Procurement Act 2023 – Where Does Social Value Fit In?

In this blog, we review the history of social value within public sector procurement, analyse elements of the Procurement Act 2023 relevant to social value, and interpret the ultimate future of social value within the tender process.

History of social value in public sector tenders

Since the introduction of the Public Services (Social Value) Act 2012, public sector buyers and bidders alike have been required to consider how contract awards will benefit the wider community outside the scope of works.

Contracting authorities have a requirement to consider ‘how what is proposed to be procured might improve the economic, social and environmental wellbeing’ of the geographic area. Likewise, bidder organisations must offer contract-specific initiatives and commitments at no additional cost to the buyer, its residents and other relevant stakeholders.

The introduction of PPN 06/20 further strengthened social value obligations for central government buyers. All contracts procured through central government departments are required to apply a 10% minimum weighting towards social value – a significant percentage when tenders are often won and lost by a couple of marks.

Although there is no equivalent legal obligation, many devolved local authorities have enthusiastically embraced social value as part of the tender process. Our bid writing team regularly complete submissions for local government tenders where social value comprises up to 25% of the overall marking criteria, including submissions for Scottish, local council and educational/academy purchasing authorities.

As social value has matured in public sector procurement, bidders have been required to adapt accordingly, giving greater consideration to social value commitments which are targeted, tenable and proportionate to the overall value of the contract.

Procurement Act 2023 – examining the language

During the initial consultation phases, many procurement experts and stakeholders lobbied for the inclusion of social value directly as part of the Procurement Act 2023. For example, Social Value UK issued an open letter in May 2023, calling for social value to be included within the Act’s legislative language. However, upon its release on 26 October, there was no appearance or inclusion of the words ‘social value’ in any section or clause.

Although this may be disappointing for proponents within the public procurement arena, we do not interpret this to mean the end of social value within tenders. Indeed, we expect the principles of social value to remain a central element of public sector tendering. Proponents of social value will be encouraged by the following inclusions:

• Introduction, Section 12: outlining a requirement for contracting authorities to have regard for ‘maximising public benefit’, which some ministers have claimed is equivalent to enshrining social value into law.
• Chapter 2, Section 19: A shift from ‘most economically advantageous tender’ (MEAT) to ‘most advantageous tender’ (MAT) governing the award criteria, further aligning with a procurement approach which does not solely consider price.
• Chapter 5, Section 52: a new requirement for authorities to publish annual key performance indicator statistics for all suppliers on contracts with a total value exceeding £5 million. As social value commitments often form a contractual KPI, supplier performance for social value will have greater monitoring and oversight.

These are not substitutes for direct inclusion of ‘social value’ within the Act, but it is an encouraging sign that the government has adopted central tenets which promote its inclusion. This suggests authorities may adopt a more implicit approach to social value in lieu of an explicit mandatory element of the tender process.

The future of social value in procurement

Social value benefits all stakeholders in the tender process. It allows the authority to showcase the benefits of public sector procurement to residents, gives economic, social and environmental support to local communities without incurring additional cost, and enables suppliers to engage in socially responsible initiatives. The benefits of including social value within procurement therefore outweigh potential burdens or negatives to the tender process.

In a wider context, the principles of social value can also be used to support the following objectives:

• Reducing carbon emissions and achieving Net Zero by 2050: as social value encompasses environmental wellbeing in addition to social and economic wellbeing, bidders will be required to enhance and refine their existing social value practices. For example, many tenders now require bidders to submit their annual Carbon Reduction Plan as part of the selection questionnaire.
• Investing in local businesses: by incorporating local businesses and subcontracting partners into your supply chain, the wider community benefits directly from award of a contract. For social value responses where this is an option, stating a percentage of total contract spend with local partners can be counted towards social value.
• Offering job opportunities and apprenticeships: to support long-term, sustainable careers and employment, extending job opportunities, placements and apprenticeships to residents in the geographic area of the contract will always be relevant to social value. As above, the authority’s residents will benefit directly from contract award in this context.

In short, neither the principles of social value nor the requirements of PPN 06/20 are being phased out. We expect authorities to continue placing appropriate weighting on social value within tender evaluation criteria, and requirements for bidders to provide contract-specific commitments which benefit the wider community.

Supporting you with tender opportunities

Since 2009, our highly experienced team of bid and tender writers have supported with over 7,000 PQQ, SQ and tender submissions, maintaining a steady 85% success rate. The majority of these submissions involve support with social value submissions, resulting in the establishment of our dedicated, in-house Social Value Practice division in 2021. We have also provided social value training to external delegates, including large multi-national organisations.

If you would like to learn more about the social value support we can provide or other bid writing, reviewing and training services, our sales and marketing team are available for a free, no-obligation chat at info@executivecompass.co.uk or 0800 612 5563.