What is social value? (A supplier's guide: Procurement Act 2023)

What is social value? (A supplier's guide: Procurement Act 2023)

Posted by Ben Pollard Picture of Ben Pollard on 22 May 2024

The introduction of The Social Value Act in 2013 made it mandatory for public sector buyers to consider social, economic and environmental benefits when procuring goods and services.

Since the introduction of the act, a number of policy notes and, most recently, The Procurement Act 2023, have built on the way the public sector thinks about social value.

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This article explains what is meant by social value and how procurement teams across the country must consider social value in the procurement process.

The article may be used by procurement professionals to sharpen up on their social value obligations, or by suppliers to government to understand how social value will be considered in relation to their bids.

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Social value: what is it?

The CCS defines social value in procurement as “ensuring that public spending generates additional economic, social and environmental benefits beyond just the goods or services being procured.”

In other words, it’s about procurement that positively impacts people and communities outside of the scope of the contract itself.

Social value is split into three broad pillars:

  • Social - increasing the wellbeing of individuals and communities.

  • Economic - increasing societal wellbeing through economic policy and business practices

  • Environmental - promoting sustainable practices and processes that protect the natural environment and ensure a viable future for everyone

Suppliers with a high social value offering will prove that they can qualitatively improve local wellbeing across one or multiple of these verticals. 

 

How social value is considered in procurement

The Social Value Act requires public bodies to consider how the services they are procuring can improve social, economic, and environmental well-being in the communities they serve.

Whilst some social value criteria may benefit people all over the world (eg. carbon reduction, ethical supply chains), social value mostly refers to benefits that can be directly felt within the constituency that is being served.

 

Central government

Procurement Policy Note 06/20 introduced the Social Value Model as a means of standardising these social value objectives in Central Government procurement.

The PPN lays out 5 key themes and 8 policy outcomes that are to be considered as social value objectives in Central Government procurement. For each objective, it also lays out 'what good looks like' - ie. what Central Government procurement teams will be looking for across each vertical.

It also provides a guide for evaluating social value in tenders.

In 2021, the NHS subscribed to the Central Government social value model.

The PPN does not apply to Local Government.

 

Local government

The Local Government Association (LGA) - together with Tussell customer Social Value Portal - has put together the TOMs framework for Local Council's to quantify and review social value considerations.

The TOMs cover 5 distinct themes:

  • Promoting skills and employment

  • Supporting the growth of responsible businesses

  • Creating healthier, safer and more resilient communities

  • Protecting and improving the environment

  • Promoting social innovation

Councils are also encouraged to publish a social value strategy online that outlines their specific social value goals.

Through doing this, they can increase transparency and arm suppliers with the information they need to provide meaningful social value pledges that serve specific wellbeing objectives in local areas and communities.

Here's an example from the London Borough of Waltham Forest. Every year, they publish a new social value statement to reaffirm their goals to suppliers and to measure social value progress.

 

Social value in the devolved regions

Northern Ireland, Scotland and Wales all have different approaches to social value that have been enacted via different regional social value legislations.

In each UK region - excluding Scotland - social value must comprise at least 10% of each procurement's total award criteria. Although, this weighting may be increased at a contracting authority's own discretion.

Bid-writing experts and Tussell customers - Executive Compass - "regularly complete submissions where social value comprises up to 25% of the overall marking criteria, including submissions for Scottish [Government]."

 

Northern Ireland

PPN 01/21, which mandates the minimum 10% social value weighting in Northern Ireland for high-value contracts, outlines 4 key themes for scoring social value.

These four themes (and some of their corresponding indicators) are listed below:

  • Increasing secure employment and skills

    • Procurement contracts that:
      • Create employment, re-training and other return to work opportunities for those furthest from the labour market

      • Support educational attainment in the workforce, including training schemes that address skills gaps and result in recognised qualifications.

      • Increase the representation of disabled people in the contract workforce.

      • Create opportunities for entrepreneurship and help new, small organisations to grow, supporting economic growth and business creation.

  • Building ethical and resilient supply chains

    • Sourcing strategies that:
      • Create a diverse supply chain to deliver the contract including new businesses and entrepreneurs, startups, SMEs and VCSEs.

      • Promote ethical supply chains and practices.

  • Delivering zero carbon

    • Procurement strategies and specifications that:
      • Deliver additional environmental benefits in the performance of the contract including working towards net zero greenhouse gas emissions.

  • Promoting wellbeing

    • Contracts that include measures to:
      • Support the health and wellbeing, including physical and mental health, in the contract workforce.

      • Allocate a percentage of the budget to artwork or cultural activities.

The NI Department for Finance urges buyers to weigh up cost, quality, and social value when awarding suppliers and making procurement decisions.

 

Scotland

Whilst Scotland requires no minimum weighting to social value, the Scottish Government urges procurement teams to consider 'social impact' in addition to cost when making procurement decisions.

SPPN 10/2020 defines positive social impact as outcomes that align with Scotland's National Performance Framework and the UN's 17 Sustainable Development Goals.

The National Performance Framework (NPF) sets out national indicators for Scottish wellbeing that cover children and young people, communities, culture, economy, education, environment, fair work and business, health, human rights, internationalism, and poverty.

The specific criteria used to measure the NPF can be found on the Scottish Government website.

 

Wales

Since November 2020, Welsh contracting authorities have been required to support 8 Welsh wellbeing goals in addition to providing a minimum of 10% weighting to social value in procurement.

The 8 goals - as defined by the Well-being of Future Generations Act - are as follows:

  • A prosperous Wales

  • A resilient Wales

  • A healthier Wales

  • A more equal Wales

  • A Wales of more cohesive communities

  • A Wales of vibrant culture and thriving Welsh language

  • A globally responsible Wales

These 8 goals are to be supported via the following overarching 'Social Value /Community Benefits policy objectives.'

  • Training and recruitment of economically inactive people

  • Supply chain initiatives

  • Environmental initiatives

  • Cultural initiatives

  • Educational initiatives

  • Community initiatives

  • Retention and training of existing workforce

  • Working with the 3rd sector (VCSEs)

These 8 policy objectives can be tailored in the context of specific community needs and contractual requirements in order to support people and communities in Wales.

 

The Procurement Act 2023

The Procurement Act, which will go live on the 28th of October 2024, makes no specific reference to social value. However, it is set to usher in some small but powerful changes to the way the public sector thinks about social benefit in procurement. 

Currently, the Public Contracts Regulations 2015 requires procurement teams to reward the Most Economically Advantageous Tender (MEAT).

The Procurement Act will amend this existing standard, requiring procurement teams to award a contract to whichever supplier that submits “the most advantageous tender (MAT) that the contracting authority considers (a) satisfies their requirements and (b) best satisfies the award criteria by reference to the assessment methodology and the relative importance of the criteria.”

Download Tussell's free Procurement Act guidebook

Whilst social value is already considered, the Cabinet Office intends for this change to add clarity and reassure contracting authorities that they may take a broader approach to what can be included in the evaluation of tenders.

Tussell clients and procurement experts, Executive Compass, also note that Section 12 of the Act outlines the requirement for contracting authorities to have regard for 'maximising public benefit', while Chapter 5, Section 52 mandates the publishing of annual key performance indicator (KPI) statistics for all suppliers on contracts worth over £5m. 

"As social value commitments often form a contractual KPI, supplier performance for social value will have greater monitoring and oversight." (Executive Compass).

 

How suppliers should think about social value

Social value is a critical component for suppliers hoping to stand out in a crowded public sector marketplace - especially when it comes to medium and high-value contracts.

Most social value legislation includes caveats so that the rules and advice be applied proportionately by procurement teams so as not to disadvantage smaller suppliers.

With that being said, even with small contracts it never hurts to consider and outline the way in which you intend to support environmental, social and economic wellbeing to local communities outside the core scope of the contract. 

Considering the specific social value strategies of a buyer is also helpful when putting together a bid - this includes regional and national targets as well as specific strategies published by local governments.

Beyond these specific strategies and goals, several core social value themes are consistent across the whole country. These ought to be considered when putting together any high-value bids.

  • Skills, training and employability

  • Environmental sustainability & carbon reduction

  • Supporting VCSEs and SMEs

  • Thriving local economies

Of these four core themes, working with local businesses, VCSEs and SMEs is perhaps the easiest way of providing a localised social and economic benefit.

Tools such as Tussell can help you identify locally-based VCSEs and SMEs in your sector with a proven track record of working with government. 

 

How buyers should think about social value

The way you think about social value will vary depending on the specific social value legislation and strategy in your locality or region.

However, building a specific social value strategy can be a powerful tool to ensure social value is delivering material benefits to your local community.

According to the LGA, only 23% of local councils have published a social value strategy online. And, a staggering 44% of councils have made no mention of social value on their website.

Having a clear and easily-accessible social value strategy will enable prospective suppliers to tailor their bids around your wellbeing goals and encourage them to deliver targeted social value in your constituency.

Making use of Carbon Reduction Schedules is another brilliant way of delivering environmental social value.

In terms of social and economic social value, procuring directly from local businesses, SMEs and VCSEs (when possible) is one of the most effective ways of supporting the local economy, generating social value and bolstering the voluntary sector.

 


Book a demo with the Tussell team to learn how Tussell can help you quickly identify local SMEs and VCSEs in your category with a proven track record of working with the public sector.

 

Summary and conclusion

Across the UK, social value already plays an intrinsic role in the procurement process. With the upcoming introduction of the Procurement Act 2023, this trend is only set to increase.

For this reason, understanding the broad strokes of social value legislation and the specific details of local social value plans is a must for anyone hoping to make smarter procurement decisions and/or do more business with the public sector.

Tussell is the market's trusted source of public sector market insights, and is already being used by buyers all over the country to promote social value through procurement and save time and money in the procurement process.

Tussell is also used by over half of the UK's strategic suppliers to increase their social value offering, diversify their supply chains and to find more opportunities to do business with the public sector.

Book a demo with the Tussell team today to find out how you can start benefiting today.