In the competitive public procurement market, social value can be the difference between winning and losing a contract. This is all good and well, but there are some who struggle with the definition of social value, and even more seem to struggle with how to measure social value to prove their success.
We’re going to explore some social value details to (hopefully) clear confusion. We’ll also look at how it works and why it’s so important to public sector buyers.
What Is Social Value In Procurement: Below The Surface
According to Crown Commercial Services (CCS), social value ensures “that public spending generates additional economical, social, and environmental benefits beyond just the goods or services being procured.”
Basically, suppliers must go above and beyond the requirements in a contract to provide additional value to people and communities.
That’s the surface. Let’s go a little deeper.
Most of us know that social value comprises three elements:
- Social
- Economic
- Environmental
1) Social:
The health and well-being of people and communities.
2) Economic:
The economic well-being of people and communities through business policies and practices.
3) Environmental:
The protection of the natural environment through sustainable practices and processes.
That scratches the surface. Let’s go a little deeper.
Social Value Model
On the 1st of January 2021, the central government published Procurement Policy Note 06/20, which contained the Social Value Model. The model provides more details on social value objectives in central government procurement.
There are five themes, eight policy outcomes, and 24 Model Award Outcomes (MACs).
MACs build on the policy outcomes. For example:
- MAC 1.2: Support people and communities in managing and recovering from the impacts of COVID-19, including those who are the worst affected or are shielding.
- MAC 3.3: Support the development of scalable and future-proofed new methods to modernise delivery and increase productivity.
- MAC 4.1: Deliver additional environmental benefits in the performance of the contract, including working towards net zero greenhouse gas emissions.
- MAC 6.1: Demonstrate action to identify and tackle employment, skills, and pay inequality in the contract workforce.
Procurement Policy Note 06/20 doesn’t apply to local government. However, the Local Government Association (LGA) and Social Value Portal created the TOMS – (Themes Outcomes Measures) System™ which covers five themes:
- Promoting skills and employment
- Supporting the growth of responsible businesses
- Creating healthier, safer, and more resilient communities
- Protecting and improving the environment
- Promoting social innovation
And that is a deep look at what social value means.
What does all of this mean for suppliers?
Suppliers can give themselves an excellent chance of winning tenders if they play their social value cards right. SMEs have an even chance of winning contracts against the big players – all they need is a rocking social value strategy.
One of the easiest wins – relatively speaking – is collaborating or partnering with existing charitable or voluntary organisations that share your values and align with the government’s social, environmental, and economic objectives.
Net Zero ticks quite a big box. Anything that brings the government closer to its Net Zero target by 2050 will score points. If you can combine it with something economic or social, that’s all the better.
For example, your business installs solar water heaters and you’re bidding on a contract to install solar water heaters on all the local council buildings in the region. You could offer an apprenticeship programme that trains locals to install and maintain solar water heaters.
You’re addressing an immediate need – unemployment – and looking to the future because maintenance is an ongoing job.
Social Value Council
Even if you’re only thinking about entering the public sector, it’s a good idea to include social value in the decision.
Why?
Because the Labour Party’s Plan to Make Work Pay will form a Social Value Council that includes public, employer, and trade union representatives. The purpose is to strengthen the delivery of social value initiatives in public contracts.
A National Procurement Plan is also on the cards. One of the purposes of the plan will be to make the explicit consideration of social value mandatory in all public sector contracts. That includes all central and local government contracts, regardless of size.
Putting A Value On Social Value
How to measure social value is a tricky question. How do you measure something as subjective and intangible as social value?
Social Value Reports
A social value report provides evidence to support suppliers’ claims of significant impact and success. The thing about these reports is that they must be objective. So, suppliers must be honest and transparent and include instances where things went wrong as well as when they went right.
You don’t want to dwell on the negative stuff, but you don’t want to hide it either. As soon as you start hiding or fudging the truth, you’ll lose buyer’s trust and that’s your career in public procurement scuppered.
Reports should also be … human. They’re not just facts, figures, graphs, and Venn diagrams. They tell the story of your social value initiative’s impact. How it got to where it is, the real difference it makes in people’s lives, how goals were achieved and measured, how the whole thing supports the government’s social, economic, and environmental priorities, and lessons learnt that will improve the social value strategy and set new initiatives off on the right foot.
Measuring success
Set SMART goals. SMART stands for Specific, Measureable, Achievable, Relevant, and Time-bound. The narrower and more specific the goal, the easier it is to assign metrics, including KPIs.
For example:
- Your goal is to provide 22 apprenticeships to youths within three months. It’s easy to measure success. Did you take on 22 apprentices? Yes. Excellent. No. Why not?
- Your goal is to increase the percentage of under-represented groups in your workforce by 10% in six months. Did you reach your diversity and inclusion goal? Yes. Excellent. No. Why not?
- Your goal is to increase the percentage of local businesses (with social value commitments) in your supply chain to 40% within four months. Have you reached the goal? Yes, you actually exceeded your goal. Excellent. No. Why not?
How do you intend to proceed?
This is important because it shows stakeholders that you are still committed to social value outcomes and you intend to take the lessons learnt to improve the initiative where necessary and build on success to increase the positive impact on the local community.
The best way to take your initiative to the next level is to analyse data according to these four types.
- Qualitative: Subjective: How people experienced and felt about the initiative. Data is obtained from interviews, focus groups, and observations.
- Quantitative: Numerical data: Surveys, controlled experiments, and secondary data analysis to find patterns and forecast social value progress.
- Primary: Direct from the source: Data is obtained through specific survey questions, interviews, and observations.
- Secondary: Indirect: Third-party research, past data, and historical records.
Make the report compelling with images and charts. Add your brand and brand colours throughout for pops of brightness.
Examples of Successful Social Value In Businesses
Some big brands have fully embraced social value and embedded policies in their core business activities.
Patagonia
Patagonia specialises in hard-wearing outdoor gear and is well-known for its social value programmes. It donates 1% of annual sales to address climate change. It provides grants to grassroots groups dedicated to identifying the root causes of environmental problems and addressing them for long-term sustainability. And that’s just for a start.
Philips
Technology giant, Philips, is carbon neutral in all its global operations and gets 100% of its electricity from renewable sources.
IKEA
Global furniture brand, IKEA, uses sustainable wood and cotton and is committed to reducing its carbon footprint.
Digital Platforms As Social Value Tools
We’ve explored social value criteria and objectives and their place in public procurement. We’ve looked at how to measure the impact of social value programmes. But how can suppliers bring their social value work to the attention of government public sector buyers?
eSourcing platforms, like Delta eSourcing, often provide services to help suppliers optimise their bidding process. Delta eSourcing, for instance, includes services to increase suppliers’ reach, promote their brands, and even enjoy professional supply chain management on their behalf.
As an eSourcing portal, Delta, also has procurement tools that enable registered suppliers to store documents and create customisable proposal templates that make it easy to structure their bids in a way that emphasises their social value credentials and compliance with rules and regulations.
Buyers appreciate well-structured proposals that are easy to read and point them in the direction of particularly salient points, like social value deliverables. Contact Delta eSourcing to book a free demo and find out how our services can show your social value programmes benefit people and local communities in the best possible light.
