Achieving Social Value Through Procurement

INTRODUCTION

Social value is the quantification of positive public benefits and outcomes. It originates from a collection of principles aiming to improve health, wellbeing, quality of life, and communities. Social value prompts us to consider whether the money spent on the delivery of goods, works or services can also produce a wider benefit for the community. It means looking beyond financial value alone and considering the collective benefit to the local community.

Procurement sources inputs from suppliers in order to satisfy the needs of its customers. It therefore has a responsibility to ensure that social value is considered in the sourcing process and that contracts deliver social value outcomes.

A social value approach emphasises the following principles:

• EMBED SOCIAL VALUE: Adapt your policies and governance arrangements to emphasise the role social value will play.
• DELIVER SOCIAL VALUE: Implement social value through commissioning and procurement processes from assessment of assets and needs through to advertisement and pre-qualification questionnaires, specification, evaluation and contract compliance.
• DEMONSTRATE SOCIAL VALUE: Evidence how and when you have introduced social value and the impact that this has made.

LEGISLATION

In the UK, the Public Services (Social Value) Act 2012 allows public bodies in England and Wales to assess the creation of social value when they are placing public services out to tender. Bidding organisations can score extra points for the way in which they will deliver the contract and where they can show that they will have a positive impact on the environment or local communities.

The National Social Value Taskforce was founded in 2016 to establish a good practice framework to integrate the legislation into the UK public-sector and business community. A National Social Value Measurement Framework was developed by Social Value Portal and launched in 2017. The framework, which is reviewed and endorsed by the National Social Value Taskforce, is a method of reporting and measuring social value to a consistent standard.[1]

The framework provides a ‘golden thread’ between an organisation’s overarching strategy and vision, to the delivery of that vision. It does this by means of themes, outcomes and measures (TOMs).

THEMES:           Visionary social value areas.

OUTCOMES:     The positive changes within communities an organisation wants to see.

MEASURES:      A set of measurements used to achieve outcomes.

CASE EXAMPLE

Most public-sector organisations use the TOMs approach when developing their social value strategy. A case study example of Liverpool Clinical Commissioning Group (LCCG) is provided below.[2]

CRITICISMS

The Public Services (Social Value) Act 2012 should be a win-win scenario: the taxpayer gets extra value for money, and social enterprises are more likely to win public service contracts. However, what should have been a useful, creative concept often becomes an onerous and bureaucratic process. Social value submission forms often run to more than 8 pages itemising a host of specific kinds of social value. Some make sense: the number of employees, apprenticeships and work placements for people from specific local communities, for example. However, there is also a long list of prescribed kinds of employee volunteering which bidders can commit to, with a strong preference for visiting schools and giving careers talks. Each kind of social value has a multiplier applied to it, which means that each ‘unit’ of social value may be worth £1, or nearly £30,000 for some of the employment-related units. These are often derived from third-party databases which have been developed.[3]

There is a rationale behind this: if social value is to be scored, there has to be some rigour to it. How do you compare carbon reduction with creating volunteering opportunities? But the problems are also obvious: what would be the point of committing to any of the kinds of social value which attract 1:1 scores, if some attract 1:30,000 scores? And for an organisation with a small staff team and low margins, the ability to commit to large amounts of employee volunteering will be much more limited than for a large corporate. Many local charities create huge social value: their whole approach creates community connections and draws on volunteers and social action as its core operating function. However, they can easily be out-competed on social value in this format by a large corporate which is clever about the way it cites its employee volunteering programme in all of its tenders.

One of the problems here is that social value is being placed in a gap where commissioning for outcomes should be: if organisations were judged on the wellbeing outcomes they created, a good social enterprise would have a built-in advantage. However, the commissioner under the legislation has to consider social value as something created in addition to the main purpose of the contract, which does not allow them to value organisations which build social value and community impact into the way they deliver their core work. Ironically, there is little evidence of not-for-profit organisations being involved in designing the tools and calculators developed to enact legislation which was intended by parliament to work in support of those organisations.

The other problem is the balance between the need for transparency and fairness in public service contracting on the one hand and the desire to value something which is valuable precisely because of its subjective, locally-decided nature.

CHANGES TO THE LEGISLATION

In response to these challenges, the UK Government released a new plan for delivering greater social value through its procurement processes in September 2020. The new measures were introduced through a new model for government departments to better assess the total social impact of suppliers’ bids. Whereas the Public Services (Social Value) Act 2012 just required agencies to ‘consider’ social value in procurement decisions, it is now mandatory.

Public-sector commissioners should use this model to take account of the additional social benefits that can be achieved in the delivery of its contracts, using policy outcomes aligned with the government’s priorities. Social value should be explicitly evaluated in all government procurement and the requirements should be relevant and proportionate to the subject-matter of the contract.

SOCIAL VALUE MODEL

 The Social Value Model sets out government’s social value priorities for procurement.[4] It includes a menu of social value options for commercial staff to review and select with their internal clients and any other stakeholders. There are 5 themes and 8 policy outcomes which flow from these themes. Commissioners should select appropriate local delivery objectives which align with these policy outcomes. The themes and policy outcomes are shown in the diagram below.

Following the TOMs approach, there should be a clear ‘golden thread’ from government priorities to the development of strategies and business cases for programmes and projects, through to procurement specifications. If done correctly this approach will encourage market collaboration that identifies and refines proposals, as well as provides evaluation criteria that can allow contracting authorities to conduct more sophisticated evaluations of quality, wider public policy delivery and whole-life value.

Although it has been criticised as being too prescriptive, the new model does at least ensure that all public-sector buyers are working towards the government’s social value priorities, thus ensuring consistency and alignment. Furthermore, the policy outcomes are sufficiently broad and outcome-based for specific local objectives and measures to be developed. The different themes and policy outcomes can also be adjusted in terms of local importance by weighting them accordingly.

The new approach stipulates that all social value initiatives should be relevant specifically to the subject matter of the contract, rather than general attributes. An overall 10% minimum weighting  is required for social value, although it can be more. The only permissible exception to this rule is where pre-market engagement demonstrates that the approach would significantly reduce competition due to a lack of market maturity in delivering social value.

Unnecessary burdens should not be placed on commercial teams or suppliers. Proportionality is an important term in relation to social value measurement. The amount of time spent and the degree of accuracy sought and achieved in any measurement exercise must be proportionate to the size of the enterprise and the risk and scope of the contract. This is good news for lower-value contracts and small social enterprises. In some cases qualitative evidence may be sufficient. Story-telling is one way of achieving this: capturing and including peoples’ stories of how they have been helped, how a programme has changed their lives, and what life would have been like without the intervention.

It should be noted that organisations must ensure that any benefit identified as social value in tenders or contracts under the policy is over and above the core deliverables of the tender or the contract. This is an important consideration for healthcare contracts, whose core deliverables are often related to improving health and wellbeing. Potential suppliers must be aware of this difference and the buyer may wish to focus on social value initiatives relating to other themes and outcomes.

[1] socialvalueportal.com

[2] https://www.liverpoolccg.nhs.uk/media/1078/social-value-strategy-and-action-plan-2014

[3] https://alexfoxblog.wordpress.com/2020/03/10/social-value/

[4] https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/940826/