Procurement in a Nutshell: Social value in procurement contracts

The change was announced by the First Secretary of State, Louise Haigh, who described the system it replaces as “a tick box exercise” that fails to deliver the change people can feel.

This nutshell outlines what changes have been made to social value weightings in procurements and how this affects contracting authorities.

Click here to read the PPN026 guidance.

PPN026 on social value

For contracts valued at £1 million and above, but less than £5 million, a 10% social value weighting should be applied. For contracts valued at £5 million or above, a minimum 20% social value weighting should be applied. Where absolute methodologies are used (such as Price per Quality Point (PQP) or Value for Money index), this will be either 10% or 20% of the non-price criteria (overall quality score).

The focus of this revised model should now be the prioritisation of British jobs, skills and opportunities for people facing barriers to employment.

In scope organisations should also ensure that all social value commitments made by suppliers during the procurement process are appropriately measured and monitored via contractual mechanisms e.g., KPIs, which are communicated to contract managers.

For contracts with an estimated value of £5 million or more (VAT inclusive), they should set at least one social value KPI.

Who does this apply to?

PPN026 only applies to central government departments, their executive agencies and non-departmental public bodies (in-scope organisations). However, other public sector contracting authorities may wish to adopt this new approach.

What procurements does it apply to?

It applies to covered procurements valued at £1 million total contract value (VAT inclusive) or above, commenced under the Procurement Act 2023. This PPN does not apply to private utilities contracts.

For framework contracts, social value should be assessed at framework and call-off in accordance with PPN026 guidance.

This guidance should be applied to all stages of the commercial lifecycle and relates to all in-scope procurements where a model award criteria can be selected which is relevant to the subject matter of the contract, proportionate, does not create unnecessary burdens for suppliers or barriers to participation and does not discriminate against treaty state suppliers.

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Previous Social Value PPN002

Under PPN002 published originally in September 2020 and updated February 2025, social value was weighted at a minimum of 10% for in-scope organisations of the total score.

What does this mean for contracting authorities?

Contracting authorities should consider social value throughout the procurement lifecycle and give greater consideration to social value for procurements valuing £5 million or more. Due to the larger social value weighting, it will become a decisive factor in supplier selection for a larger procurements.

At the same time, there is some criticism that the focus of jobs runs counter to wider social value benefits that have been achieved over recent years by authorities who have adopted social value models in their procurements. Until legislation is updated, it is possible that out-of-scope authorities may continue their existing practices.

Technical guidance is expected to follow this new PPN in the autumn. So watch this space!

For further information please contact Tim Care or Melanie Pears in our Public Sector team.