Social value in tomorrow’s procurement

With the forthcoming Procurement Bill due to go live in early 2024, Peter Masonbrook details why organizations cannot afford to sit back and wait for the social value movement to further evolve and assume they will be swept along. Action must be taken now, social value strategy needs to be developed prior to any procurement activity.

There remains a lot of hard work ahead if the built environment’s social value potential is to be fulfilled. This sentiment was evident in the lively discussions that took place when we led a Built Environment Network (BEN) event session, titled ‘How social value is set to reshape and drive value into procurement’. Held at the Custard Factory in Birmingham in March, we looked at what the public sector could do better in terms of social value.

Forthcoming Procurement Bill

The forthcoming Procurement Bill was a primary focus at the event, with participants aware of the need to get up to speed with proposed changes. The Bill is happening because leaving the EU prompted an overhaul of the public procurement regulations. It creates a new legal framework that consolidates fragmented legislation into a single regime. It's expected to go live in early 2024, for new procurement beginning after the go-live date. For more detail, take a look at the Government Commercial Function’s 45-minute video.

The Bill doesn’t explicitly mention social value, attracting accusations of vagueness from some. Instead it focuses on ‘value for money’ and uses the phrase “maximize public benefit”, rather than echoing the language of the Social Value Act.

Nonetheless, there are positive moves in the Bill. The procurement system will move away from “most economically advantageous tender (MEAT)” to “most advantageous tender (MAT)”. The bottom line is that procurement decisions will be based on more than just price, which sets the scene for a greater focus on social, economic and environmental benefits. Current challenges will remain—the need for greater understanding of what actually constitutes social value, and how to identify, drive and share best practice.

Social Value challenges

Much of the BEN event’s discussion focused on the problems of fragmented, transactional approaches to social value. For commissioning bodies, this doesn’t usually get them what they most need.

For bidders, there’s often not enough information on what’s actually needed locally, and there’s a tendency to go for the low-hanging fruit—isolated contributions that don’t maximize use of the bidder’s area of expertise, leave a legacy or empower the community. Lack of enforcement, monitoring and accountability are also problematic, as is long-term evaluation of the benefits.

There’s a growing acceptance of the need for more strategic approaches but there is limited skills and resources in the market to achieve this in what is already a pressurized procurement space. Event participants cited Levelling up, environmental challenges and Brexit, economic downturn, and Ukraine conflict as the wider backdrop to their procurement challenges. Material shortages, increased labour costs and new border control measures have focused procurement teams into other areas.

Social value strategy needs to be developed at the early stages of any procurement activity, not added as an afterthought or tick-box activity. . For example, local authorities should consider what the greatest demographic and social challenges are in their area.  By formalizing a Local Needs Analysis, the areas with the greatest needs can be identified as the greatest priority and can be incorporated into a social value strategy such as reduction in crime, improvement in skills, employment opportunities, student curriculum support.

Clear expectations, alongside a consistent methodology for tracking, recording, measuring and reporting social value activity should be articulated in any invitation to tender. This enables more informed comparison of bids, and paves the way for meaningful commitments that get delivered. Clarity and best practice documentation will guard against falling foul of ‘open and fair’ procurement rules.

Early engagement is key

Early engagement with the supply chain is key. How often do suppliers see any reference to social value commitments at ITT stage. Smaller businesses have very limited understanding or capability to deliver social value, so it is essential that the type and volume of commitments requested within bids needs to be realistic and achievable depending on the supply chain make up.

We can’t expect the Procurement Bill to resolve all the issues and no organization can afford to sit back and wait for the social value movement to further evolve and sweep them along. There a real danger of being left behind, so we all need to up our game. Commissioning bodies and supply chains alike need to invest in upskilling. There are examples of good practice already happening—a handful of local authorities have some great work that could perhaps be more widely shared.

AtkinsRéalis has worked with clients such as Hammersmith+Fulham Council and North Somerset Council to upskill their supply chain on understanding the benefits of social value through Lunch+Learn sessions.

At AtkinsRéalis, we’re helping both public and private sector clients with the culture change required to formulate their social value strategy, plan and execute its delivery, and innovate to get the most social value from the procurement exercise.