Public sector bodies are tasked by central government with managing a wide range of public services effectively and efficiently. Whilst most people know that services such as waste collection and road maintenance are awarded via a tendering process, many are surprised at the scope and scale of the full range of services covered by public sector tendering.
To identify the suppliers to deliver the services, public sector bodies issue an invitation to tender to companies and third-party institutions to undertake these public works and services for them. This involves a competition between bidders, and a contract is awarded to the organisation based on the quality of their proposal, the price, and their track record.
Other aspects, however, are increasingly added to the award criteria and include aspects such as ethics and local economic social and environmental considerations more commonly termed ‘social value’.
The Social Value Act 2012
Since the enaction in 2013 of the Public Services (Social Value) Act (2012), social value has been added as an evaluation criteria into government contracts and the Act has mandated that when commissioning services, public authorities must consider:
- How what is proposed to be procured might improve the economic, social and environmental wellbeing of the relevant local area
- How, in conducting the process of procurement, it might act with a view to securing that improvement.
The Act requires that all public bodies in England and Wales, including local authorities, government departments and NHS organisations, consider how the services they commission and procure which are expected to cost more than the thresholds provided for in the Public Contracts Regulations might improve the social, economic and environmental wellbeing of the area and local community.
Social value in tendering
Fast forwarding from 2013 to 2020, the Cabinet Office issued Procurement Policy Note 06/20 – taking account of social value in the award of central government contracts.
This Procurement Policy Note launches a new model to deliver social value through government’s commercial activities. The PPN uses much stronger language, and now central government organisations must use this model to take account of the additional social benefits that can be achieved in the delivery of its contracts, using policy outcomes aligned with this Government’s priorities. The note states:
Social value should be explicitly evaluated in all central government procurement, where the requirements are related and proportionate to the subject-matter of the contract, rather than just ‘considered’ as currently required under the Public Services (Social Value) Act 2012
This new policy note, which came into force on 1 January 2021, strengthens the Public Services Social Value Act 2012 and social value in public procurement significantly by providing a social value model which:
- Mandates a minimum of 10% weighting of the total score to be applied for social value in tendering. The policy also allows a higher weighting to be applied where the central government buyer feels it justified.
- Ensures that the evaluation of social value is qualitative and not quantitative
- Sees social value as distinct from the contract’s core deliverables
An overview of The Social Value Model
Social value in public procurement can be categorised as a horizontal policy. It is attempting to capitalise on the significant buying power of the public sector to deliver social value. And, while public procurement and public bodies have several competing priorities when awarding tenders, including economic and legal compliance issues, the new social value model makes it easier for social value to be incorporated into government contracts via the tendering process. Companies bidding for contracts will probably have seen social value tender responses becoming commonplace.
The new social value model is built around five strategic themes which are linked to policy outcomes. In turn these inform the delivery objectives and the subsequent questions you may be asked to respond to.
The social value model themes are:
- COVID-19 recovery
- Tackling economic inequality
- Fighting climate change
- Equal opportunity
Further guidance notes provide example model evaluation questions, award criteria and model response guidance linked to policy outcomes.
By way of an example question, here is an extract from the guidance document published online, this one taken from Theme 2: Tackling economic inequality:
Social value question
Describe the commitment your organisation will make to ensure that opportunities under the contract deliver the Policy Outcome and Award Criteria.
your ‘Method Statement’, stating how you will achieve this and how your commitment meets the Award Criteria, and a timed project plan and process, including how you will implement your commitment and by when. Also, how you will monitor, measure and report on your commitments/the impact of your proposals.
You should include but not be limited to:
- timed action plan
- use of metrics
- tools/processes used to gather data
- feedback and improvement
As you can see, the questions require a good deal of detail (and this is not the whole question) but at 10% weighting for social value (or more) it is to be expected.
Successful implementation of social value into the public sector offers potential commercial opportunities and positive social impact for a wide variety of organisations, SMEs and social enterprises, supporting local community and volunteer groups and large corporations.
If you need further information or support understanding the social value model, its application in government contracts, or when responding to a social value question when tendering, please contact us to discuss.