Social Value: A sea change in UK procurement policy

What is not to like about Social Value – the idea that government awarded contracts should more explicitly benefit communities. Moreover, aren’t many, if not most, contracts delivering this in some way already? So why has the issue now at the forefront of the public procurement discussion?

In the UK, Social Value’s leap to prominence follows the Cabinet Office’s landmark announcement that central government contract awards from 1st January 2021 will be based on Social Value to the tune of 10%, possibly more depending on the preferences of departments. In addition, the Cabinet Office has laid out what themes it will prioritise Social Value, how contracting departments will evaluate Social Value in bids, and how it will be measured and reported though the lifespan of contracts.

This fundamentally changes the way in which suppliers to government bid for and manage contracts. Previously, the focus was on price and quality, now there is a third very welcome – but altogether more complex – strand to consider in the bidding and delivery of public services.

It is not that the UK Government does not already recognise that many contracts generate Social Value. From efforts to tackle climate change to local employment opportunities, suppliers to government already deliver many well thought of initiatives. Soon these initiatives will no longer be meaningful outside of the procurement process, but central to it. Quite rightly, the Government’s ambition for Social Value goes well beyond a formalization of existing initiatives

A Potted History of Social Value

Social Value was first introduced into legislation by the Coalition Government in 2012. The legislation required Social Value to be “considered” in the commissioning process, but stopped short of requiring defined Social Value outputs in any contract.

There was a concerted effort amongst many local authorities, but the lack of a mandatory requirement to include Social Value as an output in the procurement process and clear ways to measure it led to patchy take-up.

When it came to central government contracts, Social Value had even less prominence.

This was clearly articulated by Lord Young, in his review of the Social Value Act in 2015. He concluded that, although “popular and effective” amongst those who were aware of the legislation, its “incorporation in actual procurements appears to be relatively low when considered against the number and value of procurements across the whole public sector”.

Some seven years after the Social Value Act was first introduced, Theresa May’s Government re-engaged with the policy when it published a consultation on Social Value to obtain the views of industry stakeholders. The Government’s response to this consultation, initially set for a  September 2019 publication, was delayed due to a triumvirate of headwinds: Brexit, the General Election, and the pandemic.

It wasn’t until December 2020 that the Government published the final part of its policy, in the form of its new Social Value Model.

How Government will Frame Social Value 

Social Value could be seen as a slightly nebulous concept – difficult to pin-down and define. In its Social Value Model the Government has tried to create a system that will bring clarity and consistency to this policy area. At the highest-level, the Government has chosen five Social Value ‘themes’:

  1. COVID-19 Recovery
  2. Tackling economic inequality
  3. Fighting climate change
  4. Equal opportunity
  5. Wellbeing

Each of these has been assigned more specific policy outcomes, which in turn have been matched with criteria by which they should be evaluated, measured and reported by contracting Departments.

The Government will not prescribe which of these Social Value deliverables a specific Department must include in contracts. Instead, Departments are encouraged to select those deliverables which are most appropriate to the public services they provide. Departments, therefore, have a strong degree of flexibility in fashioning their own Social Value preferences, but within a menu of what they can select, and a rigid framework underpinning how they are evaluated, measured and recorded.

Specific reporting requirement are also defined in the Government’s Social Value Framework. Departments already have to publish KPI performance data each quarter for Government's most important contracts, of which there are around 250. These reports will now include a Social Value KPI selected by the Cabinet Office. To provide a more holistic picture of Social Value, the Government hopes to flesh out its Social Value reporting requirements further in due course.

It’s been a long and winding road, but the introduction of this policy in 2021 marks a true sea change in public procurement – one that should be embraced by all suppliers to government, big and small.  Public procurement has now been injected with a clear social mission. To successfully harness the almost infinite potential of public contracts to generate positive social outcomes, government and suppliers will need to work in genuine partnership. Failure to do so would be to fail the myriad organisations, people and communities who could directly benefit from an effectively implemented Social Value policy.

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