A breakthrough for Social Value?

Introduced with the best of intentions, the Public Service (Social Value) Act 2012 never really fulfilled its promise of embedding the consideration of social, environmental, and local economic factors into the commissioning of public services. Aimed at reducing the emphasis on procuring for lowest price, it was intended to broaden the procurement agenda to consider whether the contract offered sustainable value to the community. But its implementation has remained patchy and inconsistent, as the 2015 review led by Lord Young concluded.

All that may be about to change, however. The publication of PPN 06/20 in September 2020 heralded a new Social Value Model which introduces a more systematic, rigorous and targeted approach that should make it easier for commissioners to specify and for suppliers to deliver tangible social value. Applicable initially only to central government commissioners, it is a pilot with the declared intention of rolling out to the entire public procurement community at a future date. So, what makes this approach better than the status quo?

The Social Value Act was made non-prescriptive to allow commissioners the flexibility to respond to local needs but in reality, this lack of structure led to such variation in the way the policy was interpreted that it became an obstacle. With almost as many interpretations as there are purchasing authorities, those supplying products and services had to re-engineer their social value offering for each contract bid which led to interventions that tended to be tactical rather than creating systemic change that built social and economic value into products and services.

There was also no specific guidance about how social value should be measured. Some contracts focused on interventions and outputs, without considering whether the lasting outcomes created benefited the communities they served. The Social Value Portal and others addressed this issue by creating models for evaluating social value, and this certainly helped to focus attention on outcomes, but there remained a lack of consistency about how social value was measured – and arguable over-reliance on financial proxies.

The new Social Value Model introduces three significant changes that could make it both more effective and easier to embed social value into procurement. Firstly, it focuses on five key policy themes and eight policy outcomes, proposing these as a menu from which the commissioning body selects those appropriate for its purpose. Secondly, it provides a comprehensive set of tools and resources including model award criteria and reporting metrics that create a standardized methodology for expressing social value requirements in tender documents and measuring their delivery in terms of outcomes. And finally, it makes consideration of social value mandatory with a minimum weighting of 10%.

There is still room for procurement professionals to tailor the social value requirements of individual contracts, but within a consistent framework that provides clarity for both purchasers and suppliers. It is early days, but this looks like real progress towards fulfilling the original aim of the Social Value Act of supporting the creation of measurable social and environmental value in public procurement.

Although its use is currently only mandatory in central government procurement, there is nothing to prevent the adoption of the new Social Value Model by both purchasing professionals and prospective suppliers across the public sector. To do so would not only create a more consistent and coherent approach to social value in public procurement, but also prepare for its likely extension once the pilot phase is completed. Those who do so are likely to be better prepared for the next phase in the evolution of public procurement.