What is Social Value in Procurement? Understanding its Impact on Sustainable Purchasing

Social value in procurement refers to the benefits that an organization or government agency aims to achieve for society when acquiring goods, services, or works. Procurement is not solely about obtaining the lowest price, but it also involves considering how the purchase can contribute to social, economic, and environmental outcomes that positively impact communities. The concept has been increasingly integrated into public sector procurement processes, especially following the introduction of legislation such as the Public Services (Social Value) Act 2012 in the United Kingdom, which requires public bodies to consider how the services they commission and procure might improve the economic, social, and environmental well-being of an area.

When public sector bodies and government agencies engage in procurement activities, they are expected to assess and value the social impact of their purchasing decisions. This could include creating jobs, protecting the environment, or improving societal well-being through the way they award contracts. The importance of social value in procurement is recognized in various policies and guidelines, reflecting a shift towards value-driven rather than cost-driven procurement strategies.

The emphasis on social value signifies a move towards more responsible and conscious procurement practices. By leveraging their purchasing power, governments and public sector organizations play a pivotal role in driving positive change and fostering a more equitable and sustainable society. Through these efforts, entities seek to ensure that public spending generates broader benefits beyond the immediate scope of the service or product being procured.

Social Value in Procurement Policy

Social value in procurement integrates broader social benefits into the purchasing decisions of public sector organizations. This movement towards sustainable procurement emphasizes the importance of delivering economic, social, and environmental welfare through the procurement process.

Legislative Background

The concept of social value has been a prominent legislative focus since the enactment of the Public Services (Social Value) Act 2012. This legislation mandates that all public bodies in the UK consider how the services they commission and procure might improve the economic, social, and environmental well-being of the area. Following this act, regulations such as the Public Contracts Regulations 2015 further underscored the importance of integrating social value into procurement decisions.

Policy Implementation

Government departments and public bodies have a responsibility to implement the procurement policies that foster social value. The Cabinet Office plays a pivotal role by providing guidance and frameworks for achieving policy outcomes related to social value. Implementation involves setting proper evaluation criteria in tenders, where weighting for social value considerations can significantly influence the outcome of procurement processes.

Frameworks and Models

To facilitate the incorporation of social value into procurement, various frameworks and models have been developed. The Social Value Model, introduced by the government, serves as a tool for public procurement officials to assess and measure the social impact of potential contracts. These frameworks provide standardized approaches and evaluation criteria, which ensure that social value is factored into decision-making alongside price and quality.

By leveraging such frameworks, public bodies can deliver more value-for-money services that also contribute to society, especially important in times of crisis, as evidenced during the pandemic. The growing adoption of social value frameworks highlights a commitment to achieving long-term, beneficial outcomes for communities through strategic procurement practices.

Executing Social Value in Practice

When incorporating social value into procurement processes, organizations embrace strategies that cumulatively enhance societal benefits, including economic development, community well-being, and environmental sustainability.

Pre-Procurement Phase

The pre-procurement phase is critical in defining the social value outcomes that need to be achieved. This stage involves strategic planning and market engagement to understand the capabilities of suppliers and the needs of the community. Social enterprises and small businesses are identified for their potential contribution to local employment and skills development. Specifications are designed in a way that encourages bids that offer value for money while delivering on the wider public services benefits.

Tendering and Awarding Contracts

During the tendering phase, the procurement team sets out clear, robust, and transparent criteria for evaluating bids. This includes the economic, environmental, and social outcomes aligned with local community needs such as job creation, apprenticeships, and work placements. The awarding of contracts is based not only on the cost but also on the social value contributions like support for supply chains, volunteering opportunities, and environmental impact reduction.

Post-Contract Monitoring

The final phase of contract management involves monitoring and reporting on the outcomes. It is crucial to have measuring metrics in place to assess the social value generated by the suppliers throughout the procurement process. Contract management should be transparent and involve continuous engagement with stakeholders to ensure that the bidders deliver on their promises for community benefits, such as local jobs and skills training, thus creating a lasting economic and environmental legacy.

Frequently Asked Questions

This section addresses common inquiries regarding the integration and demonstration of social value in procurement processes, along with government strategies and specific models related to public procurement in the UK.

How can examples of social value be integrated into procurement processes?

They can be integrated by clearly aligning procurement objectives with specific social outcomes such as creating employment opportunities or advancing environmental sustainability. For more detailed guidance on this integration, one can refer to the UK Government's guide.

What are some compelling ways to demonstrate social value in a tender response?

One can demonstrate social value in tender responses by providing tangible evidence of social impact, such as social return on investment calculations or case studies of past initiatives. Outlining the additional societal benefits of a proposal is crucial, as noted on Crown Commercial Service's page.

What thresholds exist for incorporating social value into procurement activities?

Thresholds may vary by region or sector, but in the UK, certain procurement processes require a minimum weighting for social value considerations, such as the NHS's procurement mandate.

How does the government ensure social value is considered in its procurement strategies?

The UK government mandates the consideration of social value through policies and initiatives that are outlined in Public Procurement Notes and the Social Value Model, which guide procurement teams in embedding social value in their strategies.

What key points should be understood about the UK's Public Procurement Note (PPN) on social value?

The PPN on social value provides a framework for how procurement should be conducted to generate social, economic, and environmental benefits. It lays out priorities such as fighting climate change and reducing inequality.

Can you provide a summary of what the Social Value Model entails for public procurement?

The Social Value Model is a tool used in public procurement to evaluate proposals based on their social benefits. It assesses areas such as wellbeing, community support, and environmental sustainability as part of the decision-making process. An outline of what is included in the Model can be found on the UK government's resource.