In this blog, we take a look at the latest procurement law to have passed in the UK and the effect it’s likely to have on the delivery of social value by private businesses.
On 26 October, The Procurement Act 2023 attained Royal Assent, overturning the current public procurement regime in the UK. The bill regulates how the UK Government and public sector entities purchase goods, services and public infrastructure from private sector suppliers and signifies fundamental structural changes to the current procurement landscape, combining the overarching regimes currently regulating procurement.
The Act brings greater flexibility to contracting authorities, with the aim of making bidding for contracts easier for smaller and more locally focused businesses. It also introduces several new requirements aimed at adding a greater level of transparency to the procurement lifecycle, from planning through to contract expiry.
Looking specifically at social value, what impact will the bill have?
Despite efforts to the contrary, the bill itself does not employ the term “social value”; instead, the government is employing the term “public benefit” as the threshold for the most beneficial tender.
Regardless of this omission, the bill is intended to promote social value in procurement decision-making, requiring contracting authorities to factor environmental sustainability, impact on the local community and the fair treatment of workers into their planning.
The method in which this social value-based criterion is being promoted is through bids being ranked according to the “most advantageous tender” (MAT) approach rather than the “most economically advantageous tender” (MEAT). Under this evaluation method, contracting authorities will be expected to consider social value and wider “public benefit” considerations alongside value for money.
However, the bill does not go further in setting out a clear framework for assessing bids that align with specific social value goals.
For more specific guidance on embedding social value criteria into public tenders, the government’s Procurement Policy Notes published in 2020 and 2021 provide a clearer directive, building directly upon the instrumental Public Services (Social Value) Act 2012. This was the first legislation passed in the UK that requires public sector bodies to consider how the services they commission and procure might improve the economic, social, and environmental well-being of an area.
Under the Public Services (Social Value) Act 2012, how much weight actually afforded to this consideration was left to the discretion of the government body, which only had to consider the ‘social value’ where it was proportionate, taking all considerations into account. In practice, this meant that social value considerations were often disregarded in favour of other priorities, in particular where there was a short deadline for the procurement.
Procurement Policy Note 06/20 changed this by making social value a mandatory consideration - it must now be ‘explicitly evaluated’ instead of simply ‘considered’. In fact, a minimum weighting of 10% is provided. Alongside the note, the government published a framework of over 50 metrics that all organisations hoping to enter a bid for a public contract, referred to as the “social value model”; these are split into five key groups.
- Covid-19 Recovery
- Tackling economic inequality
- Fighting climate change
- Driving equal opportunity
- Wellbeing
The note and extensive detail on all related metrics can be found here.
This note was followed by a National Procurement Policy Statement in June 2021 which included the following directive. “All contracting authorities should consider the following national priority outcomes alongside any additional local priorities in their procurement activities:”
- creating new businesses, new jobs and new skills;
- tackling climate change and reducing waste, and
- improving supplier diversity, innovation and resilience.
Whilst policy notes and statements are in themselves not legally binding like legislation, their function is to provide background information and context to help interpret and apply new laws, offering guidance to stakeholders and clarifying the scope and limits of legislation.
Therefore, whilst The Procurement Act 2023 does not explicitly reference social value, these proceedings statements and the 2012 Social Value Act clearly signpost an increasing need for these considerations to be at the forefront when considering the “most advantageous tender.”
Whilst much remains open to interpretation, the trend line is clear: social value is increasing in importance, and organisations bidding for public work that are not primed to respond appropriately will increasingly put themselves at a disadvantage when trying to win work.
How can Neighbourly support your organisation in delivering social value?
At Neighbourly, we have extensive experience supporting organisations in delivering social value at a local level. Our capabilities include;
- Expert consultation on developing a holistic community strategy tied to ESG commitments
- Volunteer matching with local charities and causes based on skills, interests, and availability to meet community needs
- Tools and resources to make volunteering easy to manage, engage employees, and track participation
- Curated volunteering opportunities tailored to contribute to key social impact goals like environment, education, health, and inclusion
- Reporting on social value contributions through volunteering such as skills gained, beneficiaries reached, etc.
- Options to donate funds locally and directly support charity operations and programming
- Solutions to involve business partners like suppliers and customers in shared social initiatives
- Support with storytelling and communications to bring community engagement to life across stakeholders
If you’re interested in having a conversation with a member of our team about how we can support your organisation's social value objectives, get in touch today.