The B.C. government missed an opportunity to strengthen community groups and advance its poverty reduction goals when it awarded hundreds of millions of dollars worth of contracts to provide employment services, says an expert on using procurement to create social benefits.
“Every purchase, intentionally or unintentionally, has an economic but also an environmental and social impact,” said David LePage, a co-founder and managing director of Buy Social Canada, an organization based in Vancouver that certifies social enterprises and promotes social procurement.
Social benefit goals need to be built into the process when governments buy goods or services, he said. “Our presumption is if you intentionally add a social value, you will create healthier communities through existing purchasing.”
But Shane Simpson, the minister responsible, says the program’s main goal has to be helping people find work. Overall, more money will be going to non-profits than ever before, he said, and the jobs program ties in well with the government’s soon to be announced anti-poverty strategy.
Earlier this month the provincial government announced the winners of contracts to provide the WorkBC program over the next six years starting April 1.
“I was surprised the government did not take the opportunity to integrate some of the great objectives around poverty reduction and community building that they hold as policy,” LePage said. “They missed an opportunity is the best way for me to say it.”
Billions to spend
The WorkBC program is funded through $2.5 billion in employment insurance funds that the federal government has committed over six years. It is administered by the province, which adds tens of millions in funding.
More than 50,000 clients throughout the province use the services each year, receiving help to search for jobs, assess their skills and get training.
Successful bidders included several non-profit agencies like the YWCA and the Open Door Social Services Society, but also big international companies like Maximus Canada Employment Services Ltd. and WCG International Consultants Ltd.
Meanwhile, some organizations that held contracts in the past were left out. Even before the results were publicly announced, some in the sector were talking about community-based service providers feeling under attack and expecting a significant number of layoffs.
“If the provincial government is trying to build healthy and inclusive communities, and they’re trying to end poverty, then the procurement and the employment strategy have to be integrated into that other goal,” LePage said.
“You can’t expect to achieve employment for people with barriers, you can’t expect to address underlying issues of poverty, unless you’re willing to use your procurement and your employment programs in a model that’s focused on not only good value for dollar, which no one says we shouldn’t get, but good value for dollar also includes the social benefit that’s being created.”
Bigger providers, more corporate
Janet Morton retired a year ago as executive director of the Greater Trail Community Skills Centre, where she’d worked since the centre opened in the small west-Kootenay city.
“Community-based employment programs are being replaced by the corporatized delivery of services that cannot possibly contribute to communities the way the skills centre has served our region over the past 21 years,” she said, adding the change will have a devastating impact.
In Trail, the contract went to the Kootenay Career Development Society, which has its head office in Nelson, 70 kilometres away.
“From what I can tell, there’s going to be fewer human beings based in the community of Trail providing services,” Morton said, stressing she’s criticizing the selection process, not the successful agency. “They’re not based in the community, so they don’t have the relationships either with the social sector or the business sector.”
Services in Prince George, Kelowna and many other communities will be provided by WCG, a company with Australian ownership that has its Canadian headquarters in Victoria. Maximus, which trades on the New York stock exchange and provides outsourcing services around the world, won contracts in Abbotsford, Summerland and elsewhere.
“You don’t get the intimacy of that connection and that capacity then to nurture and develop the kinds of programs and services that can make a real difference for people,” said Morton, who was also a member of the minister’s forum that provided advice on poverty reduction. “That fabric’s going to be lost. [Minister Simpson] ought to recognize that. He’s been in community work for a long time and he’s missed the boat if he doesn’t understand that.”
Employment agencies provide a “connective tissue” between the social and economic sectors, working closely with both employers and people who need jobs, Morton said.
She says the government’s procurement process is inconsistent with the government’s values and goals.
“On the one hand, the same ministry that oversees WorkBC has spearheaded the province’s very first poverty reduction legislation, while on the other hand it cuts the legs out from under organizations and communities like ours that are working so hard to develop the local workforce and create opportunities for people who want so badly to get out of poverty.”
For an organization like the skills centre in Trail, WorkBC provided as much as 85 per cent of the budget despite efforts to broaden funding sources. Without that backbone, she said, “They’re going to be working harder just on sheer survival.”
Simpson said he’s aware many non-profits used money from the WorkBC contracts to support their other work. “I understand there are very few sources for core funding for service organizations in the province,” he said.
“As a service, WorkBC was never intended to provide core funding for organizations to deliver other things. That was never its intention. I understand that happened, and I know why it’s valuable and I know there aren’t alternatives to that, but that was not the intention.”
There needs to be a discussion in the province about how such organizations are funded and how they would be kept accountable, said Simpson, minister of social development and poverty reduction.
“That’s a broader discussion than WorkBC,” he said. “That’s a pretty important conversation, but that’s not a conversation about how you procure WorkBC.”
Simpson said the program will align well with the government’s poverty plan, which will have a focus on making sure people have the opportunity to find and keep jobs.
The previous contracts had been awarded to agencies in 73 regions. The government cut this to 45 regions, which Simpson said brought it in line with the provincial and federal governments’ approach to defining health and economic regions.
That cut the number of agencies that would receive funding for the work by 28, Simpson said.
“There are a number of folks who don’t have contracts because there were less contracts.”
Reducing the number of contracts will allow better co-ordination of services and reduce administration costs, he said. “We’re able to take $9 million of what would have been administrative costs and feed it into direct services to folks.”
“I appreciate some of the concern,” Simpson said. “I respect that there are some folks who didn’t get contracts and they’re unhappy about that, and I don’t diminish that at all, but the process was a pretty fair process and the result is what it is.”
Simpson denied the program had become more corporate. “It’s going the other direction. It’s going to more community groups than ever,” he said.
Focus on employment
Under the contracts expiring in March, community groups and the for-profit sector each had 49 per cent of the dollar value, he said. With the new contracts, 57 per cent of the dollar value goes to non-profits and 39 per cent to for-profit businesses. The remaining four per cent went to a public institution, Douglas College.
There’s also $19 million a year for two other province-wide contracts, one with the Neil Squire Society to provide people with disabilities adaptive technology to help with work, and another with Douglas College to provide apprentice services.
The services will also be delivered by 130 subcontractors around the province, Simpson said. Some are still negotiating with the winners of the primary contracts, but 71 per cent are non-profits, he said.
The Citizens’ Services Ministry ran the procurement process based on the expectations set by the Social Development and Poverty Reduction Ministry. The model was based on the one the previous government set up, but the new government made major changes, Simpson said.
“There was an incentive to get people who were relatively more job ready because the contracts didn’t pay for you to spend an extended period of time with somebody or to support somebody over the long term. It paid to roll people through.”
He said at a time of low unemployment, it makes sense to put more emphasis on helping people who face more challenges find jobs and keep them. For each person who finds a job and keeps it for a year, the contractors will be paid from about $2,000 to $12,000 depending on how job ready the person was and the support they need.
“The model’s quite different. We know we’re going to serve less people, but the people we serve are going to get more attention because they’re going to need that to be successful,” Simpson said.
“The fundamentals of the change are the right fundamentals for addressing the people we want to be able to receive services who aren’t necessarily getting it under the current program,” he said. “I’m pretty confident about where it’s going.”
Janet Morris-Reade, the CEO of the Association of Service Providers for Employability and Career Training said she’s “cautiously optimistic” after hearing from Simpson and other ministry officials.
“They still believe there’s money in the financial model to meet the needs of communities,” she said. “They’re really trying to make this work, is what I can see.”
Negotiations are still underway with subcontractors and there are worries at organizations that are losing an income stream, she said. “At the community level there’s still quite a bit of uproar.”
Buy Social Canada’s LePage said more consideration needs to be given to the ripple effect when awarding contracts, especially in small and rural communities.
The government played it safe with WorkBC, keeping the former government’s model and awarding contracts to diverse organizations, he said. But something is missed, he argued, when the government values the efficient delivery of services over other considerations.
“To my mind the solution is a much more cross-ministerial initiative where there is a connection, there is a direct relationship, an integration of procurement to meet the social and environmental goals of government,” he said.
“It takes leadership and it takes some creativity in looking at how government procurement becomes much more of a tool than procurement just being this purchase process. It’s rethinking the role of procurement to achieve a larger government goal.”