Understanding Social Value in Public Procurement
Government spending can be a powerful tool for creating tangible social and economic benefits. Public procurement enables agencies to support local businesses, promote workforce diversity, and address societal challenges through strategic purchasing decisions.
By integrating social value into procurement, municipalities can transform traditional spending into a catalyst for sustainable development and community empowerment.
Pre-Procurement Strategies
Pre-procurement planning is essential for maximizing social value in public contracts. This phase helps organizations identify opportunities, engage stakeholders, and establish clear measurement frameworks.
Assess Policy Outcomes
Identify policy goals aligned with procurement needs, such as sustainability and local economic growth. Review organizational objectives to ensure strategic alignment and community impact.
Market Research
Conduct market analysis to understand supplier capabilities and innovative approaches. Research best practices and identify potential barriers for SMEs and social enterprises.
Engage Stakeholders
Consult internal departments, suppliers, community groups, and experts. Host pre-market engagement events and establish working groups to capture diverse perspectives.
Set Clear Metrics
Develop evaluation criteria to measure social value delivery. Create specific KPIs that balance quantitative metrics (local jobs created) with qualitative outcomes (community wellbeing).
Risk Assessment
Identify challenges to social value objectives. Develop mitigation strategies considering market capacity, resource requirements, and potential unintended consequences.
The Procurement Process
A structured procurement process ensures transparency, fairness, and maximizes social value opportunities at each stage. Following these key steps helps organizations make informed decisions while maintaining compliance with regulations.
Assess Policy Outcomes
Identify policy goals aligned with procurement needs, such as sustainability and local economic growth. Review organizational objectives to ensure strategic alignment and community impact.
Market Research
Conduct market analysis to understand supplier capabilities and innovative approaches. Research best practices and identify potential barriers for SMEs and social enterprises.
Engage Stakeholders
Consult internal departments, suppliers, community groups, and experts. Host pre-market engagement events and establish working groups to capture diverse perspectives.
Set Clear Metrics
Develop evaluation criteria to measure social value delivery. Create specific KPIs that balance quantitative metrics (local jobs created) with qualitative outcomes (community wellbeing).
Risk Assessment
Identify challenges to social value objectives. Develop mitigation strategies considering market capacity, resource requirements, and potential unintended consequences.
Social Value Act Compliance
PPN 06/20
Mandates central government bodies include social value in contract awards, with a minimum 10% weighting for social value in tenders.
Key Focus Areas
Create new jobs and skills, boost economic growth, improve wellbeing, fight climate change, and promote equal opportunities.
Monitoring and Reporting
Set clear social value targets, collect data on outcomes, and produce periodic reports to ensure transparency and accountability.
Local Authorities and Social Value
Community Engagement
Actively involve local residents through public consultations, surveys, and community forums to ensure procurement decisions directly address neighbourhood needs and create meaningful social impact.
Local Economy
Support economic resilience by directing spending toward local small and medium enterprises, creating jobs and ensuring procurement budgets generate maximum benefit for the community.
Skills Development
Partner with suppliers to create valuable training pathways through structured apprenticeships, mentoring programs, and hands-on work experience opportunities for local residents.
Sustainable and Ethical Considerations
Climate Change and Environment
- Reducing carbon emissions
- Protecting biodiversity
- Improving air and water quality
- Promoting renewable energy use
Waste Reduction and Supply Chains
- Minimising packaging
- Implementing take-back and recycling programs
- Using responsibly sourced materials
- Ensuring fair labour practices
Economic and Workforce Development
Public procurement can drive economic growth and tackle workforce inequality through targeted policies and contract requirements.
01
SME Support
Create procurement frameworks that favour small and medium enterprises in contract opportunities to stimulate local economic growth.
02
Apprenticeships
Establish and enforce specific targets for apprenticeship programs within procurement contracts to develop workforce skills.
03
Diversity Hiring
Implement requirements for employing workers from underrepresented groups to ensure inclusive economic growth.
04
Pay Equality
Integrate provisions that address gender pay gaps and promote fair compensation across all contracted work.
Future Outlook and Evolving Priorities
Digital Transformation
Adoption of digital tools for remote working and virtual supplier engagement, improving efficiency and reducing costs.
Procurement Act 2023
Set to take effect in February 2025, strengthening social value requirements and potentially increasing weightings to 30% in some cases.
Sustainability Goals
Increased focus on carbon net zero goals and supplier diversity in public sector supply chains.
Post-Covid Recovery
Focus on building resilient supply chains and supporting local businesses to boost economic recovery.
Frequently Asked Questions
Social value in public procurement involves complex processes and principles. Many organisations have questions about implementation, requirements, and best practices. Let's explore some common queries.
Social value is woven into procurement through specific criteria and weightings. Contracting authorities must apply a minimum 10% weighting for social value in central government tenders. This ensures proposals are evaluated on their wider benefits to society.
Buyers often include social value requirements in tender documents. They may ask bidders to outline plans for local job creation, environmental sustainability, or community engagement.
The Act requires public bodies to consider social value in service contracts. It aims to maximise the impact of public spending beyond just cost.
Key principles include thinking about how services could improve economic, social and environmental wellbeing. The Act encourages consultation with stakeholders to understand local needs.
Practical examples include prioritising local suppliers to boost regional economies. Some buyers ask bidders to create apprenticeships or employ people from disadvantaged groups.
Environmental outcomes are often combined with social goals. A contract might require use of sustainable materials and creation of green jobs.
Key themes include economic value, such as job creation and skills development. Environmental sustainability is crucial, covering issues like carbon reduction and waste management.
Social cohesion is another vital theme. This can involve supporting diverse communities and promoting equality. Health and wellbeing initiatives are also common in social value policies.
Bidders should provide specific, measurable commitments. This might include the number of local jobs to be created or the amount of carbon emissions to be reduced.
Proposals should align with the buyer's stated priorities. Bidders may use frameworks like the Social Value Model or TOMs (Themes, Outcomes, Measures) to structure their responses.
Current priorities include COVID-19 recovery, tackling economic inequality, and fighting climate change. There's a focus on creating new jobs and opportunities for all.
The Procurement Act 2023 will emphasise "public benefit" in all public sector projects. This signals a continued commitment to embedding social value in procurement decisions.