Social value is proving to be an ever-increasing part of corporate social responsibility within the procurement process.
The Public Service (Social Value) Act 2012, was introduced to transform how public money was spent, calling those who commission public services, such as public sector revenue contracts or capital projects, to consider how wider social, economic and environmental benefits could be secured.
The Act placed a legal requirement on commissioners to award public sector contracts based on cost, prior experience, and how they could deliver additional social value to the communities they serve.
8 years on, we see the evidence of the growing importance of social value, now accounting for around 20% of bid and tender evaluations.
Whilst the new policy does not make it compulsory for local clients and businesses it does, however, emphasise the importance of social value-driven projects and calls for local clients to start getting serious about delivering real social value in partnership with communities to “build back better’.
Sarah Coughlan, Chief Operating Officer here at SPC says that this new policy is an ‘opportunity for local businesses and communities as well as governments to take seriously and do good in communities, especially locally.’
New measures as we enter the new year
From 1st January 2021, new rules will be put in place for procurement in relation to social value. A joint team from Cabinet Office and the Department for Digital, Culture, Media and Sport (DCMS), and Voluntary, Community and Social Enterprises (VCSEs) have designed a social value delivery model for central government buyers drawing on examples of best practice in local government.
Currently, social value is only required to be ‘considered’ in central government procurement. However, with the new measures coming into force at the start of the new year, social value should now be ‘explicitly evaluated’ where the requirements are related and proportionate to the subject-matter of the contract.
Sarah Coughlan believes this is a big move forward in embedding social value in procurement on central government contracts. She commented, ‘we await the detailed guidance, but look forward to seeing central government move towards standard award criteria, delivery objectives that describe ‘what good looks like’, and metrics for contract management and reporting.
What good looks like
This new government model inspires people to adopt a renewed focus on ‘what good looks like’ in the policy note. The new model has a focus on COVID-19 recovery improving work conditions and helping those unemployed due to the pandemic which in turn increases social value generated.
Social value is often met with the suspicion that the numbers aren’t completely reliable as it is oftentimes unclear how the figures are calculated. This new policy, however, signals a real opportunity to develop better-defined data, therefore creating a clearer understanding of the social value delivered and its statistics. There are now also more widely accepted benchmarks endorsed with historical data, forging an opportunity to build more trust among clients and contractors alike. Something we have seen repeatedly from our clients is a sincere desire to “positively disturb” the way that pounds-and-pence figures are applied to the social value of a project.
As the policy note suggests “consistency means the process for defining social value will be standardised. It provides a clear, systematic way to evaluate these priority policies in the award of a contract.” This is vital for the whole industry.
The new policy also fits in with the wider government agenda as Boris Johnson says he has a mission to unite and ‘level up’ the UK, improving the construction part of the agenda. This will also play a key part on the agenda since the big hit to the construction world due to COVID-19.
Keeping social value local
The policy note also stresses that clients will be free to target their social value requirements to the communities they reflect. In order to make the most of this, clients and constructors alike will need to renew their focus on engaging with local communities to deeply understand their real, rather than perceived needs, which will allow them to recover from COVID-19 together.
Without this engagement, the risk is that social value is reduced to just a box-ticking exercise and not a factor that will actually help create a strong sense of social purpose with the potential to enhance community resilience.
Targeted social value programmes should become the new industry standard in order to grow social value and truly make an impact to unite and level up the country while keeping local communities and businesses firmly at the heart of the recovery.
For more information on Social Profit Calculator click here
For more information on the Procurement Policy Note click here