While social value has been a feature of public procurement over the last decade, it has usually carried a relatively low weighting. The ground-breaking policy note Procurement Policy Note (PPN) 06/20 announced by the Cabinet Office in September last year, requires that from 1st January 2021 all central government departments (and their executive agencies and non-departmental public bodies, including NHS Trusts) include in their procurements a social value award criterion weighted at a minimum of 10% of the overall score.
This demonstrates the marked shift in the public sector’s attitude towards the role that social value should play in determining who wins public contracts. Social value is the additional value created in the delivery of a contract through a wider community or public benefit, which extends beyond the monetary value of the contract itself.
Businesses that bid for public contracts in all industries and sectors will now be expected to demonstrate more sophisticated and more ambitious social value commitments to maximise their social value scores when bidding for public contracts over the coming months and years. Instead of making general references to overarching policies on social value, businesses will need to commit to delivering targeted social value improvements relevant to the contract during its lifetime.
By placing a significant weighting on social value and following that through with contractual obligations to report and deliver (with powers for the contract to be terminated if a supplier does not meet the social value KPIs), the government is looking for a system-level change to how its supply chain delivers measurable social value improvements.
The government’s aim is for social value to have a heavy enough weighting to be a differentiating factor in bid evaluation and to ensure that public sector contracts are drafted to ensure compliance with the social value commitments made by the winning bidder.
The government is also looking for the new approach to create more opportunities for small and medium-sized enterprises and social enterprises to win public contracts by giving a meaningful weighting to the social value they can generate in the evaluation of the “most economically advantageous tender”.
Social evaluation criteria will need to be relevant and proportionate to the contract being procured. The Cabinet Office has set out a list of areas of priority focus:
- Covid-19 recovery – to help local communities to manage and recover from the impact of Covid-19
- Tackling economic inequality – to create new businesses, new jobs and new skills, and increase supply chain resilience and capacity
- Fighting climate change – to ensure the effective stewardship of the environment
- Equal opportunity – to reduce the disability employment gap, and tackle workforce inequality
- Wellbeing – to improve health and wellbeing, and improve community integration
Businesses need to be recording their current social value initiatives and consider how these could be presented in a tender response, including reporting obligations and measurable outputs.
For expert help getting your business in a position to commit to deliver on social value requirements in the delivery of contracts, contact us.