Social value encompasses the broader
advantages organisations can provide society, extending beyond financial
profit. It includes a variety of dimensions, such as social, economic, and
environmental factors, all of which play a crucial role in enhancing the
well-being of individuals and communities. The core principle is that
businesses and public entities should assess the societal impact of their
operations and aim to produce beneficial outcomes for the community.
The Social Value Act 2012 represents a
pivotal legislative framework designed to integrate social value into the
public sector's procurement practices in the United Kingdom. This legislation
mandates that public authorities consider how the services they commission and
the contracts they issue can contribute to enhancing social value.
Consequently, when public bodies engage in procurement, they must assess the
costs and the broader benefits their decisions may yield for the community.
The Act encourages public authorities to
enhance social value by prioritising local suppliers, stimulating regional
economies, and promoting job creation and skill development. It also urges
evaluations of environmental impacts in procurement, such as choosing
sustainable suppliers to reduce carbon footprints. Local councils in the UK
exemplify the Act's implementation by awarding contracts to organisations
focused on improving community health and well-being, fostering stronger
connections and better health outcomes for residents.
The Procurement Act 2023
The 2023 Procurement Act marks a
significant shift in the landscape of public procurement, introducing
comprehensive reforms to enhance the efficiency of project execution, goods
acquisition, and service delivery within the public sector. One of the primary
goals of this legislation is to promote greater transparency and accountability
in the management of public resources, ensuring that procurement processes are
conducted fairly and impartially. Additionally, the Act emphasises the
importance of social value, mandating that a strategic assessment of social
impact be integrated into the early phases of procurement activities.
The Act mandates auditable criteria for
public authorities to meet social value requirements in procurement. Reforms
include removing lower thresholds to improve transparency for smaller
contracts, allowing more entities to participate, and enhancing oversight.
Enacted on May 20, 2023, the Procurement Act aims to integrate practices that
provide social, economic, and environmental benefits, focusing on responsible
wealth generation. Effective early 2025, the Act requires adaptations from
contracting authorities and tenderers to align with the new regulatory
framework and its impact on procurement practices.
The cornerstone of transformation for
contracting authorities lies in the changes outlined in the Act, which
reinterpret social value and anticipate various social outcomes. Adjustments in
systemic connections are essential to influence the new processes effectively.
Social outcomes should be viewed as foundational rather than just an extension
of social value. Thus, these elements must be integrated into their strategic
planning documents for contracting authorities to embrace the transformative
social principles proposed in the Act. The journey ahead is expected to be
demanding.
For suppliers, the new Act signifies a
shift away from streamlined and efficient bidding practices towards the
necessity of presenting a credible narrative. Adhering to the Act will be a
significant advantage, and obtaining certification for a social outcome will
likely create new commercial prospects. Furthermore, it is essential to
recognise that change is underway, as stakeholders are increasingly called upon
to provide insights or share their perspectives. This evolving landscape
underscores the importance of adapting to the Act's new requirements and
expectations.
Relation to Social Value Legislation
The recently enacted Procurement Act
2023 introduces a foundational principle in its first article, stating that
achieving value for money necessitates a value-based approach. This approach
emphasises the integration of financial costs and quality, aiming to enhance
process efficiency and effectiveness while ensuring responsible and sustainable
performance. It also highlights the importance of considering economic, social,
and environmental factors in line with existing social value legislation,
thereby illustrating a strong connection between the new procurement framework
and established social value policies.
The Procurement Act 2023 mandates that
public entities incorporate social procurement practices prioritising
environmental sustainability and community benefits. This requirement to
evaluate social value during the procurement process is consistent with the
interpretations of the provisions outlined in Directive 2014/24/EU, which the
UK government has integrated into the Public Procurement Law of 2015. By
reinforcing the significance of social value, the Act promotes behavioural
changes in procurement practices and contributes to a balanced legislative
framework that supports sustainability.
An integrated strategy that combines
social value with procurement policies may bolster the likelihood of these
approaches being upheld in legal challenges. By establishing an evidence-based
strategy rather than merely aspirational goals, the Act enhances the
credibility of social value initiatives. This is particularly important given
the stipulation for stakeholder involvement within the Social Value Policy
Framework, which further solidifies the foundation for effective and
accountable procurement practices.
Challenges and Opportunities
Implementing social value legislation
poses considerable challenges for public authorities, especially those with
limited familiarity with the concept and facing constraints in resources and
time. While some entities have adopted a comprehensive organisational strategy
towards social value, other governmental and public authorities view this
legislation as another regulatory requirement. This perspective could hinder
the effective integration of social value into public procurement processes and
may lead to scepticism among suppliers and various stakeholders.
Public authorities can harness social
value legislation. A strong framework fosters innovative collaborations among
local and state stakeholders, such as business associations and community
organisations. This enhances procurement strategies, ensuring social value is
integrated into operations. Community procurement clauses can encourage
suppliers to form subcontracting networks with local firms, support regional
businesses, and engage long-term unemployed individuals. By adopting these
strategies, public authorities maximise the benefits of social value
legislation for inclusive and sustainable economic growth.
Over time, adopting a comprehensive
approach to social value legislation can foster stronger collaborations and
enhance community outcomes, moving away from traditional transactional
tender-bid methods. This shift can create more opportunities for communities to
gain from contracts while minimising procurement spending leakage. Maintaining
a long-term perspective on the advantages of social value is crucial, as
evidence indicates that community procurement commissions can further leverage
assets, leading to sustained local development and economic benefits.
One effective strategy for balancing
these objectives is to consider delegating greater authority and resources to
local entities throughout the UK, allowing them to address their unique
circumstances effectively. However, striking this balance presents a
significant operational challenge that must be navigated to unlock long-term
benefits. Investing in social value procurement as a strategic initiative makes
sound business sense and is a financially viable option.
Obstacles to Implementation
The successful execution of national
social value legislation encounters numerous challenges. The public sector's
institutional framework, aligned with specific policy commitments, often
exhibits considerable inertia. This inertia is compounded by the limited
capabilities of procurement staff and constraints related to budget and time,
which are primarily allocated to achieving established 'core' objectives.
Additionally, external factors, including the structure of available guidance
on social value in public procurement, the credibility of its sources, and how
well this information is disseminated within contracting authorities,
contribute to this inertia.
A key obstacle to implementing social
value legislation is measuring progress and outcomes. Public value from
procurement is not an ultimate goal but a tool for specific policies, like
promoting fair trade or including marginalised groups. Addressing these
measurement challenges is essential for integrating social value into public
procurement. These issues create hurdles in applying social value policies
consistently across suppliers, businesses, and member states, raising concerns
about the effectiveness of initiatives promoting social value in procurement.
When such obstacles and risks are
present, numerous instances illustrate potential failures or compromises in
adhering to the intended spirit of the legislation. Variations in
interpretation have led to differing levels of implementation, with some initiatives
not being executed at all. While there is some clarity regarding service
contracts that fall under the light-touch regime and adhere to full regime
rules, the lack of practical examples of social value in public procurement
highlights the challenges faced in actual implementation.
These challenges underscore the
necessity for effective and coherent implementation, which requires robust
senior leadership and a capacity beyond the procurement function. It is
essential to recognise that simply introducing legislative measures is insufficient;
instead, a comprehensive approach that includes strong leadership and support
across various levels is crucial for achieving the desired outcomes in social
value procurement.
Successful Implementation of Social
Value Principles
Numerous public authorities have
effectively integrated social value outcomes into their procurement processes.
This has been accomplished by employing various strategies, such as requiring
service providers to hire residents and provide work placements, delivering
educational services or products that enhance skills, promoting volunteerism,
and engaging small and medium-sized enterprises. Numerous case studies evidence
the effectiveness of these approaches. Collaborative efforts with
community-based and third-sector organisations with local or specialised
knowledge consistently produce positive results.
It is essential to incorporate social
value principles from the outset, beginning with policy direction or
commissioning strategies and extending to implementation and measurable
outcomes whenever feasible. Establishing medium to long-term contracts encourages
the integration of social value practices and bolsters the workforce
development of local businesses. Local authorities have successfully woven
social value into the services they currently commission, mainly through the
early intervention grant.
Monitoring and assessing the benefits
derived from social value initiatives is essential to showcase their positive
impacts effectively. This process highlights areas for potential improvement,
informs best practices, and inspires other local authorities and recession
managers to adopt similar approaches. The contracts primarily influenced local
well-being, branding, and social cohesion, with stakeholders reporting enhanced
quality of life and increased motivation among participants to seek employment,
leading to notable economic advantages.
Potential suppliers have recommended
greater engagement with local partners in future initiatives to amplify these
beneficial outcomes further. While internal challenges were encountered,
strategies to address them included developing realistic and proportionate
contract specifications. The local authority prioritised well-being outcomes to
determine percentage allocations rather than simply opting for the lowest bid,
ensuring a more effective and impactful approach to contract management.
Future Directions
The recent establishment of more
structured social value legislation, systems, and best practices is anticipated
to significantly influence public procurement strategies, especially as
concepts like accountability gain prominence in public service contracts.
Future trends in social value legislation and best practices may involve
broadening the scope of public service accountability, efficiency, and
cost-effectiveness to encompass local community engagement, thereby enhancing
service delivery for a larger population while catering to smaller groups'
specific needs.
There is likely to be an increase in
community and stakeholder involvement, allowing for more feedback and oversight
regarding new public services and contract specifications. This shift will
facilitate a more comprehensive definition and measurement of social value
within contracts. Additionally, contracting authorities are expected to
leverage advanced technologies and dashboards to effectively track and
communicate the progressive outcomes of the selected social value contract
options to all relevant stakeholders.
Legislative reforms may further advocate
for a shift from 'purpose' to practice in public sector procurement,
underscoring the importance of prioritising social value in procurement
decisions. This approach will foster accountable partnerships with the voluntary
and community sectors and the social economy. Ongoing education and awareness
initiatives will also be crucial in promoting best practices related to
historical accounts of social care and accommodation. At the same time,
collaborative efforts between the public and private sectors are likely to
enhance the value of social entrepreneurial initiatives.
There is a growing need for those in
positions of influence to actively work towards dismantling entrenched systems
that prioritise rigid policies over collaborative, open frameworks. Local
authorities can pave the way for innovative approaches that blend economic,
social, and trust elements across public, community, market, and financial
initiatives by fostering environments where trust is built on shared
principles. This forward-thinking perspective may lead to the development of
new organisational models that prioritise social value, innovation, and
procurement, driven by the vision and creativity of social entrepreneurs.
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