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Why public procurement drives inequality

By 7th September 2021 No Comments
Inequality

Recently, I had a conversation with a procurement professional about inequality in the Not for Profit (NFP) sector. They had attended a seminar where there was a view that procurement processes, for their sector, drove inequality in labour outcomes, especially for female workers. It set my mind thinking about this as initially, the conversation sounded like one of the reactionary “hot takes” one sees all to often these days. After a bit of research however, I came to the view that they complainants are probably correct. I’ll explain how this happens in a structural way and then using a real example. I’ll also make some suggestions for how things can be improved. 

Outsourcing core social services to NFPs means worse conditions of employment for predominantly female employees

Firstly, in the NFP sector, a lot of their funding is contingent and project driven. Typically, there are more women working for NFPs that specialise in services than men, especially in domestically focused NFPs. Project based roles (fixed-term contracts) rarely offer terms and conditions of employment that are as favourable as full-time roles. It is quite common for there to be no provision for pension payments, few benefits like healthcare cover or illness cover and little in the way of security of tenure beyond the end of a funding cycle. This indicates that there is a structural imbalance in areas that have a high proportion of female employees and that means an elevated risk of inequality presents.

By way of a counter-example, it can be quite common in construction for many men employed in the sector to be self-employed. Construction is a sector which is also project based but in many cases, there is both a cultural acceptance, a tradition and a choice for most of the small sub-contractors operating on construction jobs that does not exist in the funded project space NFPs operate in. While some trade unions are positing the view that there is unfair and exploitative practices in construction (what they call bogus self-employment where a worker only works for one builder but is forced to act as a self-employed person rather than an employee), the landscape for this, certainly in terms of choice is more mixed in construction than it is in the NFP space. 

To summarise, what role does the State play in driving these structural issues? The simple truth is that they are central to this system. They designed it, they propagate it and they sustain it. They are the engine in the vehicle driving it so they are the source of any inequality that this is driving. If you write the tender, consciously or unconsciously, you are engineering the outcomes the process delivers.

What can be done to reduce the risk of procurement driving inequality?

Where there is no real competition for services, especially social services, a direct funding model may be what is needed. NFPs should consider pushing back at State bodies and examine how roles can be funded such that services are provided but that security of tenure, pension accumulation rights etc are not being actively undermined by State actors that elsewhere impose stringent employment obligations on businesses. Inequality is evident when you look at the terms and conditions enjoyed by project officers in full-time state roles compared to roles linked to outsourced tender cycles. This is evident at the moment in Local Employment Services contracts in 2021.

The implication of designating these services core state services is that the cost of providing these services may rise significantly (i.e. reflect that they are permanent requirements that the State does not intend on cancelling or withdrawing from the marketplace). This may force choices around how contracts are allocated and whether NFPs are efficient delivery vehicles for social services. In some cases, this could result in people being given the option to become full-time public servants. In other cases, it may require an alternative approach to drive efficiencies in administrative overheads. Engineering mergers in service providers may free up budget to improve terms and conditions for their own workers. It should not all come down to a tax payer funded hike in costs. The sheltered procurement provision in the EU could also be used to experiment with this. There is insufficient ambition being shown in this regard. 

Are we evaluating the skills of proposed resources the right way?

One other area where there is the potential for bias and inequality in procurement is how CVs are sought and used. CVs are central to tendering as they are used to evaluate which team has the right blend of experience to undertake the contract in question. Procurement lags emerging good recruitment practices quite significantly in how it does this. We are quite familiar with the procurement practices in Northern Ireland. Equality legislation following decades of sectarian civil war means that CVs are anonymised in many tender processes. Typically, this is both at a gender level and a name level.  

The EU is currently looking at gender based procurement and whether countries have been considering it enough as a question. I have been thinking about this since I completed a consultation they issued on this earlier this year and I think the Northern Ireland example is probably the best path for companies interested in actively encouraging diversity to control for conscious and unconscious bias in procurement.

If processes are to be more equitable States have to demonstrate a willingness to make them so. This applies to how they are run (e.g. how personnel information is sought) as well as whether the mechanism for service delivery actually needs to be tendered in the first place.

I previously wrote about aspects of this topic in 2018 – some thoughts on it here: https://keystonepg.ie/diversity-public-procurement/   

Find out more about NFP procurement on www.sluamor.com