New CIOB report reveals SMEs must embrace social value within tendering

Findings comprised:

• A significant gap between Tier 1 contractors and SMEs regarding knowledge, capacity and resources to implement, monitor and measure social value commitments.
• An increasing number of local councils are embracing social value as an essential part of all contracts and frameworks, with little signs of dissipating.
• An absence of ‘social-value-ready SMEs to meet demand in public sector construction’, meaning those small- and medium-sized businesses who do embrace the principles of social value as part of their organisational strategy ‘will gain a competitive advantage’.

Overall, the CIOB’s conclusions are consonant with those of our Social Value Practice division, regarding the rapid expansion of social value within public sector procurement and the need for SMEs to be flexible and adapt with changes to standard industry practice. This also informs the consultative approach our team of tender writers utilise when drafting responses and collaboratively workshopping ideas for commitments on behalf of clients.

To supplement the CIOB report, this blog will produce commentary on findings in addition to offering advice for SMEs who may be encountering unanticipated challenges when adjusting to this new, indispensable aspect of public sector procurement.

Social value for newcomers

Although the concept has been present in public sector procurement for over a decade, the report began with a brief recap of the history, terminology and objectives around social value.

First introduced with the passage of the Social Value Act 2012, the legislation required government bodies acting as purchasing authorities to consider ‘economic, social and environmental well-being in connection with public services contracts’. This was strengthened by Procurement Policy Note 06/20, which required all central government authorities (such as the Crown Commercial Service and Ministry of Defence) to prescribe a minimum 10% weighting to social value responses in the tender evaluation criteria.

Although not required by procurement regulations, local authorities have been among the most enthusiastic champions of social value in tendering, with some authorities assigning as much as 25% of the overall weighting to social value responses and commitments.

Social value themes, outcomes and commitments

Although not mandatory, the most popular framework for categorising and assessing social value commitments is the National TOMs calculator. This tool organises proposals into five themes:

Theme title	Description of outcomes	Example commitment
Jobs: Promoting local skills and development	Providing pathways to local skills and employment, such as providing full-time employment for local residents, delivering careers talks to schools/colleges and allocating apprenticeships or training opportunities as a result of contract award.	‘… One apprenticeship opportunity per £250,000 gained through the framework will be created within the geographic area, with advertisements placed in relevant colleges to attract a suitable quality and volume of applicants.’
Growth: Supporting the growth of responsible regional businesses	Allocating a proportion of contractual supply chain spend with local businesses or third sector organisations.	‘… We will implement a target of 75% of net contract spend through local suppliers and supply chains, with preference given to SMEs.’
Social: Building healthier, safer and more resilient communities	Earmarking donations or in-kind contributions to local community projects.	‘… Each quarter, we will plant 100 trees within five miles of the authority’s operational base, thereby enhancing green spaces for local residents.’
Environment: Decarbonising and safeguarding our world	Calculable, year-on-year reductions in carbon emissions, producing reports on the percentage of waste diverted from landfill and producing an organisational ‘Net Zero by 2030’ policy on actionable objectives and targets.	‘… Operatives will utilise the waste hierarchy to achieve our organisational target of 90% of waste diverted from landfill, helping to achieve our goal of Net Zero by 2030.’
Innovation: Promoting social innovation within the community	Working collaboratively with other stakeholders, such as authority representatives or other contractors, to design measures for promoting the above four themes to be implemented over the contract term.	‘… Working with other contractors on the framework, we will host a monthly food bank for vulnerable and low-income residents, providing targeted support to the community.’

Due to the increased focus on social value, it would be beneficial for SMEs interested in bidding for public sector contracts to begin identifying potential commitments which align with these themes prior to entering the tender exercise.

Planning, monitoring and reporting social value commitments

Embedded within the CIOB report are interviews with construction SMEs describing their difficulties adjusting to social value commitments as a contractual obligation. This included concerns over fairness, ill-suited requirements and difficulty in sourcing ideas for commitments.

To address current shortcomings in social value strategies, an anonymous Tier 1 contractor offered several pieces of advice, including assigning responsibility to one individual, engaging with the buyer to discuss proposals and compliance, and integrating social value commitments into overall plans for service delivery.

Once again, this advice aligns with our organisational approach to clients. A broad approach to creating a strong social value action plan consists of planning, monitoring and reporting on all activities, as outlined below:

• Planning: In the report, SMEs disclosed how they felt at a competitive disadvantage when drafting proposals, as funding and resources were more limited in comparison to Tier 1 contractors. However, authorities will take this into consideration during the evaluation process, and are looking for social value commitments which are realistic, tenable and proportionate to the overall contract value. Prior to the tender process, evaluate your organisation’s strengths, such as detailed knowledge of the local area which larger companies may not possess, to develop a plan for feasible commitments. Lastly, ensure offerings are concrete, time-bound and quantified, like the examples in the above section.
• Monitoring: Assign responsibility to a single, management-level individual within your organisation to serve as a social value representative by dedicating time and budget to ensure they have comprehensive knowledge and training on the principles of social value. Their duties will include monitoring and measuring the impact of commitments, in addition to serving as a point of contact for any clarifications from the buyer. By assigning task ownership to one individual and integrating time for social value duties into weekly schedules before the contract ‘go-live’ date, you will benefit from a more organised and cohesive approach.
• Reporting: Determine the format, frequency and content of reporting on progress against commitments in collaboration with the purchasing authority’s representatives. For example, discuss whether meetings will be online or in person, if copies of reports should be sent to individuals outside meetings and any qualitative data to supplement figures, such as testimonials from apprentices employed as a result of contract award. This will aid in allaying any concerns the authority may have on your ability to deliver.

Adhering to a realistically enforceable social value action plan tailored to your organisation will save time and resources further down the line, in addition to minimising risk of noncompliance on social value commitments, which will form a contractual KPI for the contract lifecycle.

Overcoming challenges inherent to social value delivery

Unsurprisingly, the CIOB report described many SMEs struggling in adapting to social value requirements within tendering, with one describing requirements as ‘sitting awkwardly with smaller companies like ours.’ Despite the unfamiliar terminology and imposing calculations, many commitments within the five TOMs themes will align with business activities you are likely already engaging in on a day-to-day basis. This can be used as a basis to adapt for future commitments, bolstered by your research during the planning stage outlined in the above section. Examples could consist of:

• Apprenticeships or work experience: Consider how many apprenticeships or work placements you have supported in the past, where you have previously sourced candidates and what experience/qualifications they gained as a result of their time within the organisation. This can subsequently be revised upwards in light of the additional revenue received resulting from contract award.
• Volunteering or in-kind contributions: Restrictions on what activities qualify as volunteering or charitable contributions are minimal – it can include sponsoring of a local sports team, Christmas raffles/donations or litter-picking in a local park or beach. Although it may be odd to formalise these activities, they are excellent examples of social value and deserve to be recognised as such during the evaluation process. Consequently, reflect on any similar activities you have done in the past and adapt them for the new contract, while ensuring they are tailored to organisations and opportunities within the local area.
• Environment and decarbonisation: Building on existing processes for reducing landfill waste, such as the waste hierarchy and recycling streams, could be strengthened by reviewing potential reductions within your supply chain, such as eliminating single-use plastics. If you have already introduced hybrid or electric vehicles to support decarbonisation efforts, consider any additional efforts, such as increasing energy efficiency within your central office through appliances and temperature control. Planting trees is also a good way to offset organisational carbon emissions.

Lastly, instead of trying to gloss over any commitments from monthly meetings or reports with authority representatives, be proactive in voicing your challenges. It may be possible to produce a collaborative solution, such as sourcing apprenticeships or community projects from alternative contacts within the region.

How Executive Compass can support you with social value

As part of our bid and tender services, Executive Compass offer external social value training, with a specialisation in developing sustainable social value action plans and internal processes for SMEs. Since 2021, we have delivered expert social value workshops to over 500 participants.

• Level 1 training supports trainees in building an understanding and increasing awareness of social value
• Level 2 training focuses on developing, measuring and monitoring activities and commitments.

Furthermore, all our tender writers receive training on the principles of social value, and benefit from insight and feedback from quality managers, ensuring the strongest possible quality responses for your organisation’s tender submission.

To find out more, our sales and marketing team are contactable at 0800 612 5563, or alternatively via email info@executivecompass.co.uk.