Charlene Maginnis explains how the Government’s rules on social value are shaping the public sector’s buying decisions.

This article was originally published in Public Finance.

A different kind of squeeze is coming to public sector finances, after a year of unprecedented and unforeseen spending. 

For the coming decade, ensuring that the public sector is getting every ounce of value that it can possibly get from its procurements is going to be the name of the game. And different ideas of value will be added to, and magnify, traditional concerns of pounds and pence.

In September 2020, the Cabinet Office published Public Procurement Note 06/20 – taking account of social value in the award of central government contracts.

The guidance note requires all central government departments to explicitly evaluate social value in their new procurements, where the requirements are relevant and proportionate to the subject matter of the contract.

The PPN also includes a new social value model, which contains a menu of priority social value themes and policy outcomes that can be applied in new procurements and contracts.

And social value is certainly not restricted to central government bodies. If anything, local government has led the way in considering how to make sure its local citizens’ money is being used to boost local economies and tackle social inequalities. 

We know that suppliers are having to review their offer to the public sector to catch up with often developed and preconceived notions of what they should be able to offer.

For many companies, it will be a step into the unknown.

A complex environment

Thousands of suppliers of all sizes are currently signed up to supply goods and services through Crown Commercial Service frameworks, across a dizzying array of categories and specialisms.

When we also consider that CCS works with 18,000 customers across the length and breadth of the UK, the opportunity for social value to be generated through our procurement solutions is clear. What is also clear however is that a one-size fits all approach to delivering that value is not going to work.

Self-evidently, a large central government body is not going to look at social value in the same way as a rural local authority or large hospital trust. That poses a challenge for suppliers – how should they structure their bids to meet the needs of a complex customer market?

At CCS we’ve been starting to see the first generation of framework agreements awarded since the new PPN came into effect, and the many and various ways suppliers are trying to meet the new requirements to set out their social value offer.

Supplier approaches

CCS supports the public sector to procure goods and services. The distinction between those two different kinds of product is an important one when considering social value.

For service-led sectors, people obviously sit at the heart of potential opportunities. For suppliers who are connecting the public sector with human resources and expertise, focusing on how those people are recruited and engaged offers one route to delivering social value. 

CCS may ask suppliers bidding to join our agreements to demonstrate how they work to ensure fair, inclusive and ethical employment practices. This could include evidence that they’ve advertised vacancies in a wide range of locations, are using name-blind recruitment practices, or that they’ve engaged with VCSE organisations about the possibility of offering apprenticeships. 

Many suppliers of products on the other hand are looking at the impact their manufacturing processes have on the environment, and on the UK’s carbon net zero targets.

Suppliers on CCS’s furniture agreement are asked to support the Greening Government Commitment to ensure that all packaging of products is reusable or readily recyclable. They report on their greenhouse gas emissions and the amount of waste they send to landfill, and are obliged to demonstrate sustainable sourcing practices for the timber they use.

The commonality here is the importance of considering how social value can be maximised at every stage of the procurement process, whether you’re buying in physical goods or human expertise.

Find out more

You can find a full list of Crown Commercial Service commercial agreements and details of how to build policy considerations into your procurement in our interactive digital brochure.