Businesses seeking to win government work must set out how they will also deliver on the government's social value priorities.
The changes mean that, from 1st January 2021, central government will now be required to go further than the Public Services (Social Value) Act 2012 to ensure that all major procurements explicitly evaluate social value, where appropriate, rather than just consider it.
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.
Commercial teams in all government departments will be expected to go on training courses in implementing the new model, learning how to squeeze maximum social value from each contract.
The underlying aim is for government to use its buying power to do good beyond the actual asset being purchased. In other words, it is not enough for a contractor to build a hospital that saves lives and cares for the sick; the contractor must also commit to local job creations schemes, or some other kind of local initiative relevant to the project that furthers the public good.
The Cabinet Office believes that this will have the effect of making it easier for smaller local companies to compete in their areas against big national or multi-national players (although this misses the fact that many big companies now have teams of people in place specifically to promote their social value scores when bidding for work).
The Public Services (Social Value) Act 2012 already places a requirement on relevant contracting authorities to consider, in respect of procurement for services, how the economic, environmental and social well-being of the relevant area may be improved by what is being procured. Last year the Cabinet Office consulted on a new procurement model devised by a joint team from Cabinet Office and the Department for Digital, Culture, Media & Sport (DCMS), working with Claire Dove, the government’s crown representative for 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. Commercial specialists, policymakers, small and large businesses and the VCSE sector have been engaged in the design.
Application of the new social value model will be mandatory in central government but commercial teams retain flexibility in deciding which of the outcomes should be applied to their particular procurement to ensure relevance and proportionality. 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; a higher weighting can be applied if justified.
Cabinet Office minister Julia Lopez said: “Government has tremendous buying power, spending £49bn each year on contracts for vital public services. Value to the taxpayer should lie at the heart of our procurement decisions. Too often, however, ‘value’ has been narrowly defined by price without taking into account other important factors such as the number of local jobs or apprenticeships a contractor will provide, the care they show the environment in their business practices or the number of SMEs involved in their wider supply chain.
“We want to see a greater variety of companies deliver government contracts, from every corner of our country - not just because that benefits local economies and communities but because it helps diversify our risk, create a more resilient supplier base and deliver some of our critical priorities. If we can use government’s buying power to drive that broader value, the better our chances of levelling up our country and investing in our people as part of our Covid recovery.”
The Federation of Small Businesses welcomed the move. Arnab Dutt, chair of the federation’s social value policy unit, said: “I welcome the announcement on social value procurement as an important step forward for public sector supply chains. Its focus on addressing economic inequality, the climate emergency and societal wellbeing is a 21st century agenda.
“Social value has the potential to be transformational in bringing opportunity to all parts of our country and to the many small businesses that are the lifeblood of our communities.”