Contracting with the private sector for services: new challenges for the third sector?
Aiken, Mike (2007)


By Mike Aiken, Visiting Research Fellow at the Open University and Research Associate, IVAR

The contracting out of state services to third sector organisations has become a dominant part of the UK policy environment (Audit Commission 2005, Kendall 2003). Larger charities and social enterprises have been enthusiastic although there has recently been some caution (NCVO 2006). Discussions, in third sector studies, have focussed on the dilemmas of contracting with the state. One implication that has received little attention is where voluntary organisations deliver services on contract directly to private sector organisations.

The trans-European EMDELA research (2006/7) examined third sector organisations delivering work and training to excluded communities. It found that the outsourcing of services, alongside civil service cutbacks, had resulted in contracts being increasingly ‘bundled’ to include a broader geographical area and wider range of services. This tendency has been noted in recycling (Slater 2006) and Job Centre Plus contracts (Davies 2006). Such processes favour larger national organisations in bidding processes – from either third or private sectors – which then sub-contract to locally-based organisations to deliver specialised elements. Hence local voluntary organisations start to deliver contracts to agencies from either the third – or private – sector.

This paper is an early exploration of the implications. How might the distinctive values of third sector organisations, local knowledge and trust, as well as policy structures such as compacts and Local Strategic Partnerships, be affected? Using ideas from institutional theory (DeMaggio & Powell 1991), and notions of the hybridisation of the third sector (Evers 2005), the paper asks whether contracting with the private sector provides a new wave of dilemmas for the third sector.

Mike’s paper is available here (Word).


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