1. The experience of third sector subcontractors in the European Social Fund 2007-13 Programme Richard Crisp Centre for Regional Economic and Social Research (CRESR) Sheffield Hallam University

2. How many subcontractors are there?  ESF website lists 1,266 subcontracts and 706 subcontractors…  …but a number of TSOs we contacted had no subcontract  We estimate there are 488 subcontractors  And surveyed 137 of these (28 per cent)

3. Third sector squeezed out?  Mean average size of contracts held = £275,754 but the median average = £87,000  Total value of subcontracts = £134.6 million  Four per cent of the £3.4bn awarded through ESF  Subcontractors are much larger than the 'average' third sector organisation.

4. Third Sector squeezed out?

5. Overall experiences are positive  Concerns about delayed or end-loaded payments, excessive bureaucracy and inflexible contracts... ...but most felt able to draw on organisational strengths, work with disadvantaged clients and deliver a high quality service  TSOs largely positive about relationships with prime/lead contractors: 79 per cent report ‘good relationship’ with contract manager 75 per cent have ‘clear lines of communication’

6. Satisfaction with experience Income Sector of prime Overall Per cent

7. Final reflections  Some evidence that TSOs are squeezed out at the bidding phase… ...but largely positive about their experience once in.  Key concerns centre on contract specifications and systems rather than relationship with prime contractors.  TSOs feel able to deliver a valuable service that meets needs of the ‘hard-to-reach’.

8. Lessons for the Work Programme The challenge for prime contractors:  Ease the burden of paperwork  Minimise financial risk  Provide flexible subcontracts that support innovation The challenge for third sector subcontractors:  Be ‘reasonably commercial’  Keep focused on outcomes without losing sight of social aims  Can ‘do-gooders, pink or fluffy, social workers’ survive?