'Social value' model developed for UK government procurements

Out-Law News | 13 Mar 2019 | 4:00 pm | 2 min. read

Potential social benefits that can be derived from UK government contracts will need to be considered by departments when they set criteria for the award of those contracts, under new proposals outlined by the government.

The government's draft new social value delivery model sets out policy outcomes based on broad 'social value' themes that departments can strive for when developing award criteria for their contracts.

Outcomes envisaged include supply chains that are accessible to SMEs and businesses owned or led by under-represented groups, such as women, people of black, Asian or ethnic minority background, or those with disabilities. Others focus on boosting employability and skills, reducing environmental impacts, modern slavery and cybersecurity risks, and on improving gender pay balance and mental health and wellbeing, through public procurements.

The model contains possible evaluation questions that departments can pose when selecting 'social value' award criteria for their contracts, as well as ways departments could evaluate the responses they receive from prospective suppliers.

Departments will "have the freedom to choose which themes and policy outcomes they apply in each procurement", and will not be forced to select any policy outcomes from the model if there are none relevant to the subject-matter of the contract, the government said. Where they do so, however, the social value award criteria must be given a "minimum 10% weighting" in the overall evaluation of bids.

The Cabinet Office and Department for Digital, Culture, Media and Sport are running a joint consultation on the proposals. The consultation closes on 10 June.

Jonathan Hart of Pinsent Masons, the law firm behind Out-Law.com, said, though, that while the values and ideas espoused in the consultation are important, they will need to be considered in context of the practicalities of tender processes.

"There are already significant burdens being placed upon procurers and bidders alike when it comes to preparing and responding to complex and challenging tender processes – as well as the political pressures of demonstrating delivery of value for money," Hart said. "If they are to be more than just aspirational, there’s going to need to be a lot of careful thought given to their application."

Anne-Marie Friel, also of Pinsent Masons, said: "This is further evidence for the notion that, making socially responsible decisions is an essential facet of running a successful modern business. Reputation and profit will increasingly rise and fall on the basis of  the decisions that businesses make and the way they choose to operate."

"It should come as no surprise to see government taking this step given the hugely important role that procurement plays in achieving a socially responsible economy. It does raise some challenges in terms of the internal transformation that might be required to allow business to meet these new requirements effectively as well as the development of objective methods that will enable measurement and evaluation of performance against metrics," she said.

The latest proposals come after the government last month published a new 'outsourcing playbook' which codified best practices around outsourcing in the UK public sector. Contained in the playbook is a 'balanced scorecard' approach that is designed to ensure the social value of bids is taken into account when departments evaluate them, and that decisions are not purely based on financial considerations.

"The overarching objective for the government’s commercial activities will remain achieving the best commercial outcome but it is right that government applies its commissioning to supporting key social outcomes," the government said. "The public sector must maximise social value effectively and comprehensively through its procurement. It cannot afford not to; a missed opportunity to deliver social value is a cost that has to be absorbed elsewhere in public services."

"The approach will apply tests that all bidders, irrespective of their size and type, should be capable of meeting. Our proposed approach will further level the playing field for the UK’s small businesses, voluntary and community sector organisations and social enterprises – they are closest to our communities and will often be well placed to deliver social value through the contract," it said.

'Social value' is defined by the government in the consultation paper as "the wider financial and non-financial impacts of projects and programmes including the wellbeing of individuals and communities, social capital and the environment".