With many of the public sector procurement stories in the UK recently featuring apparently strange pandemic-related supplier selection decisions and allegations of nepotism, it is good to be able to report a positive story from Whitehall.
We’ve talked about social value here several times, and the interviews with David Gigg, David Shields and Julie Welsh all strongly featured that topic. Gigg in particular mentioned that further guidance on applying social value to a wider range of government procurement was on the way, but he hinted that it was taking some time to get it all agreed. Well, it is now here!
Last week the government announced new measures which were launched to “promote new jobs and skills, encourage economic growth and prosperity, tackle climate change and level up the UK”. That’s a pretty ambitious rage of objectives and clearly social value in procurement can’t on its own solve any of those problems. But it can certainly contribute. So a new “social value in procurement model” will be used by government departments to assess a supplier’s social impact, starting from January 1st, 2021. It wasn’t easy to find the actual “model” but it is contained within this Procurement Policy Note (PPN).
Here is the first key action point – “Social value should be explicitly evaluated in all central government procurement, where the requirements are related and proportionate to the subject-matter of the contract, rather than just ‘considered’ as currently required under the Public Services (Social Value) Act 2012. Unnecessary burdens should not be placed on commercial teams or suppliers”.
The PPN says that more detailed guidance will follow, so this isn’t the final product. And the PPN itself is a little obscure in places – for example, it says, “it is the quality of what is being offered that will count in the evaluation, not the quantity”. But in some cases, it must be the quantity that matters. If bidders are offering apprenticeships, or to employ ex-offenders in relation to a large construction project, then surely it is the quantity that matters?
There is also an unclear sentence at paragraph 12 in the PPN. A minimum weighting of 10% of the total score for social value should be applied in the procurement to ensure that it carries a heavy enough score to be a differentiating factor in bid evaluation; a higher weighting can be applied if justified.
I think it means that the weighting for social value should be a minimum of 10% of the total score, but that isn’t clear. And is that 10% of the overall total or 10% of the non-price score? The PPN does include a useful table of themes and outcomes, although we do get into rather woolly zen-like territory with the policy outcome “improve community integration” – good luck with trying to mark that in a bid, everyone!
Cabinet Office Minister Julia Lopez said, “‘value’ has been narrowly defined by price without taking into account other important factors such as the number of local jobs or apprenticeships a contractor will provide, the care they show the environment in their business practices or the number of SMEs involved in their wider supply chain.
We want to see a greater variety of companies deliver government contracts, from every corner of our country - not just because that benefits local economies and communities but because it helps diversify our risk, create a more resilient supplier base and deliver some of our critical priorities”.
We would totally share that view, but there are dangers here. In terms of whether more focus on social value helps smaller firms win contracts, the jury is still out. Large firms can afford to have bid teams who will no doubt be working out how to maximise their own social value offerings to incorporate into bids. A small SME may have less time or indeed ability to come up with impressive promises on apprenticeships, emissions or human rights. We don’t want this to be yet another barrier to entry for small firms, so we need to watch out for that potential issue.
Procurement and customer organisations generally also need to think hard about what sort of social value they want to see for each contract. As David Shields pointed out in his interview, asking bidders to come up with “random” proposals that may have little relationship to the buying organisation’s own strategy is not sensible.
Of course contracts also need managing, and organisations will have to check that social value promises made during the bidding process are actually delivered. And we mustn’t let social value become a cloak for corruption. It must not lead to paying over the odds or giving contracts to firms for the wrong reasons, but disguising that by saying “they had a great social value proposition – choosing them was nothing to do with the fact it is my best friend’s firm”.
But although those notes of caution are necessary, the direction of travel here is good. We look forward to seeing how the new model is applied and it will be interesting to see examples of how social value becomes a more important element in public procurement.