Cabinet Office issues advice on Public Services (Social Value) Act 2012
The Cabinet Office has issued advice for commissioners and procurers on the effect of the Public Services (Social Value) Act 2012 ahead of the legislation coming into force at the end of the month.
The 2012 Act requires commissioners to consider the economic, environmental and social benefits of their approaches to procurement before the process starts. They also have to consider whether they should consult on these issues.
A Procurement Policy Note (PPN) issued by the Cabinet Office said: “The Act applies to the pre-procurement stage of contracts for services because that is where social value can be considered to greatest effect.
“Commissioners should consider social value before the procurement starts because that can inform the whole shape of the procurement approach and the design of the services required. Commissioners can use the Act to re-think outcomes and the types of services to commission before starting the procurement process.”
The Cabinet Office said demand for core public services would increase significantly over the next few years in a time of reduced funding.
“Increasingly, commissioners will need to identify better targeted more innovative and radical service delivery solutions to meet this demand,” it added.
“In these tight economic times it is particularly important that maximum value in public spending is achieved. However currently some commissioners miss opportunities to secure both the best price and meet the wider social, economic and environmental needs of the community.”
The note suggested that commissioners and procurers should be taking a value for money approach – “not lowest cost” – to assessing contracts, adding that the Act complemented that approach.
It said: “The Cabinet Office’s new Commissioning Academy will focus on these issues and this note explains the duties placed on commissioners and procurers by the Act. It also suggests approaches that may be taken when applying its considerations to the design of procurement processes.”
The PPN covers what authorities are required to do under the Act, and consideration of the economic, social and environmental well being of the relevant area and applying this to the procurement process.
A section of technical questions and answers covers such issues as:
- Does the Act apply to Part B Services Contracts and below threshold contracts?
- How does the Act apply to framework agreements?
- What contracts are not covered by the Act?
- What has to be considered in the pre-procurement stage?
- What is the definition of public services contract?
- What is the relevant area?
- What is the pre-procurement stage?
- Who should be consulted and how should it be done?
- How should contracting authorities apply the results of considerations and consultations to the procurement process?
- What about procurements which are planned at the time the Act comes fully into force but an advert has not yet been issued?
- What bodies does the Act apply to?
- How can contracting authorities demonstrate that the Act has been considered?
- How does the Act relate to local authorities’ Best Value duty?
An annex provides an example illustrating how social value can be considered at various stages of the commissioning and procurement process. This example covers the provision of a meals on wheels service for the elderly.
The Cabinet Office warned that the note was not a substitute for reading the Act itself and authorities must familiarise themselves with it.
The Procurement Policy Note can be viewed here.
Philip Hoult
See also: our Procurement Law: Special Report 2012 in association with Bevan Brittan.