What is social value?

The purpose of social value in public procurement is to maximise the reach of public expenditure by ensuring that local communities, economies, and the environment benefit in some way from any given contract. The requirements were introduced in part to address a perception that taxpayers were often not benefiting in any tangible way from public spending in their local area.

While cost remains the single most important metric in the award of a public contract, social value considerations can be scored with a weighting of up to 20%.

This has served to redefine the concept of value for money in publicly funded projects, placing more emphasis on going the extra mile than simply offering the lowest quote.

The impact on suppliers

Although the legislation came into force in January 2013, it is only relatively recently that the requirements have really gained momentum and become a common aspect of award criteria. As a result, suppliers are increasingly being forced to re-examine their corporate values and bid strategies.

In terms of what buyers are expecting from suppliers, existing social or environmental actions are unlikely to satisfy. Instead, any given buyer will specify their requirements and suppliers should try to offer a package of assistance specific to the socio-economic or environmental needs of the local area.

Types of social value

Apprenticeships / work experience / training

Tackling an issue like high unemployment – and youth unemployment in particular – is a common and effective way for buyers to maximise the impact of their spending and for suppliers to demonstrate their social value credentials. The provision of apprenticeships along with any kind of work experience or training opportunities not only provides added value to the community, but can also align with a supplier’s interests in terms of talent acquisition.

Supporting the third sector

This can involve any support or sponsorship for existing community initiatives and charitable organisations, or even the creation of new projects or entities. Support to bodies dedicated to disadvantaged groups specifically helps buyers extend the reach of their spending to disparate parts of the community that would not otherwise benefit from a contract.

Ethical supply chain and local recruitment

Ensuring the ethical quality of contractor supply chains was already a requirement in public procurement, but social value criteria gives buyers scope to make this aspect more prominent and allows suppliers to highlight any advantages they may have in this area. Suppliers who can demonstrate any improvement on recognised ethical standards such as health & safety, worker’s rights, and environmental awareness will place themselves in a good position. Some buyers will also want to see an emphasis on local SMEs being prioritised in contractor supply chains to maximise the impact of their indirect spend.

Environmental awareness and sustainability

Depending on the types of products or services being procured or issues in the buyer’s local area, environmental awareness can be a key factor in social value requirements. Action can take various forms, such as conservation projects in the community or educational initiatives. Engagement with schools and young people in particular is something many buyers will seek.