Improving social value: a private sector perspective

Laura Thornton and Fergus Alexander set out some recommendations on how to deliver better results for social value in public procurement.

Social value has the potential to transform the way public services are delivered and make the UK a greener, fairer, and more prosperous place. However, track record of delivery is patchy and both buyers and suppliers could do more to maximise the opportunity that social value presents.

Policy interventions such as the Social Value Model and a recommended weighting for social value criteria provide a robust platform for further development. With a renewed focus on aligning delivery to strategic objectives and collaboration between the public and private sector, underpinned by an approach that is both outcome-based and insights-driven, government and its suppliers can unlock the huge potential of social value in public procurement.

Osborne Clarke and Capgemini have been working together to gather views from the private sector about the challenges they face and opportunities they see for how the public sector could achieve better results for social value in public procurement. This has led to the identification of the five recommendations for the public sector set out in this article. With the opportunity presented by the regime change under the Procurement Act 2023, and the move towards evaluation identifying the "most advantageous tender" taking account of a wider set of factors than the previous assessment of the "most economically advantageous tender", the time is ripe to review how social value is incorporated into public tenders.

Whilst some of the opportunities identified are in the hands of the public sector to deliver, it was clear from all our conversations that suppliers see achieving enhanced social value outcomes as a common goal in which they are partners to the public sector and are also open to improvements.

Recommendation 1: Consider social value at early stages and link it to organisational objectives

The Social Value Model sets out Model Award Criteria which give the public sector straightforward guidance on what they should include in their tenders. However, there is a risk that if used prescriptively, social value is treated as an 'add on' element of tenders. This is a missed opportunity to achieve greater impact. Instead, social value should be thought about at the same stage as the specification for the tender to identify opportunities for this particular contract to integrate beneficial outcomes for the community in which it is delivered.

Our analysis of public sector buyers shows only a weak connection between their overarching strategic and policy objectives and the types of social value they request. There is potential for buyers to utilise their procurements to achieve these strategic aims through targeted social value. This requires a clear vision for social value, linked into organisational strategies to ensure consistency across multiple business areas. This also gives a clear message to suppliers on priorities and enables better tailoring of social value offers to buyers.

This approach involves close working relationships between the procurement team and any experts in social value. If conversations about social value take place only towards the end of a procurement or are misaligned to corporate objectives, social value can feel like a tick box requirement and miss the huge potential that can be provided through detailed consideration and focus at the early stages of the tender design.

Recommendation 2: Ensure sufficient clarity is provided regarding evaluation and scoring criteria

At evaluation stage, there is significant diversity of practice by buyers. Due to the common questions typically asked on social value, suppliers have a reasonable expectation that responses would receive similar scores across multiple tenders. However, even with the same public body, variances in evaluations and scoring are common.

Ensuring scoring focuses on quality rather than quantity also ensures the focus is on the delivery of meaningful results and supports small and niche suppliers rather than creating criteria which favour better resourced bidders. However, there is still a tendency for responses that provide impressive quantitative commitments to score higher than those that which demonstrate tangible, high-quality outcomes.

In many cases, the private sector sees buyers apply the same scoring criteria to technical and social value questions but this rarely achieves a consistent assessment approach. For example, assessing social value by reference to whether the answer gives good confidence that the supplier will deliver against the requirements fails to account for either the nuances of that supplier's approach or the particular priorities which have been identified by the buyer.

Instead, bespoke scoring criteria for social value questions enable a more rigorous assessment of the social value offer in that tender and may reduce risk of later challenge on this point if scoring criteria are clear and well understood by evaluators.

Recommendation 3: Ensure alignment between the procurement team and contract management team

Public sector suppliers are increasingly integrating their social value bidding and delivery, recognising that to make impactful contributions, those involved in the delivery need to be involved in the process by which commitments are made. However, for most public sector organisations there is a transition between procurement stage and contract management. We have heard anecdotal examples of great care taken by a procurement team identifying and embedding social value in a contract, only for the contract management team to be focused exclusively on delivery of what is seen as the core requirements and deprioritising social value, which has even included asking suppliers to not deliver social value.

Policy or programme teams which are responsible for the management of supplier contracts should at least be aware of the social value priorities which have been developed for this contract. More than that, they should form part of the process of identifying the social value objectives so that they are bought into the outcomes and focus on these priorities as part of the entire lifecycle of the contract. This "culture of collaboration" creates a joined-up approach in which everyone stands to benefit.

Where it’s not possible to involve the contract management team in the tender stage, there should be a detailed handover post-award, in which the social value elements are considered essential parts of the contract.

Recommendation 4: Consider how social value outcomes will be measured (and ensure that these measures are realistic)

There is a perception that social value can be a bit woolly and intangible. Fuzziness about what is intended to be delivered and what success looks like can also contribute to that. Identifying clear measures for success means that suppliers and buyers are aligned on what needs to be done.

However, there is a proliferation of different methods for measuring outcomes which leave suppliers with a challenging task to work across all of them. In doing so, the true value of social value delivery can be lost in a sea of numbers and metrics. Building consensus on the most appropriate tools to use would facilitate comparisons to be drawn and make life a bit easier for all involved. Streamlining measurement would also enable greater time to be spend focused on actual delivery of social value.

Suppliers report that the effort involved in tracking and reporting social value activities against such a wide range of measures creates an unnecessary and onerous administrative burden. It makes providing an enterprise-wide view of social value delivery on an organisational or buyer basis impossible. In turn, suppliers can be disincentivised from proposing innovative social value offers as they will not meet predefined KPIs or require reporting against another set of metrics.

The desire to quantify in financial terms every aspect of social value also has some unintended consequences. Where current models assign artificially low values to activities which in practice are time consuming, this creates a disincentive for suppliers to offer innovative social value activities if their measurement is less favourable.

Recommendation 5: Engage with public sector suppliers and consider the relationship between national contracts and local social value asks – there is not a one size fits all approach for social value in all contracts

Social value is not a quick fix, but when done properly, it delivers outcomes which far exceed the scope and duration of the contract. This requires collaboration between buyers and suppliers: without the public sector, social value as we know it would not exist, but suppliers too have a role to play in the creation of meaningful initiatives. Suppliers have invested heavily and built core social value capabilities and want the opportunity to share what they can do with the public sector.

There is an opportunity to broker honest conversations between authorities and suppliers in respect of delivering local impact on national contracts, recognising that suppliers will each have their own geographic footprint. The creation of social value ‘hubs’ which multiple suppliers can utilise is potentially one way for the public sector to shape local initiatives.

Social value criteria which anticipate local delivery in every case may be unrealistic for some national frameworks, acting as a disincentive to suppliers. Some companies we spoke to suggested that a different model should apply to national frameworks which would see social value consolidated across the framework as a whole rather than localised to each call off contract. However, this would need to be balanced against the uncertainty of winning call-off contracts for many framework suppliers.

Conclusions

The opportunities to achieve wider social benefits from public sector contracts are undisputed and there are some fantastic examples of buyers and suppliers working together to deliver amazing social value. However, there is more that can be done. Social value needs to be considered at all stages of the commercial lifecycle, from the initial shaping of requirements, through evaluation and award, and throughout the contract management period. The potential for social value to meet public sector policy aims is largely untapped and more can be done to align procurement and delivery teams. However, with a clear vision, close collaboration with suppliers, and a renewed focus on outcomes, not outputs, social value’s vast potential will be unlocked.

Laura Thornton is a Public Procurement Lawyer at Osborne Clarke and Fergus Alexander is a Director and Lead, Public Procurement and Commercial Advisory practice at CapGemini Invent.