Maximising the benefit of social value
The Social Value Act came into force in 2013 in a bid to ensure that social, economic and environmental benefits were considered when commissioning public services. Gemma Waring of procurement specialist Millstream examines how local government can make it work in practice to get the maximum benefits for communities.
SOCIAL VALUE was high on the agenda at this year’s Procurex conference as it continues to gain greater weight as part of local government and central bodies' buying decisions. Where once purchasing criteria was split between price and quality, it is now best practice to award up to 20% of the total score to social value.
In hand with this surge in sense of social responsibility comes significant challenges for procurement officers and public sector suppliers. Despite coming into force in 2013, the Social Value Act can be difficult to put into practice. It's important to get this right during the tender process and, perhaps more importantly, ensure systems are in place to see this through in the long term, especially as it now represents a higher proportion of criteria requirements.
Ambiguities on definition, implementation and measurement minimise the Social Value Act's effectiveness and authorities' ability to maximise benefits in communities in which they operate. Organisations such as the Social Value Portal can provide a service that allows organisations to "measure and manage the contribution that their organisation and supply chain makes to society" according to the Social Value Act principles but it's perhaps the earlier stages of the process that need greater attention.
Local authorities need to define what social value means to them as an organisation, their suppliers and the local community. Harrow Council's definition - "the sum of the economic, environmental and social benefit which can be secured through the way we procure goods, services and works" - is how many authorities and central purchasing bodies typically consider social value, but an understanding of what this means in practice is key.
Manchester City Council, for example, has outlined what "matters to people who live and work in Manchester" and made this a central part of its city vision, using social value as a means to help achieve it. Its supplier toolkit also provides potential bidders with a greater understanding of what they can do in their community to support their bid effort. Suppliers are scored on their contribution and "offer" to the local community, be it through its Social Value in Kind initiative, perhaps where the business can offer a number of apprenticeships to a local school or improve environmental sustainability or, alternatively, its Social Value Fund, where cash contributions can be offered in lieu of "in kind" activity.
North of the border, the Scottish Government's Community Benefit Clause has been a key component of procurement policy since 2008. Its study undertaken between 2009 and 2014, looking at a variety of community benefits within 24 sample contracts, found evidence to demonstrate the success of the legislation. One example of success was that 1,000 individuals from priority groups, such as young people not in employment, education or training, were recruited as a result of implementing the clause, of which 35% wouldn't have been taken on without the clause. This research concluded that while Community Benefit Clauses are increasingly being used in public sector contracts across Scotland, there remains scope to continue raising awareness and understanding.
While integrating corporate social responsibility (CSR) into the tender process ensures the community in which it operates benefits, it raises the question of whether a supplier is only acting socially to win a tender. Businesses already demonstrating CSR practices will have an advantage.
In fact, social enterprises could dominate new tender opportunities in this respect. By hiring a social enterprise supplier, an authority can tick all of its social value boxes and most likely award them the full 20% possible within that criteria. While quality of service and delivery could be a concern in comparison to that of larger commercial business, some procurement officers seek to find value for money through social value than rather simply commercial means. This creates greater competition between private and third sector businesses and will almost certainly make commercial firms reconsider how they can meet requirements.
In the past, local authority procurement officers would invest time in getting to know their top 10 suppliers. Even the most competitive of processes could mean a supplier would hold the contract for a service or product based on price or experience for a number of years. One of the impacts of this greater focus on social value is that it gives smaller firms an opportunity to edge into the market.
Crucially, the social value criteria within a tender must be realistic and appropriate for all potential competitors to make the process as fair as possible. For example, rather than state a supplier must create 10 apprenticeship opportunities per year, this could be proportionate to the size of the business or number of employees.
One framework process that seems to be proving successful is a points system. A firm could be given a number of points based on the monetary value of a contract, which it would then be able to 'spend' in the second year of the contract. These points could be the equivalent of three school visits per year, hire two apprentices or gift 25 computers to a local library, for example. The key here is that this system allows for flexibility in both the supplier's capabilities and what the local community would benefit from most.
Currently, the Social Value Act only applies to the provision of services rather than products. However, that's not to say it can't be implemented as best practice. As the economy continues to fluctuate and local government budget cuts remain a considerable threat, social value enables authorities to support the community in where it is needed most.
Applying best practice throughout the process by defining, implementing and measuring social value in a way that is appropriate to everyone is vital.
Procurement specialist Millstream provides a tender publishing and management service, My Tenders, which is used by hundreds of public sector organisations in the UK. For more insights or top tips on social value within the public sector visit www.millstream.eu or read Gemma’s recent blog on the topic here.