Social Value in Procurement: Why is it Important?

social value

What is Social Value in Procurement?

Even if you have worked with the public sector in the past, this does not guarantee future wins. With changes in recent years and more on the way, social value in procurement has become more important than ever before, which means suppliers must be willing to do more to help improve society and tackle issues such as modern slavery and climate change if they want to succeed in the public procurement process.

Learn more about the role of social value in public procurement and what the UK Government, public sector organisations, and other local authorities & public bodies will be considering when granting public sector contracts below.

Social Value in the UK: Government Procurement Measures

Procurement and social value have been intertwined for quite some time now, so there is a lot known about how public authorities approach the criteria for this during the tender process.

This is how the government has created systems around it:

The Social Value Act & Following Policies

The Public Services (Social Value) Act came into action in January 2013 with the goal of encouraging buyers to consider how to secure added social, economical and environmental value and benefits from potential suppliers when procuring goods and services.

Following this Act, the National TOMs Framework was published in 2017 as a type of minimum reporting standard for measuring social value outcomes.

At the end of 2018, Cabinet Office Minister at the time, David Lidington (former Chancellor of the Duchy of Lancaster), announced new government procurement measures with social value and long-term impact in mind.

With UK central government departments spending billions with third-party organisations every year, Mr Lidington wanted taxpayers and small businesses in particular to benefit from this expenditure. He said:

“We are determined to build a society where people from all parts of our country have access to the best public services. Public services should be delivered with values at their heart… it is right that we use government’s purchasing power to benefit society.”

The Social Value Model

This announcement came hand-in-hand with the Social Value Model, which aims to deliver more consistency to the process of assessing social value and forms part of the current far-reaching procurement reforms.

In January 2021, the UK government implemented the Social Value 2021 Model. This requires central government to go further than the Public Services (Social Value) Act 2012, mandating that all major government procurements must now explicitly evaluate social value when drawing up central government contracts rather than just “consider” it. While only central government is required to do this, it is clear that other buyers are following suit, meaning that social value will be a key consideration in many public sector procurements henceforth.

All bidders must explain what they will deliver and how they will do so in the tender bids, which will be scored in the bid evaluations with a minimum weighting of 10% for social value.

Themes of the Social Value Model

As detailed in the Procurement Policy Note (PPN 06/20), the Social Value Model consists of five themes and eight policy outcomes that flow from these themes. They are as follows:

  1. COVID-19 recovery — helping local communities to manage and recover from the impact of COVID-19.

  2. Tackling economic inequality — creating new businesses, jobs, and skills while increasing supply chain resilience and capacity.

  3. Fighting climate change — effective stewardship of the environment.

  4. Equal opportunity — reducing the disability employment gap and tackling workforce inequality.

  5. Wellbeing — improving health & wellbeing and community integration.

These themes and the associated policies are going to be increasingly important and suppliers should consider how they can contribute to any or all of them in future tender bids.

Green Paper: Transforming Public Procurement

On 15 December 2020, the UK Government set out proposals to shape the future of public procurement legislation through the publication of the Green Paper: Transforming Public Procurement.

This Green Paper forms the basis of the Procurement Bill.

The overarching goals of “the Green Paper” are to speed up and simplify the procurement process, place value for money at its centre, generate social value, and innovate public service delivery through unlocking opportunities for charities, SMEs, and social enterprises to innovate in public service delivery.

About one-third of all annual public spending is on public procurement, so by improving procurement process regulations, the government saves the taxpayer money while creating more opportunities, improving public services, empowering communities, and restoring local pride across every region of the country.

A simple and flexible procurement regime with greater accountability for social value can play a big role in contributing to the government’s levelling-up goals.

How a Supplier’s Social Impact Can Win Them More Public Sector Opportunities

One of the most common questions asked by organisations wishing to win public sector business is how can they increase their chances of success.

The answer is: Deliver a compliant bid that keeps you in the running and then add environmental, economic, and social value benefits to your solution that are closely linked to its delivery to increase your chances of winning.

But remember – don’t promise anything you cannot actually deliver. To ensure suppliers adhere to what they set out in their proposals, buyers can include social value criteria in the key performance indicators upon awarding the contract.

How to Improve & Showcase Your Social Value

In marketplaces where there are a large number of suppliers that provide broadly similar solutions and where it’s challenging to differentiate them, showing social value takes on even greater significance. Whilst it’s simple to articulate, it is seldom easy to deliver.

To that end, have a look at the checklist below to help stimulate discussion around social value priorities and help you improve and articulate the environmental and socio-economic benefits that you’re able to deliver:

  • Determine what your organisation already delivers that could strengthen a bid in terms of environmental, economic, and social benefits.

  • Create case studies that show the environmental and socio-economic benefits you’ve already delivered and use these in your bids and proposals.

  • Create/develop links with local communities, charities, and groups to help deliver benefits around social, economic, and environmental well-being, then articulate these in your bids and proposals.

  • Develop your supply chain to work with local, third sector, or social enterprises and try, where possible, to ensure that the goods, works, and services that you buy come from ethical and sustainable sources and that you’re able to explain and back this up in your bids and proposals.

  • Create programmes to deliver apprenticeships, work experience, employment of the long term unemployed, provide flexible working opportunities, etc.

  • Show that staff training and development is part of your core ethos and that you will apply or increase this through the delivery of the tender opportunity that you’re bidding for.

  • If you don’t already have a Corporate Social Responsibility (CSR) policy, create one now that will encapsulate everything that you’re doing in terms of the delivery of social, economic, and environmental benefits, and that shows you’re carrying out your business in an ethical way.

  • Look at legal cases, case studies, past bids and, above all, positively engage the buyers.

From charities and civil society to small businesses and start-ups, sustainable procurement that encourages community integration along with social, environmental, and economic growth is at the heart of social value.

Tracker can provide the tender tools and support you need to streamline this process. Request a free demo today!

Are you Engaging with the Public Sector?

In a report by Cadence Marketing published in 2020, “Are Socio-Economic and Environmental Value Deliverable in Public Procurement?”, Phil Kinnell, Senior Consultancy and Training Manager, PASS Procurement recommends that suppliers use early engagement with public sector organisations to tackle challenges around social value:

“For a supplier, the challenge of achieving these socio-economic
and environmental benefits is firstly to check that you understand
and respond appropriately to these elements, which are
increasingly common in public sector procurement exercises;
and secondly, is to work with the public sector in a proactive way
to help them apply sustainability where it is most effective and
efficient to do so. That is something that the public sector cannot
do alone.

This collaborative approach can be instigated by the public sector
where they engage the marketplace for advice when they are
forming their specification and approach to procurements, but I
would recommend being as proactive as possible by engaging the
public sector through existing relationships or via effective early

Tracker: Your Guide to Social Value in Procurement

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