In the latest round of updates to procurement and social value, it’s become apparent that the government want to send a clear message to procurement teams within the public sector. It is no longer acceptable to just make decisions based on choosing the cheapest option.
Instead, social value needs to get considered. Is the renewed focus necessary, however, or is it simply just creating a host of additional paperwork for public sector buyers?
In this article, we want to look at how social value protects public procurement teams, ensures the right business is winning the contract, and why it will remain a cornerstone of public procurement for many years to come. Keep reading to learn more.
The Basics of Social Value
In 2012 the Social Value Act was created. Its purpose is to keep the public sector responsible for considering social value in their future decisions and contracts. This means that every decision that concerns the public sector needs to have benefits that expand to the three areas social values typically look at.
These include:
- Social
- Environmental
- Economic
In June of 2018, the government announced that they would be reviewing and awarding major contracts with social values in mind. Government departments are also expected to report on the social value of their major contracts.
Why Is Social Value Important?
A social values definition is useless if you don’t understand why it’s so important. Because communities are becoming more and more aware of social and environmental issues in the world, the decisions made by the public sector need to consider social value. It’s impossible to solve all of the problems of the world, but you can make an impact through your purchasing decisions.
Social value ensures that decisions made are beneficial to the community. This also helps ensure that certain demographics don’t get missed or overlooked. When you consider social values, you can build a diverse and resilient supplier base.
Social value has many impacts, and recent models help support recovery after COVID-19. This helps build a stronger future for our communities and stimulates economic growth.
Social value has impacts that are direct and indirect. When you consider the impact, you can begin to understand just how vital social value is.
Some of the direct impacts include:
- Crime reduction
- Support small enterprises
- Create volunteering opportunities
- Reduce your carbon footprint
- Reduce poverty
Some ways social value has an indirect impact include:
- Increase inclusion and diversity
- Decrease pollution, waste, and excess consumption
- Promote growth and innovation in the community
- Improve equality and accessibility
- Promote consumer and labour rights
- Improve the feeling of well-being in the community
How Does Social Value Ensure the Right Business Is Getting the Contract?
In the past, when considering contracts, the decision would often come down to finances. Choosing a contract based on finances alone doesn’t help benefit the community.
In fact, when you choose a contract based solely on money, it can cause damage when companies use unethical practices to undercut their opponents. When you consider social value, you will be looking at a few things.
Input
Input considers what resources are used by the company. This often helps determine the environmental impact.
For example, does the organisation use items that are sustainable and environmentally friendly? Do they minimise waste and promote recycling?
Are they part of an ethical supply chain? How is the organisation working to reduce its carbon footprint and gas emissions?
The resources they use and how they use them can tell you a lot.
Activities
What does the business do? This is about more than what they will do for you.
Organisations have a lot of power in the community. If they support local charities, help the community, tackle community projects and issues, and promote local culture, it’s beneficial to support them.
By awarding a business that does that, you can indirectly help support the community by supporting that company.
Output and Outcome
What are the results of the activities? What long-term change will it create in the community and the people?
We’ll take a few examples of how the company can have an economic impact here. If the organisation offers work experience placements, local employment, and supports local suppliers, it can have a significant impact on the local economy.
Expected Impact
When you ask yourself how a company is impacting the community through the lens of economic, environmental, and social, you can choose companies that positively impact your community. Looking at the expected impact helps you see the value held.
Why Will Social Value Remain a Cornerstone of Public Procurement?
Considering social value in public procurement has always been a good decision. However, now it goes beyond being a good decision; it’s required by the Social Value Act.
Even though the Social Value Act has been in place since 2012, it has only been practiced at a local government level. New rules added in 2021 have made it so social value needs to be considered by all central government bodies for the first time.
However, the real reason social value will remain a cornerstone comes down to the benefits.
Give Back to Society
When you invest in community projects, you give back and create a better world. As you give people the chance to get involved and create connections, it increases a feeling of well-being within the community.
Help the Environment
When considering social value in procurement, you want to choose contracts that minimise environmental damage. The public sector can have a significant impact on climate change when considering the environment.
Build Your Reputation
People care about the world, and the impact humans are having on it is becoming more and more apparent. Part of building a good reputation involves using sustainable practices.
When you consider social values you make decisions that benefit the environment. This helps you build a good reputation amongst your community.
Promote Economic Growth
When you choose businesses that use local suppliers or hire local workers, you promote economic growth. This is more and more important as businesses continue to recover from the impact of COVID-19.
Build Your Community With Social Value
Considering social value in public procurement helps create a better community. Make sure that the right business gets the contract and your community benefits.
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