Avoiding Social Value Barriers to Entry

 As the concept of looking for “social value” in public sector procurement becomes established, attention has turned to the practicalities of making it work in the intended manner.  There are tricky issues which we have discussed around scoring the social value elements of bids and tenders. There are also risks that if buyers aren’t careful, social value considerations (including environmental demands, human rights accreditation and other factors we see cropping up now in procurement) might become barriers to entry, working against smaller, younger or less well-resourced potential suppliers. It would be ironic if “social value” made it harder for social enterprises, minority-owned firms and the like to actually win contracts!

 Here is a short extract from the “Procurement with Purpose” book that looks at some of those issues.

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 Another area of concern around using public procurement for social value is that it could have unintended consequences in terms of increasing barriers to entry for the very firms that it should be helping.

 In the US, provisions to support minority-owned businesses through public procurement are much more established than in Europe. But the  whole bidding process is often so complex for government tenders it has created such barriers. So many US firms either focus entirely on public sector work, or won’t even attempt to win contracts. That can’t be healthy.

 Already, the large government suppliers in the UK are on top of this agenda. A quick LinkedIn search brings up a “CSR Manager” for giant services firm Serco and a whole bunch of people at Capita (including “Head of Responsible Business at Capita Customer Management” and “Head of Responsible Business (Government Services)”).

 Now of course major suppliers to the public sector should take purpose and sustainability seriously. But if you are a small firm bidding against Capita to win a contract, you probably don’t have a dedicated manager in this area. You may not have an all-encompassing programme, including carbon reduction, diversity and inclusion, a lengthy modern slavery policy, a whole bunch of apprentices, data available about staff with disabilities, and community programmes.

 Yes, large firms should be doing all this. But it must not lead to a situation where small firms are at an immediate disadvantage when they are competing with the giants. If social value is weighted at 20% of total marks, and your start-up scores 5/20 whilst Capita scores 20, you are most unlikely to win that contract, however strong the rest of your bid.

 There is no simple answer to this conundrum. Smaller firms might need specific education and training – outside of specific bids of course – to help them. More creative thinking from smaller firms can be encouraged, so they can come up with novel approaches. They may be able to play the “local” card better than the corporate giants. But this will all require thought and effort from public procurement leaders.

 Ensuring that suppliers actually deliver the social value they have promised during the procurement process in another challenge, as it is for any PwP promises and for any buyer, public or private sector. The need for robust contract management was addressed earlier, but in the initial days of procurement for social value, public sector buyers were often not equipped to ensure that suppliers followed through. To drive real benefits, organisations must verify and monitor delivery of any benefits arising from supplier behaviour and actions.