Businesses seeking to win government contracts will have to set out how they will also deliver social value priorities - including Covid-19 recovery measures, according to measures announced this week.
Government departments will use the social value model to assess and score suppliers on the wider positive benefits they bring by delivering the contract.
This will mean that value for money for the taxpayer can be maximised while also building a more resilient and diverse supplier base.
The new measures will seek to promote new jobs and skills, encourage economic growth and prosperity, tackle climate change and level up the UK, according to the Cabinet Office announcement.
The new approach will mean there will be more opportunities for SMEs and social enterprises to win government contracts by demonstrating the full extent of the value they would generate.
The government stated that "value for money will still be paramount, but a bidder’s social value score will be incorporated into assessment of contracts".
The social value model which departments will assess contracts on includes:
* Supporting COVID-19 recovery, including helping local communities manage and recover from the impact of COVID
* Tackling economic inequality, including creating new businesses, jobs and skills, as well as increasing supply chain resilience
* Fighting climate change and reducing waste
* Driving equal opportunity, including reducing the disability employment gap and tackling workforce inequality
* Improving health and wellbeing and community integration
The new approach will apply tests that all bidders, irrespective of their size and type, will be capable of meeting and therefore further levels the playing field for the UK’s small businesses, start-ups and voluntary and community sector organisations and social enterprises, said the government.
The new measures will come into effect on 1st January 2021.
Cabinet Office Minister, Julia Lopez said: “Government has tremendous buying power, spending £49bn each year on contracts for vital public services. Value to the taxpayer should lie at the heart of our procurement decisions. Too often, however, ‘value’ has been narrowly defined by price without taking into account other important factors such as the number of local jobs or apprenticeships a contractor will provide, the care they show the environment in their business practices or the number of SMEs involved in their wider supply chain.
“We want to see a greater variety of companies deliver government contracts, from every corner of our country - not just because that benefits local economies and communities but because it helps diversify our risk, create a more resilient supplier base and deliver some of our critical priorities. If we can use government’s buying power to drive that broader value, the better our chances of levelling up our country and investing in our people as part of our COVID recovery.”
Commercial teams in all government departments will also be expected to complete training courses in implementing the new model and how to ensure the maximum social value is derived from each contract.
The changes mean that central government will now be required to go further than the Public Services (Social Value) Act 2012 to ensure that all major procurements explicitly evaluate social value, where appropriate, rather than just consider it.
The move was welcomed by experts in the field of social value.
Arnab Dutt, the chair of the Social Value Policy Unit at the Federation of Small Businesses, said: “I welcome the announcement on social value procurement as an important step forward for public sector supply chains. Its focus on addressing economic inequality, the climate emergency and societal wellbeing is a 21st century agenda.
“Social value has the potential to be transformational in bringing opportunity to all parts of our country and to the many small businesses that are the lifeblood of our communities."
Mark Fox, the chief executive of The Business Services Association, added: “This is a good initiative putting people first by focussing on social value. It helps push up standards and best practice."
Matthew Fell, CBI chief UK policy director, told Facilitate: “So many companies are already delivering substantial social value across a variety of sectors, from facilities management to manufacturing and lT services, and they will welcome the launch of a new Social Value Framework to help drive greater consistency across government contracts.
“Greater clarity will help commissioners and suppliers sing from the same hymn sheet, resulting in more opportunities to deliver social impact for the public.
“The Framework must be underpinned by effective training and support for public bodies to put the new model into practice.”
Andrew O’Brien, director of external affairs, Social Enterprise UK:
“It is good to see that social value has not been ignored by the Government despite COVID and Brexit, and this is a powerful signal to the market that more needs to be done to maximise the social, economic and environmental impact of public spending.”
“For facility management companies and other businesses, this announcement should mark a phase of greater rigour in measuring and evaluating social value. The best way for businesses to respond is to find partners with knowledge and expertise in delivery, such as social enterprises, to unlock social value through their business and supply chains.”
“This should not be the end of the journey. With the UK due to formally exit the transition period by the end of the year, there will be more flexibility for government to set the rules on procurement. Hopefully Government will use these new powers to drive social value even further forward across the public sector so that we can generate billions in additional benefits for communities.”