Successfully Procuring Social Value

If procurement is going to get serious about social value, then it needs to ensure that it is fully integrated into strategic plans.

Public spending through procurement practices and contracts can be shaped in a way that benefits both the economy and society – but too often this is not the case.

Since the implementation of the Public Services Social Value Act 2012, not enough has been done by commissioning organisations to ensure they are obtaining maximum social value from contracts.

What is Social Value?

Social value is a way of thinking about how scarce resources are allocated and used. It involves looking beyond the price of a contract, and prompts organisations to consider the collective benefits a contract could deliver.

Implementation shouldn’t be a trade off against cost or quality. It is possible to deliver a triple bottom line through procurement activity. A combination of three factors – social, environmental and financial – should improve the quality of delivery, which in turn will almost always result in an improvement in efficiency.

It’s essential that when commissioning services, organisations are focused on achieving the best value, as opposed to focusing solely on cost. The strategic power of social procurement can be extremely influential, particularly when decisions are aligned to a business strategy which supports an organisation’s wider corporate mission and values.

How can social value be achieved?

There are a number of ways to ensure that social value can be fully integrated as a part of procurement plans. The Public Services Act 2012 asks organisations to only consider it at the point of commissioning. However, to realise maximum benefits, social value should be considered past this point.

Fusion21 delivers procurement services for built assets to over 180 public sector members, and we ensure social value is delivered through our programmes by measuring the performance and delivery on contracts.

To date £56 million of social impact has been delivered, and over 2400 jobs have been created. Last year alone we achieved over £13 million of efficiency savings for our members.

So, at the point of commissioning, how can you ensure considering social value will make a difference? Including it within the award criteria, and assigning weighted sections as part of a supplier’s quality submission during a tender process, is one option.

Fusion21 attribute a proportion of a tender evaluation to social value – resulting in this having a direct impact on the final scoring. This approach ensures that social enterprises, SME’s and socially driven suppliers, stand a better chance of winning work through the procurement process.

It also provides an opportunity for organisations to demonstrate the added value they can deliver on a contract, and enables the commissioner to evaluate this based on project objectives.

Avoid Best Endeavours

Organisations should always avoid a ‘best endeavours’ approach to social value implementation within contracts. Instead, commissioners should stipulate how their objectives will be managed, and consider how performance will be evaluated. One way to do this includes asking successful bidders to produce SMART action plans, listing the outputs they can generate.

Once this is complete, social value performance should be integrated into standard contract management procedures.

Fusion21 also issues Regeneration and Local Economic Benefit Plans to every member who has commissioned a contract through us. These plans contain clear objectives and set targets – in addition to providing analysis and detailed progress reports.

By placing a financial figure on the value generated, our members can see the clear benefits of social value activity.

Finally, if social value can become engrained in a supplier’s contractual obligations, it is easier to ensure that goals will be met. At Fusion21, we put a contract in place between our member and supplier, which states an employment opportunity, must be created for every £500k of contract value.

It’s fair to say that procuring for social value needs to have a higher priority in the public sector – and to retain competitive advantage, suppliers should be considering their approach to delivering this.

Fusion21 is an award winning social enterprise who’ve gained national recognition for collaborative working with suppliers and members. We provide a wide range of procurement services and procurement frameworks for built assets that meet the unique requirements of public sector organisations.