New year, new rules
From 1st January 2021, the government is introducing a new public procurement model that takes greater account of the additional social value created by contractors who are bidding for work.
Businesses that are seeking to procure government work must set out how they intend to deliver on the government’s social value priorities.
Currently, social value is only required to be ‘considered’ in central government procurement. However, with the new measures coming into place 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.
The social value model on which departments will assess contracts includes:
- Supporting Covid-19 recovery, including helping local communities manage and recover from the impact of Covid
- Tackling economic inequality, including creating new businesses, jobs and skills, as well as increasing supply chain resilience
- Fighting climate change and reducing waste
- Driving equal opportunity, including reducing the disability employment gap and tackling workforce inequality and promoting community integration.
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.’
Social value is proving to be an ever-increasing part of corporate social responsibility within the procurement process. Eight years on, we see the evidence of the growing importance of social value, now accounting for around 20% of bid and tender evaluations.
The new model states that a ‘minimum weighting of 10% of the total score for social value should be applied in the procurement to ensure that it carries a heavy enough score to be a differentiating factor in bid evaluation’. All bidders will be tested, and bidders must demonstrate the full extent of the social value they will generate.
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 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.
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.
Construction Leadership Council’s Procuring for Value Toolkit provides helpful insight on how government, clients and the industry can maximise impact with a change in approach to procurement. Procuring for Value is a key theme of the sector deal and attempts to provide guidance, information and contact details as a support to suppliers when considering their ‘offer’ and delivery of social value. These are some helpful anchor points as the industry adapts and adopts new ways of working, which are all important steps towards improvement.
Enhancing community resilience
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. Along these lines, social value will become a vital priority on the back of which we will hopefully see the creation of a whole new social contract.