The Rise of Social Value

Sarah Hinchliffe • 7 October 2021

An introduction to Social Value and its importance in public sector tendering

When I first came across the concept of social value, it certainly didn’t have capital letters! I can’t recall exactly when it was, but I thought it was mainly something for buyers to worry about and that, from my side, a few fluffy statements about recycling would suffice.

Those days are long gone. Social Value has earned its stripes and now accounts for a minimum of 10% of marks in public sector procurement. As a result, there is a whole Social Value “industry” taking shape.

In this article, I share my Social Value journey so far and help you to fast-track your knowledge, score more points and win more business. But be aware, this is a vast and evolving landscape, so stay tuned.

What is Social Value

To understand Social Value, it’s a good idea to first think about the words individually. In this context, “social” relates to society or its organisation and “value” refers to worth. Put them back together and Social Value refers to improvements to a community that can be measured.

The “social” part breaks down into three elements - economic, environmental and social (people and communities) – and you will typically hear talk of improving the “well-being” of these elements.

The “value” or worth can be expressed in financial terms, but other measures can be equally valid. For example:

Economic: creating x apprenticeships per annum; using x% local supply chain; increasing local employment by x or x%; investing x hours supporting local small businesses
Environmental: reducing carbon footprint by x tonnes; achieving x% recycling; reducing landfill by x%; reducing water consumption by x
Social: providing x volunteering hours volunteering; making £x donations to local charities; providing x support for disadvantaged people; paying the Living Wage

If you are starting to wonder about the difference between Social Value and Corporate Social Responsibility (CSR), then you are not alone - CSR focuses on the same three elements. A good way to think about it is that CSR is a demonstration of your company’s on-going commitment, whereas Social Value is about procurement-specific improvements and the measurable return they will bring to a local area. However, many organisations are evolving their CSR policies to be Social Value policies.

For readers in the construction or infrastructure industries, the descriptions above may resonate with the Balanced Scorecard for Growth model introduced some years ago for projects over £10m. Indeed, balancing cost with wider societal implications is an established practice for such projects. The new Social Value initiatives extend the same principles to a much wider scope of procurement.

The rules!

Social Value first achieved official status with the Public Services (Social Value) Act 2012. The Act requires public sector organisations in England and Wales to consider how their procurements can impact Social Value. Hot on the heels of this, Scotland introduced the Procurement Reform (Scotland) Act 2014, and Wales introduced the Well-being of Future Generations Act (Wales) 2015, the same year that Westminster updated the Public Procurement Regulations to include a new European Directive.

In 2019, the UK Government began a public consultation into Social Value aimed at reinforcing and extending its role and scope. After much contemplation, Public Procurement Notice (PPN) 06/20 was published ready for a change in the law on 1st January 2021.

PPN 06/20 is about taking account of social value in the award of central government contracts. It is accompanied by “The Social Value Model”, a guide to using the Social Value Model and a quick reference table. And don’t be fooled into thinking “central government contracts” means only central government contracts - we are seeing it turn up far and wide with that whopping 10% attached. Note that PPN 06/20 and The Social Value Model apply to England and UK-wide in-scope organisations. Scotland has its own SPPN 10/2020 “Measuring social impact in public procurement” and Wales has WPPN 01/20 “Social value clauses/community benefits through public procurement”. Northern Ireland is set to follow PPN06/20 in 2022.

Despite national differences, all buyers are now supposed to build Social Value into their procurements. They should formulate relevant and proportionate Social Value requirements that are assessed through well-constructed tender questions and evaluation criteria. To maintain a level playing field across all size and type of supplier, evaluation is meant to be quantitative with a focus on local and specific benefit. The qualitative element comes into the contractual performance measures that will be binding on successful suppliers.

So, we have legislation and policies galore, but what should suppliers do in practice.

Wising up

To help you get to grips with Social Value, there are some rich resources available from organisations who champion Social Value. There are not-for-profit, commercial and social enterprise organisations who can help you develop a Social Value policy and guide you in creating measurable Social Value for individual bids.

There are also some excellent free modelling tools out there. For example, The Social Value Portal (www.socialvalueportal.com) developed and maintains the National Themes, Outcomes and Measures (TOMs):

Themes (5 key principles):

Promoting skills and employment
Supporting the growth of responsible regional businesses
Creating healthier, safer and more resilient communities
Protecting and improving our environment
Promoting social innovation

Outcomes (18 pre-defined objectives or goals, aligned to the 5 Themes.

For example:

Theme: Promoting skills and employment
Outcome 1: More local people in employment

Measures (38 measures that can be used to assess whether these Outcomes have been achieved.

For example:

Theme: Promoting skills and employment
Outcome 1: More local people in employment
Measure 1: No. of local people employed on contract for one year or the whole duration of the contract, whichever is shorter

Using the free downloadable National TOMs Social Value Calculator tool, you can start to express tangible value.

To demonstrate your level of commitment to Social Value, there are recognised certificates for companies - check out www.socialvalueuk.org and www.socialvaluequalitymark.com. Social Value UK also offers individual certification.

Getting real

If we look in more detail now at what to expect in procurement documentation, let’s use the Social Value Model as an example. Buyers are pointed to the model, which is much simpler that the National TOMS and has five themes and eight outcomes:

Theme 1: COVID-19 recovery:

Outcome: Help local communities to manage and recover from the impact of COVID-19

Theme 2: Tackling economic inequality:

Outcome: Create new businesses, new jobs and new skills
Outcome: Increase supply chain resilience and capacity

Theme 3: Fighting climate change:

Outcome: Effective stewardship of the environment

Theme 4: Equal opportunity:

Outcome: Reduce the disability employment gap
Outcome: Tackle workforce inequality

Theme 5: Wellbeing:

Outcome: Improve health and wellbeing
Outcome: Improve community integration

Each Outcome then has Delivery Objectives.

PPN 06/20 has associated guidance explaining clearly how it is all supposed to work. There are model evaluation questions, model award criteria, model response guidance and reporting metrics.

Some buyers seem to be working sensibly. Sadly, there is a big “but”. Experience so far suggests that many buyers are far from savvy about how to use PPN 06/20 or the guidance. Here are some recent examples:

A link to the PPN asking suppliers to pick an outcome and write about it. Admittedly, this makes it easier for suppliers, but it hardly leads to a fair apples and apples comparison and it’s certainly not specific or local.
One Theme and Outcome selected with an unedited cut and paste of the Social Value Model guidance. Fairer, yes, but not necessarily relevant and proportionate.
Savvier public sector organisations using their own custom-built Social Value models. At least this approach makes it local, but it generates more work for the suppliers who have to tune into a different set of criteria.
“Tell us what you can do for us on Social Value.” That one doesn’t even deserve a comment!

Such nonsense leaves suppliers either asking for clarification – which is often met with equal nonsense – or guessing what the “right” answer is.

What now for suppliers?

If you want to supply to the public sector, you certainly need to wake up and smell the Fairtrade coffee. Social Value is serious (remember that minimum 10%) and specific (directly relevant to a local area, not just general policies). And don’t think this is just for the big companies. If you are a small or medium-sized enterprise (SME) competing for public sector contracts, don’t expect any favours. Think positively - the desire to have more SMEs and Social Enterprises as public sector suppliers has fuelled the increased importance of Social Value and they are often well-positioned to make a strong local impact.

When you receive your next tender documentation, check the percentage set for Social Value. Also check the scoring criteria - you may have to achieve a minimum score to stay in the game. If a minimum score requires you to demonstrate something you haven’t got or can’t do, then qualify out quickly. But also remember that minimum scores probably aren’t good enough to win – you really need to work hard to maximise every score, so get your Social Value position straight.

If you receive a sensible Social Value request, thank your lucky stars that you have an informed buyer. And if you receive nonsense? Start with the Social Value Model. Use your best judgement on what’s local, specific, relevant and proportionate. Follow the guidance when constructing your response and tell them that’s what you’ve done. Make sure you include clear actions, timelines and measurable outcomes. Use the National TOMs to find benchmarked values and note there is a current consultation about formally linking them and the Social Value Model together.

Beyond the next proposal, think ahead and prepare. A good start is to get your board to recognise the importance of Social Value and to put it on the same footing as other corporate initiatives. Start to curate all your Social Value collateral along with questions you receive and your responses. Gather scores and feedback, then loop round a continuous improvement process so you get better every time.

What does the future hold?

The purpose of Social Value is genuine – to bring a thoughtful and caring side to procurement and encourage buyers and suppliers to be accountable for the well-being of the community through their actions. I can see it becoming equally as important in the private sector as the public sector.

A systematic approach can bring clarity and consistency, both crucial to support a fair procurement process where questions are relevant and appropriate, and assessment unbiassed. On the flip-side, systematisation can make things mechanical and remove the genuine thought and care. There is a risk that Social Value will become something we all pay lip service to in the interests of winning a contract.

I hope this article has given you a taste of Social Value and inspires you to research and begin your Social Value journey if you haven’t already done so. And don’t forget to keep your carbon emissions low as you travel the Social Value road!

* No recommendation or endorsement is implied through mention of any organisation in this blog

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