Social value in procurement has become increasingly important in light of the Covid-19 pandemic, with increased pressure to support the economic recovery up and down the supply chain, whilst delivering much-needed benefits to wider communities.
For public sector, the emphasis on social value has also shifted from a nice-to-have to a must-have – with central government departments starting to catch up with local authorities who have been leading the way in many areas. PPN 06/04 – Taking Account of Social Value – shifts the dial away from solely economically advantageous tenders to ones which deliver additional benefits and explicitly assess supplier’s social value offerings.
This poses the question, how can public procurement professionals deliver social value efficiently, ensuring value for money is still achieved, without it becoming a box-ticking exercise?
Challenges with embedding social value
There are three main challenges for public sector professionals around the complexity of implementing social value in procurement, preventing an imbalance in outcomes and how to measure outputs effectively.
The first challenge stems from social value being a new, intangible concept for many. Professionals have been grappling with how to effectively communicate social value requirements to the supply chain with limited resources, and how to develop and implement a system. Many organisations are not set up to deliver this capability alongside traditional business as usual activity.
Secondly, delivering holistic social value can be challenging, given the multiple areas it covers – which can lead to an imbalance in focus. For example, working with suppliers that lower their environmental footprint achieves social value, but what about supporting supplier diversity and backing social enterprises, or ensuring mental health and wellbeing is supported in the local community?
The most significant challenge lies within measuring the impact of the outcomes. Delivering a framework to report on and evaluate the real benefit of social value outcomes can be complicated. Often organisations can fall down by not realising the value after it has already been promised, through ineffective contract and supplier management processes.
Solutions to incorporate social value into procurement
Despite the challenges associated with implementing a social value approach in public sector procurement, there are solutions and practical ways to deliver it in your organisation without compromising on cost.
Agree specific themes: Every organisation is different, so your social value themes should be specific and relatable to your organisation’s wider strategy. By being clear in what you are trying to achieve, and communicating effectively up and down the supply chain and weaving a specific criteria into contracts for tender, setting themes will support implementation and simplify reporting.
Set achievable outcomes: Proportionality is key in implementing social value. For larger public sector contracts, suppliers should be expected to deliver far-reaching social benefits that go beyond economic value. However, if the tender is only small, organisations will need to balance commercial objectives with social ones, as adding too many requirements will drive the cost up and could adversely drive smaller suppliers out of the process.
Integrate with existing processes: Setting up a new procurement process for social value can be resource and time heavy, so by integrating the social value processes into current ways of working, it becomes much more achievable. This could include reviewing requirements for potential barriers to entry for micro, small and medium enterprises, consciously thinking about supplier diversity during supplier selection, explicitly evaluation a social value question to a tendering process, and much more.
Create toolkits: To support implementation across the organisation, toolkits can be a useful way of providing practical guidance on how to include social value at each stage of the procurement process. Practical guidance includes example questions aligned to outcomes, guidance on how to develop social value KPIs, and how to evaluate social value offerings from suppliers. This will also save time and resources in the long term.
The future of social value in the public sector
Social value has become more than a buzzword and will continue to play a pivotal role in delivering additional benefits through procurement, becoming ever more prominent to align with businesses and consumers shifting priorities. The recent PPN 06/04 Taking Account of Social Value release has paved the way for delivering a bigger impact in UK Central Government Departments, implementing a standardised way of measuring and reporting on social value.
Additionally, the requirement for prospective public sector suppliers bidding for contracts above £5m to publish a Carbon Reduction Plan following the release of PPN 06/21 increases the focus on these additional benefits being delivered. This will also be driven from the bottom up by a new generation of commercial professionals who are more environmentally and socially aware.
With this in mind, now really is the time to be thinking smarter about how the public sector can deliver real long-term social value.