New rules prioritise social value in central government contracts

Helen Bradley, Head of Business Development

This month, we see a seismic shift in public procurement take place. As of 1 January 2021, Procurement Policy Notice (PPN) 06/20 will come into effect and central government organisations will be required to ‘explicitly evaluate’ social value when writing contracts.

Social value is all about making positive changes to communities through business and – via the delivery of public contracts – there is a sizeable opportunity to maximise this impact both locally and across the UK. Previously only encouraged to consider social value – as is required by the Social Value Act 2012 – the action note, titled Taking Account of Social Value in the Award of Central Government Contracts, places greater expectation on authorities when it comes to ethical spending of public money. Evaluation of the social value impact of contracts is now an explicit requirement.

So – whether it’s via the creation of jobs and apprenticeships or the use of more sustainable business practices – government organisations will look to collaborate with suppliers whose work gives back to the economy and their communities, both locally and nationally. And though the change of wording may seem subtle, its impact can’t be underestimated. The PPN should incentivise both authorities and private enterprises to take CSR and social value more seriously.

“The public sector must maximise social value effectively and comprehensively through its procurement. Applying social value requirements in procurement can have a significantly positive impact by broadening the benefits that are delivered.”  – Action Note (PPN) 06/20

The real change here, when it comes to securing contracts, is that the new framework requires a qualitative evaluation of social value when considering bids. The PPN states that “it is the quality of what is being offered that will count in the evaluation, not the quantity”. Heartening for a social enterprise like FFBS, this will allow organisations to fully outline the impact of the work that they do, something which isn’t always easy to quantify. For example, we deliver social value primarily through gifted profit to our parent charity and by extending our partners’ funding by securing better pricing for essential goods and services. And whilst it’s not as easy to quantify as, say, the number of jobs created as a result of the contract, our work has wide reaching impact, as you can see from the infographic below.

In addition to this, the PPN document provides clear guidelines for procuring organisations to follow, with five key outcomes specified with supporting examples of good practice:

  • COVID-19 recovery
  • Tackling economic inequality
  • Fighting climate change
  • Equal opportunity
  • Wellbeing

Organisations can select which of the key outcomes to prioritise and the PPN provides a menu of options for tender specifications, including model questions and model criteria. All of this detail makes it easier for procurement teams to build social value into their procurement, ensuring the outcomes are relevant to their organisation.

We believe one of the most beneficial aspects of this change is that is it will give organisations like FFBS greater remit to demonstrate what we can do to reach your prioritised outcomes without being restricted by prescriptions around how we have to get there. When given the the space and flexibility to show their true value beyond just fiscal benefits, you’ll be surprised at how much social enterprises can do and how much we can offer.

We’re really pleased to see greater accountability coming into place for social value in public procurement. This will open up the opportunity for social enterprises to demonstrate their true value in the supply chain and establish themselves in the economic mainstream (read more on this in my blog for Supply Change on how we deliver social value twice over here).

The change signals a shift in thinking about what we as a society want to deliver, together, through our partnerships with each other. It’s a wholehearted commitment to ‘build back better’ and we’re excited for what it means for government contracts and the social enterprises wishing to deliver them.

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