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Introducing Social Value into Procurement

UK Construction Intelligence Report

A long-awaited change


From the 1st of January 2021 the Procurement Policy Note 06/20: taking account of social value in the award of central government contracts, came into effect.

Social value isn’t a new concept. From 2013, when the Social Value Act first came into force, all public sector commissioners were required to consider how they could improve the economic, environmental and social wellbeing of their population through their procurement activities.

This year’s legislation now makes the inclusion of social value in public sector procurement mandatory

It has long been discussed about the need for the built environment to move away from lowest cost and to a more balanced view of what ‘added value’ means (Read Peter’s article ‘Social value is not something we can afford to ignore’). PPN 06/20 forces us to think about the real impact of what we do and how we can work to increase that social impact for the good of everyone. The notice provides positive social value objectives from Covid-19 recovery to environment and health and wellbeing that recognise that what we do in the built environment matters.

PPN 06/20 also opens the doors wider to opportunities for SMEs (Small to Medium Size Enterprise) and VCSEs (Voluntary Community and Social Enterprise) – a more qualitive evaluation process for procurement means the most impactful and fair solution will be taken forward. PPN 11/20, enhances this by providing an easier route to market for SMEs and VCSEs to work on government projects without the red tape.

Where we are now

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So, if the concept of social value has been knocking around since 2013, what’s held some organisations back from truly realising social value in their projects?

First, it wasn’t mandatory, while some organisations, notably Pagabo, took their own initiative on social value and embedded it in their procurement ethos, many didn’t include it because they didn’t have to.

Many organisations don’t see the benefits of social value, we must be able to demonstrate the positive impact and outcomes social value has had throughout, and at the end of, projects. More examples, like Manchester Town Hall, are needed to show the industry that social value has real benefits.

The third blocker is the lack of training and awareness on how to manage and report social value. PPN 06/20 rectifies this to an extent with a wider training programme being rolled out for government staff.

Perhaps most importantly to date there has been no consistent approach to the way social value is measured. There are tools for measurement available in the market, but each uses different metrics to evaluate social value impact. If you don’t know how you’ll measure social value on your project, how can you effectively procure for it?

Why social value matters now more than ever?

The big issues that are fundamentally changing the world around us – Brexit, Covid-19, the UN Sustainable Development Goals, our commitment to Net Zero – are also key drivers for social value.

Leaving the EU means local government will need to start bidding for funding previously procured through the EU Investment Bank. There will be an onus on the public sector to show how their work drives social impact before funding is granted. If we have a limited budget to fund projects, we must prioritise those that give the UK the best economic and social value.

Covid-19 has put the spotlight on health and wellbeing. On our road to recovery post-pandemic, we must prioritise those construction projects that make our places and spaces safer for people and improve their quality of life.

With Net Zero being considered in every project and sector, the environmental aspect of social value is paramount. The environmental benefits obtained from a social value approach to construction – the creation of green space, sustainable solutions such as Modern Methods of Construction (MMC) – contribute directly towards our Net Zero goals.

Does the new procurement notice go far enough?

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The publication of PPN 06/20 in and of itself isn’t enough to enact the change we need. In fact, in some ways, it doesn’t go far enough.

For one, it only mandates social value in the procurement process and not in the actual delivery of the project. This means that suppliers can commit to big social value promises into their tenders, without being held accountable to delivering those promises later down the line. Some local authorities, like Hammersmith & Fulham, have already embraced social value and embedded it in their procurement. What we need to ensure is the tracking and measurement of the social value impact throughout the lifecycle of the project.

It also means that large organisations may still have a leg up in winning work as they have vast experience in responding to central government bids and will be able to make larger commitments to social value than say a SME.

It is also only mandated for central government bodies; in some ways an easier, shorter-term fix than amending the Social Value Act which would affect the whole of the UK public sector. The PPN also states "Unnecessary burdens should not be placed on commercial teams or suppliers” which could suggest a ‘get out’ clause for some projects. And it also only mandates a weighing score of 10 or less for social value; we’ve already seen projects weighting it at 17 to 30%, so know it can play a bigger role with a higher positive social value impact.

Finally, training is still needed. Until training has happened, social value will be poorly administered and have little real impact on project delivery. Without awareness and understanding at every level, we won’t see social value’s true potential.

Taking social value forward

With PPN 06/20 in place, it is now up to us to ensure social value is embedded, and more importantly, delivered. I say ‘us’ in the broadest sense as for social value to work it must be promulgated through every element of the client’s organisation and the supply chain.

At Faithful+Gould, we have been looking at social value since the inauguration of the Social Value Act, with a robust policy that covers everything from business and jobs and workforce inequality to supply chain, environment, health and wellbeing and community collaboration. 86% of our supply chain are SMEs. And we are not only measuring social value, but looking at how we innovate within that, finding new ways of measuring areas like environmental impact and how that links to wider Net Zero targets.

Social value is at the heart of what we do at Faithful+Gould, and we want to lead the way in ensuring social value isn’t just a ‘bidding tool’ but about actual delivery and a long-term approach that responds to the economic, social and environmental needs of society.

If you have any questions around how you set social value objectives, develop social value policies or measure its implementation throughout a project’s lifecycle.