Procurement in a nutshell – social value in procurement

This update provides a view of the place of social value in procurement four years after the coming into force of the Public Services (Social Value) Act 2012 (“the Social Value Act”).

It discusses challenges identified by contracting authorities (CAs) to achieving the aims of social value in practice, and highlights some suggested steps to “unlocking social value”.

The Social Value Act

The Social Value Act came into force on 31 January 2013. Under the Act, public services commissioners are required to “have regard to” economic, social and environmental well-being when procuring public services.

The obligation applies to services above the European Union’s Official Journal threshold. Statutory guidance also recommends that CAs consider social value for other contracts such as contracts below threshold or for goods and works.

At one time, a provider able to deliver a service at the least cost would have been most likely to win the bid. However, the Social Value Act means that CAs can look for providers who can also deliver social value to the local community for minimal or no additional cost.

Earlier this year, Minister for Civil Society Rob Wilson announced his intention for a further review of the Social Value Act stating his commitment to “a public sector that is a catalyst for innovation and gets much more social impact for every single pound it spends”.

Achieving social value in practice

According to a study conducted by Social Enterprise UK in 2016, 78% of a sample group of councils routinely considered social value in their procurement and commissioning. This represented an increase of 16% from 2014.

Despite the apparent increase in uptake, the study identified the following typology of councils’ use of the Social Value Act:

Embracers

Generally having a social value policy, embracers apply social value in a manner wider than the Act requires for most, if not all, tenders. Social value scoring in tenders may be as significant as 30%.

Adopters

While mentioning social value explicitly in procurement strategy and applying it more widely than the threshold, adopters take a more reserved approach to scoring for social value, typically awarding 5%.

Compliers

For compliers, social value is expressly mentioned in procurement strategy but they have not, in practice, used the Act on many occasions.

Bystanders

This group consists of CAs which make no mention of social value in procurement strategies and showcase no social value activity or track record.

The challenges

Two main barriers to embedding social value across services, practices and processes of CAs have been identified.

Defining social value can pose difficulty, particularly to those CAs which cover a greater breadth and complexity of service areas.

Specific types of contracts can be more challenging. For example, the time limitation in short term and/or low value contracts is seen as a hindrance to conducting discussions which are considered necessary in order to explore the possible ways in which to apply social value to the procurement process.

The second main barrier is the related step of measuring social value. One particular problem highlighted is the approach to social value in “people services” such as families’ services or health and social care products.

While social value can represent a separate add-on to the initial service in infrastructure services, people services are typically provided by charity organisations and concern demographics with complex needs.

Some CAs therefore consider that they lack the capacity and expertise for the long-term qualitative measuring which would be required.

Unlocking social value

Based on its interaction with CAs, Social Enterprise UK has identified four practical steps for organisations to create more social value:

1. Define

Giving shape to the purposes of social value priorities in internal policies and strategies provides clarity of purpose for the organisation. Defining purposes will identify the difference sought to be made locally and will be most effective where supported by senior leadership to drive cultural change.

2. Integrate

The vision set out must then be integrated across all services and operations, involving stakeholders in design and delivery. Integration includes recognising, for example, that scale of contracts is not a barrier to the application of social value and the significance of consulting communities.

3. Partner

In order to tackle complexities, maximising social value is best addressed through establishing partnerships with other organisations in the social and private sectors. Cross-sector partnerships can help to realise outcomes that would not happen otherwise.

4. Measure

Changes and benefits which are achieved must be evidenced and communicated. Measurement methods should be in line with the definition of social value, driven through leadership and should consider sharing good practice in order to develop a coordinated approach.

Why is this important?

Despite the reported increase in CAs taking social value into consideration, there are still reports that in the context of austerity and financial pressures, rather than being embedded into processes, social value “seems to stay on the margins of the debate about the redesign of services”.

The perception of a “tick box” culture around social value stems from a lack of clarity about how to consider social value in public services.

In light of this, it is important to focus on the lessons which can be learned from those organisations which are achieving benefits which derive from a focus on social value such as better service delivery, opportunities for innovation and cost savings.

A longer term perspective will help CAs reconcile apparent tensions between achieving cost savings and achieving the aims of social value. The Social Value Act may represent for CAs a valuable tool in realising value for money in the longer term.

How can I find out more?

If you have any queries on the issues raised or on any aspect of procurement, please contact us via our procurement hotline on 0191 204 4464.