Despite its ubiquity within public sector procurement, bidder organisations may still struggle to understand the principles and purposes of social value. To facilitate understanding, we address several common misconceptions of social value in public sector bidding.
Following the introduction of the Public Services (Social Value) Act 2012, public sector authorities were required to consider ‘economic, social and environmental well-being in connection with public services contracts’. The government’s commitment to integrating social value into procurement processes was further strengthened with the publication of Procurement Policy Note (PPN) 06/20, which mandated that all central government authorities – such as CCS and the Ministry of Defence – must give a minimum 10% overall weighting to bidders’ social value initiatives. PPN 06/20 also established defined social value themes and outcomes, as outlined below:
|Social Value Theme
|Helping local communities to manage and recover from the impact of COVID-19.
|Tackling economic inequality
|Creating new businesses, jobs and skills in addition to increasing supply chain resilience and capacity.
|Fighting climate change
|Establishing and maintaining effective stewardship of the environment.
|Reducing the disability employment gap and tackling workforce inequality.
|Improving health and well-being and improving community integration.
Although they are not legally obliged to do so, local authorities, such as councils and housing associations, often choose to include social value within tenders. Subcentral government authorities are also permitted to set their own weightings for social value. In some instances, social value can comprise 25% of the overall evaluation criteria – meaning that it is crucial to have a comprehensive understanding of what social value really means, including how to implement social value initiatives following contract award.
So, what are the common misconceptions surrounding social value?
Social value is simply the public sector’s version of CSR or ESG
A common misunderstanding is when bidders assume social value is an alternative way of describing their approaches to corporate social responsibility (CSR) or environmental and social governance (ESG). This is incorrect – CSR and ESG are typically policy driven and used to mitigate negative effects of performing works or services. In contrast, social value is meant to create additional positive value from a specific contract or project, outside contractual obligations. CSR policies/charity donations and social value commitments are not interchangeable – for each contract, you must generate specific commitments, goals and outcomes.
Furthermore, CSR and ESG are voluntary activities which a company sets for itself – if they do not fulfil or otherwise fail to achieve targets, there is no obligation of transparency and therefore no immediate repercussions. The opposite is the case for social value – commitments often form a contractual KPI, and failure to achieve results could result in removal from the contract or framework agreement.
Social value commitments are solely quantitative
Occasionally, some tenders will only require you to provide the overall value of your social value contributions over the life of a contract – typically this is entered into an Excel spreadsheet against commitments which are predetermined by the buyer. Successful bidders will then be required to supplement their quantitative commitments, either with an action plan or clarified through pre-start meetings with the authority.
Much more commonly, commitments will require a method statement or quality response detailing your approaches to identifying suitable partner organisations, monitoring progress and reporting results to buyer representatives. It is important to give equal care and attention to social value responses as other quality topics, particularly as they comprise such a large overall weighting within a tender.
All tenders with a social value component are evaluated the same way
Although social value in central government procurement is governed by the table outlined in PPN 06/20, local and devolved authorities are permitted to design their own social value criteria. This allows buyers to tailor social value initiatives to challenges facing their local area – for instance, by requiring tenderers to commit to addressing skills gaps or long-term unemployment.
Some common evaluation tools include:
- National TOMs calculator: Co-developed by the Social Value Portal and the Local Government Association, the national TOMs offers a standardised framework for measuring and reporting social value. In 2021, the TOMs calculator was expanded from three themes – economic, social and environmental – to five, comprising jobs, growth, social, environmental and innovation.
- Community benefits: Used by the devolved Scottish government, community benefits are mandatory for contracts with a value exceeding £4 million. Although community benefits do not have prescribed themes such as the National TOMs calculator or the central government’s Social Value Model, common initiatives include creating/maintaining local employment and apprenticeship opportunities, working with local suppliers, engaging with third sector organisations and improving local communities.
- ‘Blank slate’ model: Infrequently, buyers will adopt a model which allows tenderers to set their own benchmarks and commitments. Regardless of whether questions are broad or generic, it is crucial to provide specific, quantifiable details about proposals to ensure full marks from evaluators.
It is often beneficial to conduct independent research on the buyer to gain an understanding of local challenges and authority preferences. For example, Newcastle City Council has a social value page on their official website, complete with key principles, outcomes and measures framework and methods for identifying, implementing and measuring progress against targets.
The bidder with the largest social value commitments will win
Many SMEs feel that social value is merely a numbers game, where they are at a competitive disadvantage or are obliged to produce large, complex and unfeasible solutions. Similarly, clients often say they are ‘too small’ to deliver social value – however, central and local government authorities are incentivised to engage SMEs as suppliers, with a current target of 33% of total supply chain spend going to small- and medium-sized businesses. Authorities will therefore take discrepancies in funding and resources into consideration, and award full marks to commitments which are targeted, realistic and proportionate to the overall contract value.
Within the tender documents, authorities will also typically issue a baseline target or expectation of overall contributions. This is particularly common when a TOMs calculator is used for the submission. If a benchmark is not specified, a strong and realistic total for social value commitments is 20% of the overall value of the contract.
Lastly, submitting needlessly large and unrealistic commitments could lead to significant consequences. Similar to abnormally low pricing, excessive or untenable commitments may lead to increased scrutiny from evaluators, including a formal explanation or additional evidence of how commitments will be delivered. Failure to allay concerns could lead to an automatic disqualification.
The Social Value Practice – tender support for your organisation
Established in 2020, the Social Value Practice is our in-house division dedicated to providing clients with social value writing, reviewing and training services. A recent case study highlights the skills and experience of our Director of Social Value Stephen Kennett, who delivered training workshops across two months to delegates from a multinational software development company.
Our team of bid and tender writers are also highly experienced in working with client representatives to draft bespoke, high quality social value narrative responses, complete with input and consultative advice from Stephen.
To find out more on how we can help you deliver the strongest possible social value submission as part of a tender exercise, our sales and marketing team are available at 0800 612 5563 or via email email@example.com.
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Posted on 09-02-2024