Charities Losing Out On Service Contracts

The inquiry into a government decision to award the bulk of Pathways to Work contracts, worth £250m, to private firms has raised questions about the role of charities in public service provision.

Despite ministerial enthusiasm that the third sector should be central to Pathways to Work service provision, only one charity, the Shaw Trust, was successful when the 15 Department for Work and Pensions contracts were awarded in September.

The independent inquiry, chaired by ex-Whitehall mandarin Dame Mavis McDonald, says processes must change if government rhetoric is to match reality.

McDonald insists that the process was not flawed, but that more consideration needed to be given to desired outcomes when deciding on a procurement route.

The report, commissioned by the Association of Chief Executives of Voluntary Organisations, asks whether bidders need to include Tupe (transfer of undertakings) conditions – designed to protect staff who transfer to a new employer – in their bids. WorkDirections UK won six out of 15 contracts after legal advice that it need not apply Tupe conditions, while unsuccessful bidders factored in the cost of Tupe.

Ian Charlesworth, chief executive of the Shaw Trust, says: “In my 30 years of experience of public service contracting, I have never experienced anything like it. More weight was given to contractors’ ability to write fairytales than actual performance, past performance and on what contractors could achieve in the future.”

Steve Swan, national sales and development manager for Tomorrow’s People, a charity that lost out in the bidding process, described the report as “tame”. He says: “We need to find ways of helping organisations like Tomorrow’s People, who have a proven track record, to participate.”

But Matthew Lester, director of operations at the charity Papworth Trust, argues that the bidding process had been fair and that it was up to charities to develop skills needed to launch successful bids.

The report concludes that policymakers need to give consideration “to the longer-term market . . . if they wish to sustain quality and innovation”.

· Pathways to Third Sector Involvement is at
Ian Charlesworth, of the Shaw Trust, blogs about the McDonald inquiry at