Solving social value in the public sector

Social value is no longer an afterthought in procurement, rather it is an essential part of the contractual process and continues to evolve at pace, the government green paper Transforming Public procurement puts it further into the limelight. The environmental and economic impact of businesses and services are now a determining factor in whether a procurement contract is awarded, rather than just cost and compliance alone.

To procurement and commercial professionals, social value is how any individual contract benefits the local community in which it operates, from both an economic and environmental perspective. The type of things considered within this might include whether a contract would enable further employment, or how much air pollution the undertaking of the contract might remove from the local area.

The residual damage that COVID has created, and continues to create, is taking a huge toll on our local economies, but driving social value return through procurement allows us to inject investment directly into the local area and benefit the communities we serve.

One way in which local economies can benefit from a renewed focus on social value is through the encouragement of supplier diversity, even in sectors where national and large providers appear to have a stronghold. Dynamic purchasing systems (DPSs) allow local authorities and public sector bodies access to a huge number of SMEs across a wide range of services, and in turn, allow all relevant and potential suppliers to have fair and equal opportunity to compete for public sector tenders. For example, the YPO Enforcement Agency DPS operates with 78% of suppliers as SMEs from across the UK, with scale for large or small awards. In relation to the Enforcement Agency DPS specifically, in 2021, nearly 80% of spend across public sector customers on this solution was with SMEs.

Social value in the public sector

A renewed focus on social value doesn’t just benefit local businesses and communities either. The public sector has received scrutiny and pressure, particularly during times of austerity, to ramp up efficiencies whilst lowering prices. Social value plays a vital role in mitigating this pressure by ensuring smarter procurement, with more value achieved for every pound spent by the government, local authorities, and other public bodies, in the way of environmental and economic benefits. Beyond cost and value, the introduction of SME’s and local businesses into public sector level services will also allow for a whole new perspective: local people understand local needs and will subsequently deliver a more personalised service.

Businesses and service providers must continue to think about their potential offerings and how they will best demonstrate social value and elevate this aspect, so that they can access public sector procurement frameworks or DPS’s and stand in front of decision- makers. Ultimately, it’s about aligning themselves with local needs, which can be done in many ways. Using the priorities listed in the Local Area Plan or Sustainable Community Strategy can be a great way to start, or a more hands-on approach would be consulting directly with the community to hear what value looks like in the local context. Although it might be daunting to some, demonstrating social value doesn’t have to be difficult – it could look like anything from committing to more sustainability initiatives, like planting trees, to helping improve youth unemployment through the promotion of your industry in the local area or working with voluntary groups in the local community.