The purpose of social value in public procurement is to maximise the reach of public expenditure by ensuring that local communities, economies, and the environment benefit in some way from any given contract.
What constitutes as ‘social value’?
There are a wide range of actions relating to a variety of societal, economic and environmental issues that come under the banner of social value. Among the most common is the requirement for contractors to provide support to local economies and tackle issues such as unemployment via the provision of apprenticeships, work experience, training opportunities and the promotion of local recruitment and SMEs.
Other prominent areas include support for third sector organisations through sponsorship and donations, a focus on ensuring robust ethical standards in supply chains, engaging with local communities through educational initiatives in partnership with schools and other public services, and participating in environmental conservation and sustainability projects.
What is the purpose of these requirements?
The requirements for social value were introduced as part of the Public Services (Social Value) Act 2012 and marked a major evolution in public procurement. In part, the aim was to address a perception that taxpayers were often not benefiting in any tangible way from public spending in their local area. While cost continues to be the largest single metric in the award of public contracts, social value considerations can be scored with a weighting of up to 20%.
Buyer & supplier challenges
Whilst social value requirements were introduced some time ago, it’s only relatively recently that social value has truly taken hold and become perhaps the leading topic of discussion and area of innovation in the public sector.
In terms of what buyers are expecting from suppliers, existing social or environmental actions are unlikely to satisfy.
Buyers should:
Identify their own specific socio-economic and environmental priorities
Establish how to reflect these priorities in their procurements in the most impactful way
Fairly and efficiently evaluate social value aspects of tender submissions from suppliers
Suppliers should try to offer a package of assistance specific to the socio-economic or environmental needs of the local area. Some examples might include:
Tackling an issue like high unemployment – and youth unemployment in particular – is a common and effective way for buyers to maximise the impact of their spending and for suppliers to demonstrate their social value credentials.
Supporting or sponsoring existing community initiatives and charitable organisations, or even the creation of new projects or entities.
Demonstrating any improvement on recognised ethical standards such as health & safety, worker’s rights, and environmental awareness.
Want to know more?
For guidance on how to approach social value when bidding for public sector contracts, you can access a recording of our webinar session here.