Procurement Essentials is a new series of articles to help you overcome common hurdles, understand key concepts, and make your life as a buyer of everyday goods and services easier.
Published 24 March 2022
Last updated 30 August 2023
Updated: August 2023
Social value in procurement is about making sure that what you buy creates additional benefits for society. To get it right, you need to start thinking as early as possible about how to apply it to what you are buying.
What is social value and why is it important?
The Social Value Act 2012 states that all public bodies must consider how what they are proposing to buy might improve economic, social and environmental wellbeing. The legal requirements of the act are quite limited, and many public organisations choose to go further than just ‘considering’ social value, and actively apply the principles across their procurement activities.
Please note: central government bodies must also comply with the requirements contained in Policy Procurement Note 06/20.
Social value is traditionally applied as part of a community, local, or regional contract. A local authority commissioning a built environment regeneration project may require the companies bidding for the work to state what social benefits they would offer to the area, should they win the contract. These could include a commitment to employing local people, offering a number of apprenticeships, or supporting the growth of responsible local businesses.
Before you start any procurement, you should think carefully about whether the goods or services you’re going to buy, and the way you are going to buy them, will secure social value benefits.
Early preparation is key
Consider social value as early as possible, ideally when your requirement is still in the pre-procurement / development phase. The decisions you make during this stage will be integral to the final contract and the type of suppliers that will perform it. It needs to be right from the start.
As a first step, consult with your key stakeholders, supply market, and customer base, to reach a common understanding of what social value might look like for your contract. Many organisations want to be effective contributors to social value and will be happy to start a conversation with you. Some public agencies and commercial companies may be able to provide you with case studies or other supporting evidence to show how they have delivered it in the past.
The procurement will be more successful if you have a clear understanding of what your social value ‘ask’ is. Use this when drafting your specification and evaluation questions to avoid any sense that social value is arbitrary.
Be specific about the themes you’d like bidders to focus on – whether that’s creating new jobs, protecting the environment or tackling inequality. Clearly state your objectives and the social value outcomes you want to achieve for each theme.
How to evaluate bids for social value
We have discussed ‘how to evaluate bids’ in another article in this series. The core principles are the same for social value, but the following specific advice applies:
Take time to get your questions right
Writing a great social value award question is a skill. While you can ask as many questions as you want, often one straightforward question in plain English is sufficient. The most effective social value questions are forward-looking and have a clear link to the contract specification – asking a supplier what they will specifically do over the life of the contract, in support of the identified outcomes.
Include clear evaluation criteria so that suppliers know what you’re looking for in a response, and set a word or character limit that gives bidders enough space to make a meaningful proposal. Ideally, you should choose evaluators who have some understanding of the topic.
The Government Commercial Function has produced quick reference guidance on model evaluation questions, criteria and reporting metrics aligned to PPN 06/20.
Outcomes over outputs
Social value should always be evaluated for quality and not quantity. A large, national company might have the capacity to create an apprenticeship whereas a smaller business may partner with other local organisations to create specialist training, using their unique skills. Both contribute to the development of new skills, but in ways that suit the bidders’ skills and capacity. Evaluating proposals based on how well they contribute to the desired outcome, rather than on how much they promise, levels the playing field and encourages innovation.
Consider your weightings
PPN 06/20 requires central government departments to evaluate social value, applying a minimum overall weighting of 10%. For other public bodies this can vary. A higher percentage won’t necessarily drive more social value, so balance your weightings carefully. See Using the social value model for further guidance on this.
Once you’ve completed the evaluation process and chosen a supplier, the social value deliverables should be incorporated within the contract in readiness for managing them throughout the life cycle of your procurement.
It’s important that you’re clear on your reporting criteria at the specification stage so that you can measure social value impact effectively. For example, you could include ‘the supplier shall report on social value progress and impacts monthly / 3 monthly / 6 monthly etc.’ These will be your key performance indicators.
Finally, remember that evaluating social value doesn’t stop once the contract is awarded. You need to be consistent in collecting, recording and monitoring your KPIs.
Learn more about social value
More: You can now find all of our Procurement Essentials articles in one place on our website.