INTEGRATING SOCIAL VALUE IN PUBLIC-PRIVATE PROCUREMENT

Since the Social Value Act 2012, Local Authorities have been obliged to consider social value when procuring services, and Government has repeatedly made clear its intention to strengthen this by requiring authorities to ‘explicitly evaluate’ rather than merely ‘consider’.  Indeed, as of 1st January 2021, all central Government contracts will have to do just this and apply a minimum 10% weighting.  Whether Government will legislate to impose the same requirement on the wider public sector remains to be seen, but the statement of intent is clear.

As it stands though, the existing requirement is somewhat loose, and as a result application by authorities varies widely.  In our experience across property procurements for a number of London Boroughs, weightings from 3% to 10%+ are applied to social value.  Up to 20% is applied elsewhere.  Authorities can also be unsure what they should seek under social value, and how it should be evaluated.

The truth is that there is no right answer or one-size-fits-all approach.  However, rather than be intimidating this should be liberating for authorities, offering great freedom to focus on and secure whatever outcomes are most important in each case.

Those outcomes should be determined with reference each organisation’s goals, and crucially the views and aspirations of the people involved and affected.  Social value targets can and should be different for each project, depending on the local issues.  They should be based on engagement and analysis of socio-economics and the drivers behind local problems.  With this understanding it should be possible to set social value goals that align with the issues and have the potential to make most difference.  Many authorities in London have done this and set specific social value charters or policies (e.g. Croydon, Barking and Dagenham, Lambeth, Lewisham) which is a great way to provide a framework for every subsequent procurement, though it will always need to be tailed in each case .

It isn’t necessary to convert all outcomes to £ equivalents or use complex measurement methodologies.  Though these have their place, particularly in providing parity between social value and financial value, it can be simpler and just as effective to focus on outcomes.  Using a deep understanding of the place, establish what improvements you want to see and find a measurable proxy to target.

For example, if unemployment is the key issue, use engagement to understand what forms of employment are sought and attainable locally, then set targets for placements and permanent jobs of that type in the procurement.  This is simplified perhaps, but the point is knowing the place, and tailoring targets to specifics, is likely to provide the best results.  Targets should be measurable, but also relevant.  Some neighbourhoods may benefit more from education and work experience opportunities than apprenticeships.

Setting a low weighting for social value is not necessarily an issue.  If the requirement is tightly drawn with specific aims then it may be appropriate to use relatively few marks for what will be quite a focussed set of solutions or commitments.  Often the project or service itself is seeking to deliver social value more broadly, for example in a regeneration context, and so it can feel like double-counting to score a separate social value question.  In that case, social value can focus solely on additionality – how the contract will be delivered in a way that would deliver better outcomes or commitments made besides the core services.

If setting relevant and focussed goals is of key importance within the procurement, then so is keeping them on the agenda after contract award.  The social value outcomes should be written into contracts, assigned a slot on project meeting agendas, and responsibility for them placed on specific people.  This ensures that commitments are monitored and able to be evaluated in future.

Social value is an important aspect of public procurement, and an area central Government is looking to expand.  Given the current ‘levelling-up’ agenda, it may be more important than ever for London authorities to demonstrate value in the broadest sense.  However, it need not be complex and great flexibility is open to authorities to focus on the issues and outcomes they are most interested in.  Truly understanding local needs, and speaking to those affected, is a great place to start.