On 24 September 2020, the Cabinet Office announced that businesses seeking to win government work must set out how they will also deliver social value priorities, following new measures which will come into force on 1st January 2021. Social value is the term used to describe the additional value created in the delivery of a contract which has a wider community or public benefit.
Procurement Policy Note (‘PPN’) 06/20 sets out a new model to deliver social value through procurement and how central government organisations should use the model. The PPN applies to procurements covered by the Public Contracts Regulations 2015 and applies to all Central Government Departments, their Executive Agencies and Non-Departmental Public Bodies.
By using the social value model to assess and score suppliers on the wider positive benefits they bring to delivering a contract, it is hoped that the following aims can be achieved:
- value for money for the taxpayer can be maximised;
- of the opportunity for a more resilient and diverse supplier base is increased;
- more opportunities for SMEs and social enterprises to win public contracts by levelling the playing field;
- promoting new jobs and skills; and
- encouraging economic growth and prosperity.
The Social Value Model
The social value model is divided into five themes with outcomes and delivery objectives on which central government departments can assess contracts. These five themes are the areas of priority focus for social value delivery in central government procurement.
(1) COVID-19 Recovery: supporting COVID-19 recovery, including helping local communities manage and recover from the impact of COVID;
(2) Tackling economic inequality: including creating new businesses, jobs and skills, as well as increasing supply chain resilience and capacity;
(3) Fighting climate change: focus on effective stewardship of the environment and reducing waste;
(4) Equal Opportunity: including reducing the disability employment gap and tackling workforce inequality; and
(5) Wellbeing: Improving health and wellbeing and community integration.
This approach will apply to all bidders, irrespective of their size and type.
Application of the model is mandatory in central government but the relevant body can decide which of the outcomes should be applied to their particular procurement to ensure relevance and proportionality.
In practice: How to assess social value during a procurement process
The changes mean that Central Government Departments, their Executive Agencies and Non Departmental Public Bodies 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.
Commercial teams in all government departments will also be expected to complete training courses in implementing the new model and how to ensure the maximum social value is derived from each contract.
The PPN requires all in-scope organisations to familiarise themselves with the social value model at Annex A of the PPN, including the menu of priority policy themes and outcomes that can be applied in new procurements (as summarised above). For example, to assess a bidder’s actions against climate change, activities that deliver additional environmental benefits in the performance of the contract including working towards net zero greenhouse gas emissions should be evaluated.
The Cabinet Office Minister, Julia Lopez has said that “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”.
Therefore, while value for money is still paramount, a bidder’s social value score will need to be incorporated into the evaluation model for evaluation of tenders in a public procurement exercise.
This article is for general awareness only and does not constitute legal or professional advice. The law may have changed since this page was first published. If you would like further advice and assistance in relation to any of the issues raised in this article, please contact us today by telephone or email firstname.lastname@example.org.