Government to introduce new social value definition in public procurement reforms

The Cabinet Office also said it would change procurement practices to require all Whitehall departments to assess whether a service can be delivered more effectively in-house before any outsourcing decision is made.

The announcements come as part of the Government's response to a procurement consultation it held in June last year.

The response, published on Thursday (26 March), showed support for the proposals on social value criteria.

Among the questions, consultation respondents were asked whether they support the introduction of new award criteria that would take into account the quality of a supplier's contribution to jobs, opportunities or skills for all public contracts over £5m.

The Cabinet Office reported that the majority of responses (57%) either agreed or strongly agreed that this change would help "deliver social value that supports economic growth". A further 15% neither agree nor disagree, with 28% replying disagree or strongly disagree.

Respondents also agreed that mandating key performance indicators on social value delivery would help support transparency of progress against social value commitments, with 70% agreeing.

A further 60% supported requiring contracting authorities to use standard social value criteria and metrics in public procurement as a means of delivering social value in a "proportionate manner".

Finally, 72% agreed that contracting authorities should be permitted to define the geographical location of where social value will be delivered.

In a statement published alongside the consultation response, Cabinet Office Minister Chris Ward also announced plans to introduce a 'public interest test' in order to end 'outsourcing by default'.

He said: "For decades, successive governments have been, at best, ambivalent about whether public services are delivered in-house. At worst, we’ve had outsourcing by default, with public services hollowed out and sold off to the lowest bidder.

"That era ends today. We’re introducing a new Public Interest Test, requiring all departments to assess whether a service can be delivered more effectively in-house before any outsourcing decision is made."

He said the test would apply to service contracts of £1 million and above, covering over 95% of central government spend. All departments must also publish insourcing strategies to make the biggest wave of insourcing in a generation a reality, under the changes.

Meanwhile on social value, the minister added: "If you’re creating British jobs and supporting your local community, that should matter too. So we’re strengthening the importance that positive community impact plays in procurement decisions with a new definition of social value."

Elsewhere, he announced plans to "back British industry", which would require Whitehall departments to confirm whether prime contractors are using UK steel or explain why not.

He also said a new shipbuilding framework is being developed that will "keep government contracts with British firms where necessary and where our security interests demand it".

Adam Carey