Pillar of society: Ethics and business

The importance of social value in procurement is becoming more apparent each day. At the heart of it, social value in procurement is about ensuring that what we buy is generating value and benefits for people, stakeholders and society. Now more than ever – particularly in the context of the Covid-19 pandemic – there is a need to turn our efforts and attention towards improving social and environmental outcomes.

The Royal Institution of Chartered Surveyors refers to social value as the impact that a project or policy has on society, and the value that these impacts have, both positive and negative. The social value of a project is the net value generated to society (ie, net of negative impacts). The term ‘social’ refers to the aggregation of the individuals that make up society and not – as it is often framed – to a type of impact. Social value captures a myriad of impacts, including on the economy, the environment, health, education – these are all valuable products vital to society and to human lives.

‘Social value’ requires us to rethink how scarce resources are allocated and used. It involves a paradigm shift – from valuing the contract to giving greater value to the societal and collective benefit to society. The UN Sustainable Development Goals are widely adopted as a model to develop social value mechanisms and compel commissioners and suppliers to widen their positive impacts through investment, transformation and regeneration. Social value doesn’t compete with value for money; it is an essential element of it.

The Public Services (Social Value) Act came into force on 31 January 2013. It requires businesses that commission public services to consider ways in which they can secure and/or improve wider social, economic and environmental value. Before businesses begin the procurement process, commissioners should think about whether the services they are going to buy, or the way they are going to buy them, could secure these benefits for their area or stakeholders.

The act is a tool to help commissioners get more value for money out of procurement. It also encourages commissioners to engage with their local provider market or community to design better services, often finding new and innovative solutions to challenging problems.

In June 2018, central government announced it would go further and explicitly evaluate social value when awarding most major contracts. As part of the Social Value Act, government departments will be expected to report on the social impact of their major contracts.

The Cabinet Office and the Department for Digital, Culture, Media & Sport (DCMS) have worked with departmental commercial and policy teams, and supplier representative bodies, to develop a Social Value Model, which commissioners can use to better understand how to enact the Social Value Act. Government has defined social value through a series of priority themes and policy outcomes (borrowing from the UN Sustainable Development Goals), which are important to deliver through the government’s commercial activities.

The Social Value Model provides a comprehensive approach for departments and suppliers, and the objective is to streamline and standardise the procurement process. The model has been designed to seamlessly work into existing processes – minimising unexpected large changes and the impact for commercial teams and suppliers – and provides a clear, systematic way to evaluate these policies in the award of a contract.

Social value will be evaluated based on qualitative responses from bidders, and not on volumes. This means that larger suppliers are not able to win on scale alone; all bidders are required to set out what they will deliver and how it will be delivered, and it is this information that will be scored in bid evaluations. The minimum weighting that should be applied to social value is 10%.

Procurement in market research provides information that is critical to developing meaningful and effective procurement strategies.
When the UK government procures market research, it is procuring intellectual capital and evidence that is important to decision-making. Market research enables procurement to better understand, among other things, how the supply market works, the direction in which the market is going, its competitiveness, and the key suppliers within the market.

Commissioners procuring market research should consider:

• Integrating social value into market research across all levels of the project – from the field/ground and high level
• Engaging with researchers and others involved on the ground. Looking at how to provide more value to the community
• Acknowledging already successful projects – for example, recruitment and training processes, apprenticeship schemes, and so on.

The Market Research Society (MRS) has already made great strides, including work and commitment to a net zero strategy and diversity, equality and inclusion (DE&I) goals, as well as training and employment.

In November last year, the Crown Commercial Service (CCS) launched its new research and insight marketplace, Dynamic Procurement System (DPS), for the procuring of research and insight across the public sector. The new DPS includes the MRS Net Zero Pledge as one of the options for suppliers to demonstrate their social value and carbon-neutral plans.

By including the pledge in this way, the CCS raises the profile of the MRS Net Zero Pledge among the 200-plus suppliers that are expected to register on the DPS, as well as those public sector commissioners who procure from it.

Although the selection questionnaire itself does not mention the MRS pledge as an option (because of procurement policy regulations, this is not possible), the CCS has informed all suppliers of its inclusion in the system.

This article is from the July 2022 edition of Impact magazine.