The concept that public sector procurement should contribute to wider societal value is not new, but it has increased in importance and focus in recent years. In the UK, we saw the Social Value Act come into force in 2012, and more recently guidance from Cabinet Office that all major contracts in central government should see at least 10% of the marks in tender evaluations associated with “social value”.
However, it is still early days really for social value and organisations are still working out how best to implement the policy and make sure real benefits are obtained. One issue that has emerged is the issue of whether social value when it is being assessed in a supplier tender or proposal should be “additional”.
Some of the guidance around suggests that this should be the case - so social value should be on top of the core deliverables of the contract. In other words, you get the core proposal from the supplier, then they propose some additional social value benefits which are assessed and marked as part of the tender evaluation. But that is leading to some strange anomalies.
Imagine a contract for drug and alcohol treatment and rehabilitation services, let perhaps by a local council and a public health authority in collaboration. One bidder is a social enterprise, that is run as a not-for-profit, pays its CEO £50K a year, employs local people, many of whom are recovered drug addicts themselves, pays the national living wage (above the legal minimum), uses apprenticeships extensively, is extremely “green” and already carbon neutral. The other is a giant outsourcing service provider, owned by an offshore private equity firm, paying its CEO millions, paying its staff barely the legal minimum wage, a history of (legal) tax avoidance and with no track record of doing much in terms of emissions.
The problem is that our first social enterprise struggles to come up with “additional” social value for this particular contract. Their whole mission and way of working in delivering contracts inherently contributes to social value in a way that our second rapacious business does not, but the social enterprise’s social value is wrapped up in the “core deliverables” and the way they work .
But the business can offer to employ some “additional” apprentices (they are big enough to absorb this easily and probably would have done it anyway). They can talk about new emissions initiatives easily – because they have done nothing up to now. They can suggest that they will employ some local people if they win the contract. (which they probably would need to do anyway…)
Our social enterprise therefore struggles and may not win the contract because they are outgunned on the social value assessment, weighted at 10% or more. such an outcome seems clearly unfair and really goes against what the focus on social value is trying to achieve.
Given this dilemma, it was interesting to see a “SocSocial Impact Toolkit” on the gov.uk website from Sellafield Ltd., which operates the major nuclear site in Cumbria. The Programme and Project Partners was formed by Sellafield Ltd in 2019 - bringing in major contractors KBR, Doosan Babcock, Jacobs and Morgan Sindall Infrastructure - to transform major project delivery at the nuclear site. The guidance supports how these firms will spend some £5 billion of public money through the supply chain, and how they are expected to apply these social value principles.
As the guidance says, “Ultimately, it’s about creating permanent, positive and significant social, environmental or economic change through deliberate activities which change people’s lives in West Cumbria and Warrington”.
What I liked about the approach described was the way it defined “embedded” as well as “additional” social value.
Embedded is defined like this. “This is how you do business which generates social value” whilst additional “is over and above day to day business, impacting the lives of those beyond your company”. In tenders, the guidance says, “we are looking for embedded and additional value”.
The devil is in the detail and it is worth looking at the whole guidance document but it feels like recognising this difference, and looking to take both types of social value into account, is the right way to go. In our initial example, the social enterprise would score points for its whole approach to business, rather than merely ticking off some additional “goodies” on a spreadsheet. But this is a tricky issue, and good practice is still being developed and emerging from experience.