Helsinki 070205 workshop D service provision

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Helsinki social enterprise conference 070205

Workshop D: Service provision and public private partnership

Facilitated by: Kate Annison (South-East England Development Agency, Guildford), Barbara Torazza (freelance expert, Turin)

D.1 Summary

The debate mainly concerned the question: Can public procurement practices and state aid rules be used to support social enterprises and public-social-private partnerships? From the technical point of view, the answer is that the secondary European legislation provides several options. Nevertheless, the public sector needs to have the political will to use them as technical tools for social inclusion and innovation. Social enterprises have to dialogue with public authorities and make their social added value recognised and appreciated.

D.2 Issues

People working for different types of organisations attended the workshop: ministries of labour, a few social enterprises, research centres, local authorities, charities, associations, NGOs and health services.

The main issue was a request for clarity: it concerned different aspects of the role of social enterprises and how should they be conceived and treated. Key elements are state aid and public procurement rules. Participants’ contributions showed that there is little awareness of what state aid entails and under what conditions enterprises (whether from the mainstream economy or the social economy) can receive it. The knowledge gap seems to be wide, in spite of useful regulations and decisions by the European Commission, not to mention the Treaty and rulings of the European Court of Justice.

Social enterprises are not aware of these resources and, thus, they are unable to promote a clear and fair awareness raising campaign targeting public authorities.

The same goes for public procurement: in this field, purchasing authorities rarely dare to implement European provisions that can apparently be used in favour of social enterprises. Of course, it is important to avoid imbalances between social enterprises across Europe and also between social enterprises and for profit enterprises, which make extensive use of state aid.

Other questions were raised but they were so far-reaching that they could not be solved in the workshop and without the involvement of the social partners. The core issue concerned what status to grant to social enterprises: should they be treated as mainstream enterprises, should they operate only in specific markets, how should their social added value be recognised?

This obviously opened up other questions concerning the very nature of a social enterprise. The EMES definition does not seem to be widely known. Furthermore, legal definitions vary from one country to another, and in some cases they still have to be adopted. Some participants stressed that social enterprises do not simply provide services and do not simply offer a solution to unemployment. They create social capital and build social cohesion. They use business as a means to pursue social inclusion. They originate from a local community and are able to respond to its needs.

D.3 Recommendations

Suggestions and proposals from the participants can be clustered as follows:

  • dissemination
  • dialogue
  • awareness raising
  • training and counselling

Purchasing authorities across Europe increasingly use tendering procedures in order to raise efficiency and accountability, and reduce cost. Furthermore, they tend to make reference only to the two famous criteria set in article 53 of the Directive on the co-ordination of procedures for the award of public works contracts, public supply contracts and public service contracts:

  • the tender at the lowest price, or
  • the tender most economically advantageous from the point of view of the contracting authority.

The second criterion paves the way for the recognition of the social added value of a social enterprise: several EQUAL projects have been working on tools that can make this concept operational.

Fortunately, the European Commission, notably the Internal Market DG and the Competition DG, and, where appropriate, the Council of the EU and the European Parliament, have issued very useful regulations, directives and decisions as well as helpful interpretative communications with a wider perspective. The participants in the workshop insisted that these rules and clarifications should be disseminated so as to fill this knowledge gap and ensure a full implementation of European rules.

The dissemination could take the form of a Handbook on State Aid Rules, which would explain that state aid can be granted to social enterprises and how to do it. A Handbook on Public Procurement Rules should also be published. The workshop participants also stressed the importance of explaining why is it good to support social enterprises or to purchase from them and also to make reference to the function and the results achieved rather than to the legal definition of a social enterprise. At the same time it would be very useful to publish a Compendium of Public-Social Private Partnership explaining which rules to apply, and to provide practical examples of good practices.

It is of paramount importance to develop a thorough dialogue between the public sector and social enterprises so that each should understand the purposes and operational capacities of the other; but also with a view to building up familiarity and mutual trust, and developing common objectives. Sometimes public authorities feel they are just the target of lobbying: participants noted that the public sector needs to be listened to, not just pushed. It is also important to develop a dialogue with for profit enterprises and to explore boundaries to make connections between social enterprise, public and private sectors in order to create synergies for the promotion of social inclusion.

Furthermore, for future meetings, ETG participants would appreciate the presence of representatives of other Directorates General of the European Commission that deal with matters that touch upon social enterprises, as a political sign of attention. At the same time, more co-operation between the Employment and Social Affairs DG, the Competition DG and the Internal Market DG could lead to a publication like Buying Green! A handbook on environmental public procurement, which followed an Interpretative Communication by the Commission on the Community law applicable to public procurement and the possibilities for integrating environmental considerations into public procurement. The fact that the Commission issued this Communication together with a twin Communication on the inclusion of social considerations might be a good inspiration for action.

It seems to be urgent to develop a strong action of awareness raising, able to reach different targets:

The first is the public sector, which needs to be informed about the social added value of social enterprises and to be provided with concrete data evidencing their social impact. It will also be important to highlight the fact that social enterprises not only provide services of good quality, but at the same time save taxpayers’ money by achieving multiple objectives in the same action (for instance: service provision, social inclusion and employment).

Furthermore, social enterprises guarantee equal access to services to any citizen, even in remote areas.

It will also be useful to inform the private sector about the opportunities for co-operation with social enterprises.

It will be fundamental to inform citizens not only about the quality of the services delivered by social enterprises but also about the great opportunities that social enterprises offer with regard to self-organisation and empowerment of groups of citizens.

Training and counselling will support the dialogue and the correct use of EU rules: participants emphasised the importance of using resources from the ESF to reimburse the work time that officials devote to learn how to promote social inclusion and innovation without infringing European law.

On the other hand, social enterprises need to be trained in the same subjects so as to be able, for instance, to submit a bid or to apply for state aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest.

Furthermore, it will be important to make specialist support available for an extended timeframe, not only for the start-up of a social enterprise.