting. Criteria should be used that can measure the potential
delivery of these benefits. Authorities should make it clear that they will be choosing the most
economically advantageous tender and in all cases seeking value for money, rather than simply the lowest
price. Along with other potential contractors, if social enterprises are unsuccessful in their tender, then
feedback should be given.
5.20 The payment structure under the contract should also take
account of the needs of smaller enterprises. Significantly, the
OGC/Home Office guidance makes it clear that it is possible in
certain circumstances for public sector organisations to make
payments in advance. These should be assessed on a case-bycase basis14. Authorities must ensure that they are even handed
in their approach. SMEs may have similar cash flow issues.
Finally, authorities should avoid overly onerous reporting
requirements for social enterprises, ensuring that what is
requested is consistent with the size of the contract and the
degree of risk.
14
Think Smart ... Think Voluntary Sector, Home Office and OGC, 2004, page 25
Sheffield City Council asks

potential contractors how they
might:
work in partnership with social
enterprises,
integrate social enterprises
into their supply chain,
support the development of
social enterprise,
integrate social enterprise into
their training programme.
See Appendix 3 for an example of
Sheffield City Councils tender
information.
19
KEY POINTS
Engage with social enterprise support structures in your area.
Get to know what social enterprises can offer.
Hold meet the buyer events.
Provide guidance in how to work with local authorities.
Be accessible to potential new suppliers.
Consult a wide range of service providers, including social enterprises, at the early stage
of developing policies and strategies for procurement.
Ensure that the councils Community Strategy and Best Value Performance Plan set out
the authoritys requirements for a wide range of community benefits and include
support for engaging with the social enterprise and community/voluntary sector.
Analyse what you need in terms of pre-qualification criteria to choose your range of
tenderers and do not choose criteria which are extraneous, and which could bar social
enterprises from bidding.
In specification focus on outcomes and defined reasonable community benefits as core

requirements within the procurement.
Consider stimulating opportunities for social enterprises to be sub-contractors as well as

prime contractors in a supply chain.
Construct a payment mechanism that is realistic in cashflow terms and does not
unnecessarily increase costs.
20
6 Alternatives to Competitive
Procurement
THIS SECTION
briefly considers possible alternatives to competitive tendering including:
grants;
provision in-house; and
local authority companies.

6.1
Although the procurement processes can be organised in a way that achieves the services that social
enterprises provide, they cannot be designed to secure work for social enterprises. If these approaches are
not considered appropriate for the local context, then it may be that an alternative to procurement needs
to be considered.
GRANTS
6.2
The required service outcomes may be better achieved by grant-aiding a social enterprise rather than
offering a contract. In both central and local government there are still services that are acquired in this
way. For example, Groundwork Trusts are grant-funded for an initial period (of many years) by the ODPM.
The decision on what outcomes are best achieved through contracts and what are best achieved through
grants depends on the long-term achievement of the optimum balance of costs and quality. The case for
grant-giving would need to be argued in these terms. Even if a convincing case can be made for grantaiding social enterprises the possibility of the impact of the state aid regulations will need to be
considered. The Home Office guidance on procurement from the voluntary and community sector makes
the point that it is not always easy to tell the difference between giving grant aid and contracting, and
expert advice should be sought where there is any doubt.
PROVISION IN-HOUSE
6.3
A second option would be to deliver the services in-house, either through a separate but publicly-owned
not-for-profit organisation or by the authority itself through one of its departments. There are well known
examples of this approach, such as Newco Products in Newham, London. It is not possible for a public
body to contract with itself, and so any requirements would need to be specified in an internal agreement.
This agreement would not be subject to the procurement process. Whilst stakeholders may be included in
an advisory group, this type of arrangement does not create a social enterprise, and there are issues about
how independent or autonomous any in-house provision can be.
LOCAL AUTHORITY COMPANIES

6.4
Under clause 96 of the Local Government Act 2003 best value authorities may set up companies to do for
a commercial purpose anything which they are authorised to do for the purpose of carrying on any of
their ordinary functions. The use of this power is subject to an order by the Secretary of State and
currently may only be used by councils performing well under their comprehensive performance
assessment. Alternatively a company could be formed relying on the councils well-being powers under
Part I of the Local Government Act 2000.
6.5
The use of either power gives rise to the opportunity to create a structure similar to that of an arms
length management organisation (ALMO). This is a company limited by guarantee of which the housing
authority is the sole member. The board of directors is made up of one third authority nominees, one
third tenants and one third independents. If this type of company were to be used for a social enterprise
then the council could be either the sole member or take a majority of membership voting rights.
Flexibility in the make up of the board of directors, who would manage the enterprise, would give scope
for employee, service user and independent participation alongside representation from the council.
21
6 Alternatives to Competitive
Procurement
6.6
This approach would leave the council free to support the enterprise without open competitive tendering.
Under company law, this type of enterprise would be a subsidiary of the council. In the Teckal case15 the
European Court of Justice held that the procurement rules would not apply to a contract between a local
authority and another legally distinct body that is under the control of that authority where it operates as
if it were a department of that authority.
6.7
A major disadvantage is that under Part V of Local Government and Housing Act 1989 the new enterprise
would be a controlled company and therefore regulated for the purposes of that Act. However, under the
new local government finance regime, this is not as significant an issue as it would have been before 1
April 2004.
15
Case C - 107/98, Teckal Srl v Comune di Viano and AGAC di Reggio Emilia
22
Appendix 1

OPTIONS FOR LEGAL STRUCTURES
The options for any new venture are as follows:
Unincorporated bodies:
unincorporated association;
trust; and
legal partnership.
Incorporated bodies:
private company limited by guarantee;
private company limited by shares;
community interest company;
industrial and provident society; and
limited liability partnership.
UNINCORPORATED BODIES
Unincorporated association
An unincorporated association is an organisation of two or more people who are working together for a
common purpose but not intending to make a profit. Many clubs, societies and other informal groups would
fall into this category. The association can have a constitution, will often have a management committee and
can even be suitable for registering as a charity. But, in this option, no new separate legal body is created and
so any property will be held by the members of the association and any contracts will be entered into by
individual members of the association who will therefore be liable under those contracts. Where the new
organisation is proposed to have substantial activities, this is therefore not a suitable form to be used.
Trust
A trust is formed where a number of people who are known as trustees hold money or property on trust for a
specific purpose for the benefit of others. There will generally be some governing instrument or deed which will
set out the responsibilities of the trustees and the purpose of the trust. The trustees have a personal duty to
make sure that the money or property is used only for the purposes laid down in the governing instrument.
Trusts are subject to a fairly complex legal regime. They can be registered as charities if the purposes of the
trust are recognised by the Charity Commission as being charitable. This is a suitable form for grant making
organisations but not those carrying out commercial or service delivery activities as again in those
circumstances the trustees will be personally liable.
Legal partnership
A legal partnership is formed where two or more individuals come together to operate as a business with a view
to making a profit. Each of them will be entitled to a share in that profit. This arrangement is subject to some
legal regulation, but there is no requirement for publishing any information about the partnership. This is the
usual form for most law and accountancy firms and also many smaller business undertakings. It is only
suitable, however, for an organisation which intends to trade for profit-making purposes and where the
individuals involved are prepared to be liable if things go wrong.
INCORPORATED BODIES
Company limited by guarantee
This is the usual vehicle for non-profit making organisations, including charities, which are companies. It is a
well known vehicle, which is recognised by funders. Companies limited by guarantee do not normally distribute
23
Appendix 1

profits to their members. The members of the company undertake to pay a nominal sum (usually 1) in the
event of the company being wound up and this sum is the limit of their liability. It has a two-tier structure
with members making up those who own the company and directors who are responsible for its management.
Being a limited company such a vehicle can hold property, can employ staff and carry out the full range of legal
functions. It is relatively straightforward to set up, but will of course be regulated by Companies House and
subject to company law. If it is registered as a charity, it will also be subject to regulation by the Charity
Commission. It can form part of a group structure.
Many social enterprises throughout the country have chosen this structure. The structure provides a means of
undertaking a full range of initiatives, with a separate legal identity giving a strong focus for the community.
Company limited by shares

This is the usual vehicle for profit-making trading organisations. There is a similar two-tier structure except
that, with a share company, the owners of the company are referred to as shareholders and their liability will
be limited to the extent of their share in the company. There will then be directors who will manage the
company. This is not a form which is suitable for charitable registration.
Community interest company

Community interest companies (CICs) are a new variation on the company structure with two key new features:
an asset lock to prevent conversion to a profit-distributing body, and the ability to raise some equity finance in
a non-profit making context. Given that the form is unlikely to be available until 2005, however, it has not
been considered in detail for the purposes of this report. Further information about CICs is available at
www.dti.gov.uk/cics.
Industrial and provident society

There are two types of industrial and provident society (IPS): the co-operative and a society for the benefit of
the community.
As with companies limited by guarantee an IPS can be a non-profit making body, particularly those registered as
societies for the benefit of the community. It will have a similar two-tier structure with members and a
committee who are responsible for management. An IPS is, however, less flexible than a company limited by
guarantee in that it has a less flexible membership structure. Registration can be costly but often model rules
can be used to simplify the process.
Many social enterprises have valued the status of being a mutually owned co-operative. It should also be noted
that recent changes to the law mean that assets owned by a IPS set up for the benefit of the community can
be locked in to prevent them ever passing back into private ownership.
Limited liability partnership

Limited liability partnerships (LLPs) are a kind of hybrid between traditional partnerships and limited companies.
They offer some of the protection of limited liability in that a new body corporate, the LLP, is created, and it is
this body corporate that enters into contracts with third parties. Like a company, the LLP has to file annual
accounts with Companies House, and company insolvency rules apply to the LLP. However, the LLP also has
some characteristics of a partnership, in that the LLP itself is not liable to tax; the members are liable for tax on
the income that they draw from the LLP. This can be an advantage if those members are not themselves liable
to tax. The constitution of the LLP can remain confidential between the members and it is for the members to
decide how decisions are taken.
Few social enterprises have yet used this form, which is more likely to be relevant to the professional private
sector, although some use has been made of LLPs in a regeneration context.
Appendix 2
EU Directives - Part B
PART B SERVICES
Hotel and restaurant services
Transport by rail
Transport by water
Supporting and auxiliary transport services
Legal services
Personnel placement and supply services
Investigation and security services, other than armoured car services
Education and vocational education services
Health and social services
Recreational, cultural and sporting services
Other services
24
25
Appendix 3

1 SHEFFIELD CITY COUNCIL
Below is a number of extracts from the housing and neighbourhood investment contracts. Please note that for this
project, requirements are wider than just social enterprise and also incorporate a wider employment and training
strategy, such as 14-19 year olds, employment of hard to reach people etc.
The City Council will look to achieve Best Value through its procurement processes. Tenderers are asked to
consider how their delivery of the service could achieve the following objectives:
Creation of attractive, successful neighbourhoods where people want to live.

Contribution to the long-term sustainability of the communities improved by this project.
Contribution to the City Councils policy of closing the gap.
Creation of a strong economy that encourages a diverse and competitive supply market.
Reduction of crime/vandalism.
Provision of education and training opportunities.
Provision of recreational and cultural opportunities.
Achievement of environmental benefits.
The City Councils commitment to local regeneration is reflected in the scoring criteria for this tender and
represents part of the core subject matter of the Contract.
There is no prescribed method which Tenderers must adopt in trying to deliver the above aims and objectives.
The City Council is looking for both novel and tried and tested solutions. The key point is that the outcomes of
such an initiative must be realistic and deliverable and link well with the whole project. In other words, the City
Council is seeking to achieve Best Value for the project overall and social considerations, whilst a core part of
the Tendered Service are only part of that package.
Please submit your proposals on how you would approach the following social considerations:
1
How you would contribute towards, or deliver, any or all of the general community regeneration
objectives listed above;
How you would deliver the project in partnership with social enterprises active in the area. A social
enterprise is a business/organisation/charity with primarily social objectives whose surpluses are mainly
reinvested for that purpose in the business or in the community. Details of social enterprises active both
Sheffield wide and in the local area are attached to Volume 2 as an appendix. Another option may be the
creation of a new social enterprise. Your response should cover:
How social enterprises could be integrated into your supply chain networks;
How you could support such enterprises in their business development, including professional and
administrative skills, such that at the end of the investment programme the social enterprises would
be sufficiently skilled and experienced to be able to compete for work for long-term viability;
How social enterprises could benefit from integration into such a construction-training programme.
How you would ensure a mixed economy in sub-contracting arrangements. How would you utilise a
range of sub-contractors to be integrated into the wider supply chain (i.e. small, medium and large
enterprises) and ensuring that local businesses are not discriminated against when contracts are awarded.
The provision of training opportunities (for example by participating in the Construction JOBMatch
scheme).
How you would accommodate the Councils initiative regarding the 14 to 19 year old Work Experience
Programme, working closely with the Local Education Authority (LEA).
How you would demonstrate your commitment to the Respect For People Agenda an initiative based on
the Rethinking Construction principles, by considering the opportunities for wider training and further
development of employees, engaged directly by yourself, and your supply chain and how these
26
Appendix 3

arrangements could interface with other Partnering Contractors.
You are required to submit an outline Employment and Employee Development Plan, which could include, but
not be restricted to, the following:
1
Management Development, for example Contracts and Site Management;
Site Supervision training and development;
Customer Care Training;
Workforce development to suit the needs of the investment programme, for example multi-skilling
initiatives;
Health and Safety legislative and technical training, for example dealing with asbestos;
ICT development, for example Project Management and European Computer Driving License qualification;
Links to Further and Higher Education, for example local Colleges and Universities, and graduate
development;
Accreditation of Investors in People (IIP).
You are also required to put forward your ideas on how all the above initiatives could be combined by all
Partnering Contractors into a joint comprehensive Investment Programme wide Education, Training and
Employment Plan.
2 NOTTINGHAM CITY COUNCIL

This case study is drawn from a report that deals with the inclusion of jobs and training in that authoritys
procurement process. It relates to contracting for construction.
a)
Legal Powers
The Local Government Best Value (Exclusion of Non-commercial Considerations) Order 2001 allows
Nottingham City Council to take into account in the formation of its Approved Contractors List, amongst other
issues, the composition and training of the workforce of contractors in respect of its public supply and works
contracts. Prior to the above Order, consideration of these non-commercial issues had been prohibited by the
Local Government Act 1988. This new power can be used if Nottingham City Council considers that, in so
doing, it is facilitating best value.
The Local Government Act 2000 introduced the power of well being. This new power allows Nottingham City
Council to do anything that it considers is likely to achieve the promotion or improvement of economic, social
and environmental well-being in its area, unless there are prohibitions, restrictions or limitations contained in
any other legislation.
The new power of well-being will allow Nottingham City Council, as a major employer in the City, to extend the
function of any construction related operation to include the improvement of local employment and training.
The manner in which Nottingham City Council determines the composition of its Approved Contractors List will
be an essential element of that extended function. Best value will be facilitated by the continuous
improvement in the delivery of the extended function and the above Order will allow Nottingham City Council
to take account of the composition and training of contractor workforces when determining who may or may
not be on the Approved Tender List.
b)
Observations of Quality and Business Services
The use of Social Clauses (access to employment) in construction procurement supports the principles of Best
Value, which must have regard to economy, efficiency and effectiveness, and also equity and environment. In
considering Best Value, a relevant factor listed is that Social Clauses give effect to the principles of sustainable
development, including building in commitments to Local Agenda 21 strategies as well as reflecting the
governments own sustainability development principles.
27
Appendix 3

The government recognises that good public services rely on a well trained and motivated workforce in the
provision of services delivered either in-house or through the private sector. In line with this, the government
has amended Part II of the Local Government Act 1988, to enable local authorities to take workforce matters
into account.
In seeking this approval to apply the new power of well-being to construction procurement, this report also
supports the Sustainable Development and Best Value Pathfinder Project, and Nottingham City Council is one of
the authorities selected to participate in this project. In particular, the Pathfinder Project will examine the
opportunity to delivery sustainable development through the City Councils Best Value Procurement Strategy
and to focus on the Building Construction service and its potential impact on sustainable development.
This report is the first stage in the development of a model for social clauses in the procurement process and
consideration should be given to extending these into future contracts for other works and services.
28
Appendix 4
The following information has been compiled from several sources and the publishers cannot guarantee that is
comprehensive or accurate.
1 NATIONAL ORGANISATIONS
Co-operativesUK
Holyoake House
Hanover Street
Manchester
M60 0AS
0161 246 2900
enquiries@cooperatives-uk.coop
www.cooperatives-uk.coop
Co-operation & Mutuality Scotland

c/o Scotmid Society
92 Fountainbridge
Edinburgh
EH3 9QE
0131 229 4186
cms@scotland.coop
www.scotland.coop
Social Enterprise Partnership GB

9 Red Lion Court
London
EC4A 3EF
020 7583 9444
gerold.schwarz@sepgb.co.uk
www.sepgb.co.uk
Employee Ownership Scotland

Robert Owen House
87 Bath Street
Glasgow
Scotland
G2 2EE
0141 304 5465
eos@sol.co.uk
www.eos.coop
Social Enterprise Coalition

54 Haymarket
London
SW1Y 4RP
020 7968 4921
info@socialenterprise.org.uk
www.socialenterprise.org.uk
Social Firms UK
Aspect House
2-4 Monson Road
Red Hill
RH1 2ET
01737 764021
info@socialfirms.co.uk
www.socialfirms.co.uk
Development Trusts Association
1st Floor, Red Lion Court
London
EC4A 3EF
0845 458 8336
info@dta.org.uk
www.dta.org.uk/index2.html
DTI - Social Enterprise Unit
Small Business Service
Department of Trade and Industry
Kingsgate House
66-74 Victoria Street
London
SW1E 6SW
0845 001 0031
socialenterpriseunit@dti.gsi.gov.uk
www.dti.gov.uk/socialenterprise
Scottish Social Enterprise Coalition

Princes House
5 Shandwick Place
Edinburgh
EH2 4RG
0131 229 7257
info@cbs-network.org.uk
Social Economy Agency Northern Ireland
and Social Economy Network
15-16, Rath Mor Centre
Blighs Lane
Creggan
Derry
BT48 0LZ
028 7137 1733
info@socialeconomyagency.org
www.socialeconomyagency.org
www.socialeconomynetwork.org
Wales Co-operative Centre
Canolfan Cydweithredol Cymru
and Social Economy Network
Llandaff Court
Fairwater Road
Cardiff
CF5 2XP
029 2055 4955
walescoop@walescoop.com
www.walescooperative.com
29
Appendix 4
2 REGIONAL SOCIAL ENTERPRISE NETWORKS
Social Enterprise East Midlands
Foxhall Business Centre
Foxhall Road
Nottingham
NG7 6LH
0115 845 6434
info@seem.uk.net
www.seem.uk.net
Social Enterprise East of England
45 Grosvenor Road
St Albans
Herts
AL1 3AW
01727 813 401
peters@exemplas.com
Social Enterprise Network (Merseyside)
2-3 Atlantic Way
Brunswick Business Park
Liverpool
L3 4BE
0151 707 7729
info@sen.org.uk
www.sen.org.uk
North East Social Enterprise Partnership
14 Manchester Street
Morpeth
NE61 1BH
01670504446
nesep@economicpartnerships.com
RISE
Unit 1, Cranmere Court
Lustleigh Close
Matford Business Park
Exeter
EX2 8PW
01392 473 465
info@rise-sw.co.uk
www.rise-sw.co.uk
South East Social Enterprise Partnership
c/o Social Firms South East
Aspect House
2-4 Monson Road
Red Hill
RH1 2ET
01227 709 727
Social Enterprise Yorkshire and Humberside
c/o IMBY Ltd
53 Mowbray Street
Neepsend
Sheffield
S3 8EN
0114 249 3282
30
Appendix 4
3 REGIONAL, SUB-REGIONAL AND LOCAL SOCIAL ENTERPRISE
DEVELOPMENT BODIES
3SE
Lee House
90 Great Bridgewater Street
Manchester
M1 5JW.
0161 237 4444
info@3se.org.uk
www.3se.org.uk
Avon CDA
BRAVE Ltd
The Coach House
2 Upper York Street
Bristol
BS2 8QN
0117 989 2536
info@avoncda.coop
www.avoncda.coop
Cambridge CDA
Alex Wood Hall
Norfolk Street
Cambridge
CB1 2LD
01223 360977
cambridgecda@connectfree.co.uk
www.colc.co.uk/cambridge/ccda/
CDA South East Hants and Wight
44 High Street
Fareham
PO16 7BN
01329 223043
www.cda-info.org.uk
Cleveland Co-operative Agency
140 Park Road
Hartlepool
TS26 9HY
01429 861303
www.ccda.org.uk
Co-active
25 Wolseley Close
Plymouth
PL2 3BY
01752 500888
contact@co-active.org.uk
www.co-active.org.uk
Co-Enterprise Birmingham
Units 121-122
The Custard Factory
Gibb Street
Digbeth
Birmingham
B9 4AA
0121 687 8790
team@coenterprise.co.uk
www.coenterprise.co.uk
Co-operative and Mutual Solutions (CMS)
48 Sudell Road
Darwen
Lancashire
BB3 3HW
01253 796460
gareth@cms.coop
www.cms.coop
Co-operative Assistance Network Ltd
12 Bellevue Road
Southampton
SO15 2AY
02380 710622
services@can.coop
www.can.coop
Co-operative Futures
City Works
Alfred Street
Gloucester
GL1 4DF
01452 543030
info@co-operativefutures.coop
www.co-operativefutures.coop
Co-operative Solutions Ltd
The Latton Bush Business Centre
Southern Way
Harlow
Essex
CM18 7BH
01279 838213
office@co-operativesolutions.coop
www.co-operativesolutions.coop
Community Enterprise Unit
69A Sidwell Street
Exeter
Devon
EX4 6PH
01392 666281
ceu@ceultd.co.uk
www.ceultd.co.uk
31
Appendix 4
Community First
141 Church Street
Malvern
WR14 2AN
Telephone:01684 573334
info@communityhw.org.uk
www.communityfirst.co.uk
Coventry & Warwickshire CDA
Doe Bank Building
Doe Bank Lane
Coventry
West Midlands
CV1 3AR
024 7663 3911
info@cwcda.co.uk
www.cwcda.co.uk
Economic Partnerships
Morpeth
Northumberland
NE61 1BH
01670 516763
info@economicpartnerships.com
www.economicpartnerships.com
Greenwich CDA
2nd Floor
The Forum@Greenwich
Trafalgar Road
Greenwich
London
SE10 9EQ
0208 269 4880
info@gcda.org.uk
www.gcda.org.uk
Hackney Co-operative Developments (HCD)
62 Beechwood Road
London
E8 3DY
0207 690 2858
info@hced.co.uk
www.hced.co.uk
Harlow CDA
Third Floor
4 Mitre Buildings
West Square
Harlow
CM20 1DR
01279 451293
harlowcda@co-ops.org.uk
www.harlow.gov.uk/business/cda/cda.htm
Kent CDA
c/o Technology Enterprise Kent
James House
Castle Street
Canterbury
Kent
CT1 2QD
01227 470234
Lancashire CDA
Park House
17 Moor Park Avenue
Preston
Lancashire
PR1 6AS
01772 203692
info@lcda.org.uk
www.lcda.coop
Leicester and County CDA
94 New Walk
Leicester
LE1 7EA
0116 222 5010
enquiries@lccda.co.uk
www.lccda.co.uk
Lincolnshire CDA
c/o Business Link
Welton House
Lime Kiln Way
Lincoln
LN2 4WH
01522 574244
charlescooke@bllr.co.uk
Northamptonshire CDA
214a Kettering Road
Northampton
NN1 4BN
01604 259700
wray@enterprise-solutions.org.uk
www.enterprise-solutions.org.uk
Promo-Cymru Ltd
Baltic House
Mount Stewart Square
Cardiff
CF10 5EH
02920 462222
promo@cymru-walescda.org.uk
www.promo-cymru.org
Rochdale Social Enterprise Initiative (ROFTRA)
14/16 Newgate
Rochdale
OL16 1BA
01706 764808
andy@roftra.org.uk
www.roftra.org.uk
32
Appendix 4
Sheffield Co-op Development Group Ltd
Aizlewoods Mill
Nursery Street
Sheffield
S3 8GG
0114 282 3100
www.scdg.org
Social Enterprise London
1A Aberdeen Studios
22-24 Highbury Grove
London
N5 2EA
0207 704 7490
info@sel.org.uk
www.sel.org.uk
Social Enterprise Sunderland
Hendon Co-operative Centre
44 Mowbray Road
Sunderland
SR2 8EL
0191 545 0476
ses@hendon-hub.org.uk
www.socialenterprise-sunderland.org.uk
Suffolk Acre Ltd
Suffolk House
2 Wharfedale Road
Ipswich
IP1 4LG
01473 242514
info@suffolkacre.org.uk
www.suffolkacre.org.uk
Tamil Co-operative Development Agency
92A Forest Road
Walthamstow
London
E17 6JQ
020 8509 8484
The Guild (Norwich) Ltd
Burlington Buildings
11 Orford Place
Norwich
NR1 3RU
01603 615200
services@the-guild.co.uk
www.the-guild.co.uk
Tower Hamlets CDA
Business Development Centre
7-15 Greatorex Street
Tower Hamlets
London
E1 5NF
0207 247 1056
info@co-operation.coop
www.co-operation.coop
London Region DTA

London
EC4A 3EF
0845 458 8138
london@dta.org.uk
Eastern Region DTA
London
EC4A 3EF
0845 458 8138
eastern@dta.org.uk
East Midlands Region DTA
RASEN Hub
20, Union Street
Market Rasen
LN8 3AA
07793 321731
c.skye@dta.org.uk
North West Region DTA
Royal Standard House
334 New Chester Road
Birkenhead
CH42 2AS
0151 644 9683
northwest@dta.org.uk
South West Region DTA
Meridian House Retail Park Close
Marsh Barton Exeter
EX2 8LG
01392 276805
southwest@dta.org.uk
Wales DTA
35b Albert Road
Penarth
Glamorgan
CF64 1BY
029 2019 0260 / 0259
info@dta.org.uk
North East Region DTA
Office 1
Duncurin House Enterprise Centre
74 Medomsley Road
Consett
County Durham
DH8 5HP
01207 588534
northeast@dta.org.uk
South East Region DTA
c/o 9 Red Lion Court
London EC4A 3EF
01303 269019
k.byrne@dta.org.uk
33
Appendix 4
West Midlands Region DTA
c/o All Saints Action Network
All Saints Community Centre
All Saints Road
Wolverhampton
WV2 1EH
01902 556680
westmidlands@dta.org.uk
Yorkshire & Humber Region DTA
c/o 57 Burton Street
Sheffield
S6 2HH
0114 234 2399
yorksandhumber@dta.org.uk
www.dtayandhonline.org.uk
Scotland DTA
54 Manor Place
Edinburgh
EH3 7EH
0131 220 2456
info@dtascot.org.uk
www.dtascot.org.uk
Social Firms Scotland
54 Manor Place
Edinburgh
EH3 7EH
0131 225 4178
jayne.chappell@socialfirms.org.uk
Social Firms Wales
Innovate Trust
433 Cowbridge Road East
Canton
Cardiff
CF5 1JH
02920 391 955
alex.bird@innovate-trust.org
Social Firms South East
Aspect House
2-4 Monson Road
Redhill
Surrey
RH1 2ET
01227 709727
mwebster.socialfirms@zoom.co.uk
Social Firms South West
125 Thingwall Park
Fishponds
Bristol
BS16 2DB
0117 902 4823
keithbates@blueyonder.co.uk
Social Firms Yorkshire & Humber

IMBY
53 Mowbray Street
Sheffield
S3 8EN
0114 2493282
Social Firms North East
Morpeth
Northumberland
NE61 1BH
01670 516892
West Midlands Social Firm Partnership
Institute for Social Entrepreneurs
Rubicon House
Ravenshurst Street
Birmingham
B12 0HD
0121 771 1411
alan.cornfield@i-s-e.co.uk
Social Firms Eastern Region
86 Whiting Street
Bury St. Edmunds
Suffolk
IP33 1NX
01473 272 237
petradreyersfer@aol.com
Social Firms London
Aspect House
2-4 Monson Road
Redhill
Surrey
RH1 2ET
01227 709727
mwebster.socialfirms@zoom.co.uk
Social Firms East Midlands
Unit 37, The Lenton Business Centre
Lenton
Nottingham
NG7 2BY
0115 9424761
simonprobert@aol.com
34
Appendix 4
4 OTHER SUPPORT ORGANISATIONS
2AMASE
19 Helford Way
Upminster
Essex
RM14 1RJ
0871 218 0246
info@2amase.org.uk
www.2amase.org.uk
Accalia
KCBC
180-186 Kings Cross Road
London
WC1X 9DE
0207 689 1616
www.accalia.co.uk
Coin Street Community Builders
G2 Oxo Tower Wharf
Bargehouse Street
South Bank
London
SE1 9PH
020 7401 3610
www.coinstreet-org
Jericho Community Business
196-198 Edward Road
Balsall Heath
Birmingham
B12 9LX
0121 440 7919
www.jcp.org.uk
mutualadvantage
57 Cowley Rd,
Ilford, Essex,
1GI 3JJ
020 8491 5830
mt@mutual-advantage.co.uk
www.mutual-advantage.co.uk
New Enterprise Partnership
020 8763 2975
admin@new-enterprise.co.uk
www.new-enterprise.co.uk
Prime Focus Regeneration Group
Daimler House
Paradise Circus
Birmingham
B1 2BJ
0121 687 5000
www.focus.co.uk
The FRC Group
Atlantic Way
Brunswick Business Park
Liverpool
L3 4BE
0151 701 0551
www.the-cats-pyjamas.com
35
Appendix 5
Resources
ORGANISATIONS
Co-operativesUK
As the apex organisation for co-operative enterprise in the UK, it promotes co-operative and mutual solutions, provides legal
and governance development services, and has a range of projects to develop the sector including rural and public sector
service development.
Social Enterprise Partnership SEP
Implements infrastructure and systems development, capacity building, research and development for the social enterprise
sector in the UK.
www.sepgb.co.uk
Social Enterprise Coalition
The national body that brings together organisations to promote the social enterprise sector and share knowledge. SEC
plays a dual role, both influencing the policy agenda and promoting best practice.
Social Enterprise Unit (SEnU) DTI
The role of the Social Enterprise Unit (SEnU) is to: act as a focal point and co-ordinator for policy making affecting social
enterprise; promote and champion social enterprise; take action needed to address barriers to growth of social enterprises;
and identify and spread good practice.
www.dti.gov.uk/socialenterprise/about
Office of Government Commerce OGC
OGC works with government to improve procurement and project/programme management. Procurement website is
intended to provide access to OGC news, publications, services information and content on particular topics or initiatives of
particular interest to members of the government procurement community.
www.ogc.gov.uk
Society of Procurement Officers in Local Government (SOPO)
SOPO engages in a range of activities to promote its strategic purchasing, contracting and supplies functions.
www.sopo.org
Improvement and Development Agency (IDeA)
IDeA works to stimulate and support continual and self-sustaining improvement and development within local government.
www.idea.gov.uk/procurement
Local Government Association
The LGA exists to promote better local government. The LGA aims to put local councils at the heart of the drive to improve
public services and to work with government to ensure that the policy, legislative and financial context in which they
operate, supports that objective.
www.lga.gov.uk
36
Appendix 5
Resources
USEFUL PUBLICATIONS
Social Enterprise: a strategy for success - DTI
This strategy was launched in July 2002. It sets out a programme for the next three years of how the government will work
with key partners to promote and sustain social enterprise activity.
www.dti.gov.uk/socialenterprise/strategy
Think smartThink Voluntary Sector - Home Office & OGC
Good Practice Guidance on Procurement of Services from the Voluntary and Community Sector, June 2004.
www.homeoffice.gov.uk/docs3/thinksmart_040608.pdf
Smaller SupplierBetter Value? - OGC & SBS
Part of the 'Think Small First' drive which urges all parts of government to think about their role in supporting the enterprise
society. The booklet seeks to raise awareness of the greater competition and better value small and medium-sized
enterprises (SMEs) can bring to the marketplace.
www.ogc.gov.uk/embedded_object.asp?docid=2077
Fit to Supply - SBS
Fit to Supply is a supply chain and procurement initiative supported by the Small Business Service. The project that brings
together major purchasers of goods and services with the small businesses and enterprises in their local communities for
mutual benefit.
Purchasers - to find out how Fit to Supply can help your organization to benefit from the diverse skills on your doorstep,
build links with local communities, meet statutory requirements and deliver best value for your stakeholders, visit:
www.fittosupply.org/Clients/FTS/FTSWebsi.nsf/purchaser
National Procurement Strategy for Local Government - ODPM
www.odpm.gov.uk/stellent/groups/odpm_localgov/documents/pdf/odpm_locgov_pdf_029231.pdf
Sustainability and Local Government Procurement - IDeA
This guide draws on the experience of English and Welsh local authorities to provide practical advice on how a commitment
to sustainable development can be turned into an effective procurement policy and strategy and built into processes.
www.idea.gov.uk/publications/?id=008
Competitive Procurement - Learning from audit inspection and research - Audit Commission
www.audit-commission.gov.uk/reports/AC-REPORT.asp?CatID=&ProdID=877F5A21-2999-460e-BABF-3D4A598638E7
Assessing the Impact of Public Sector Procurement on Competition - Office of Fair Trading
Preliminary OFT research into public sector procurement, September 2004.
www.oft.gov.uk/NR/rdonlyres/5DE3EFD9-88C6-4A6F-9A36-7DBEBB1B20A8/0/oft742a.pdf
Training Module on the New Public Procurement Directives - OGC
Released August 2004, a training module covering significant changes arising from the new Public Procurement Directives
has been developed for OGC and is available on the website.
www.ogc.gov.uk/index.asp?id=1002185
The Social Enterprise Coalition and New Economics Foundation are producing a guide for procurement officers and others
involved in the procurement process. It will explain the benefits of procuring from social enterprises with a series of
practical examples showing what can be achieved. The guide will be available in early 2005.
Founded in 1973, the Birmingham based firm Anthony Collins Solicitors is a law firm with
the large social housing, charities and community regeneration operations, alongside
commercial and private client teams and has particular expertise in relation to
procurement issues. Mark Cook is co-author author of Achieving community benefits
through contracts: Law, policy and practice, research funded by the Joseph Rowntree
Foundation. The firm is also increasingly involved in services to social enterprises and
those who support them.
www.anthonycollinssolicitors.com
Provide project is part funded by Co-operative Action and delivered by Co-operativesUK

and a range of partner organisations. It promotes the awareness of co-operative social
enterprise opportunities for the delivery of public services and assists those working on
specific options.
www.cooperatives-uk.coop/provide
Co-operativesUK represents the spectrum of co-operative enterprise throughout the UK,

the Channel Islands and the Isle of Man. Its purpose is to develop and extend the
co-operative sector. It believes that co-operatives and the wider social enterprise sector
make a substantial contribution to the UK economy, and in all their diverse forms
co-operatives provide effective sustainable solutions to many of the social and economic
challenges of modern society whilst encouraging democratic participation.
Social Enterprise East of England is the regional network of social enterprises, social
enterprise support organisations and other key stakeholders within the Eastern Region. It
promotes, develops and shares the success of social enterprise and helps implement best
practice throughout the region. It works to improve skills and knowledge, encourage
sustainability through trading, maximise social impacts, influence policy and voice the
views of its members within the region and at a national level.
Co-operative Action, funded by co-operative societies, provides support and assistance to

communities throughout the UK to encourage the establishment and support for
co-operative, mutual or social enterprise initiatives. It offers grants and loans for
development and research into innovative ideas which provide co-operative, mutual or
social enterprise solutions.
www.co-operativeaction.coop
The Social Enterprise Partnership implements infrastructure and systems development,

capacity building, research and development for the social enterprise sector in the UK
and is funded by the EQUAL Community Initiative programme and other funders to
deliver a three-year project. SEP aims to address identified barriers restricting the
successful growth of the social enterprise sector, notably under-investment, insufficient
access to training and support, the lack of appropriate quality mechanisms and impact
measurement tools. SEP involves programme of work to upgrade business development
and support to the sector, to help social enterprises grow their business operations and
to measure, prove and improve their quality and impact.
www.sepgb.co.uk
This publication has been supported by

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Proactive Procurement

Achieving quality services and implementing policy

WHAT IS SOCIAL ENTERPRISE?

LOCAL AUTHORITY PROCUREMENT REQUIREMENTS - THE FRAMEWORK

EUROPEAN PROCUREMENT RULES

ALTERNATIVES TO COMPETITIVE PROCUREMENT

Legal Structures used by Social Enterprises

Detailed Case Studies

Arms Length Management Organisation

developing appropriate procurement processes, specifications, thresholds, pre-tender questionnaires and

developing opportunities for social enterprises to be sub-contractors in the supply chain.

providing grant aid rather than procuring through a service contract;

developing a supply base;

Published by the Policy Press, November 2002

2 What is Social Enterprise?

defines social enterprises; and

DEFINING SOCIAL ENTERPRISE

Social enterprises therefore have three defining characteristics:

THE RANGE OF SOCIAL ENTERPRISE

Within this definition, the range and diversity of social enterprise

Somerset Care is a non profit

2 What is Social Enterprise?

THE BENEFITS OF PROCUREMENT FROM SOCIAL ENTERPRISES

Social Enterprise: a strategy for success;

Oxford, Swindon & Gloucester

2 What is Social Enterprise?

ECT Recycling, part of the ECT

Greenwich Leisure Limited is a

2 What is Social Enterprise?

They may be co-operatives social firms, development trusts, community businesses,

They may provide a series of benefits to procuring bodies, including:

close links to communities and users;

specialist knowledge and expertise;

profitability, innovation and efficiency;

creation of social capital; and

the achievement of wider policy objectives.

3 Local Authority Procurement

the UK government procurement framework;

local government powers;

the Race Relations Act 1976;

EU treaties and directives;

state aid rules; and

the Competition Act 1998.

THE POLICY FRAMEWORK FOR PROCUREMENT

provide education or training;

(ODPM) published the National Procurement Strategy for Local

Published by the Policy Press, November 2002

See Appendix 3 for an example of

3 Local Authority Procurement

LOCAL AUTHORITY POWERS

National Procurement Strategy for Local Government, ODPM, 2003, Section 6

3 Local Authority Procurement

could include a contract clause requiring the employment

could not specify that only contractors benefiting from a

3 Local Authority Procurement

OTHER LEGAL SUBJECTS OF POSSIBLE RELEVANCE

eliminate unlawful racial discrimination; and

the aid must be granted by the state or through state resources;

Competition Act 1998

3 Local Authority Procurement

The well-being power enables local authorities to take a holistic approach to

4 European Procurement Rules

for contracts for the supply of goods, 153,376;

for contracts for services, 153,376; and