Social
value legislation is significantly transforming public procurement practices at
various levels. This policy is broad in scope and aims to bring about
meaningful changes in both economies and communities. The actual effects of
such legislation become most evident in its practical application and
interpretation, and social value follows this trend. Social value principles
are integrated into public service agreements, sector standards, and other
guidelines. However, there are valid concerns regarding the future of social
value legislation considering ongoing social, economic, and political
challenges.
Defining the Meaning of Social Value
Social
value encompasses various social, environmental, and economic outcomes,
extending beyond the transactional relationship between suppliers and
customers. This concept is particularly significant in public service delivery,
as these services are funded by taxpayer money and directly affect local
communities. The evolution of procurement law since 2008 has established a new
framework that emphasises these broader outcomes, highlighting the importance
of considering the impact of procurement decisions on society.
The
motivations driving these initiatives are notably consistent. They focus on
enhancing community involvement, fostering collaboration among public, private,
and third-sector entities, and improving social care results. Additionally,
these efforts aim to recover social costs and financial advantages while
ensuring that procurement practices align with the values and objectives of
public service. Social value serves as a conduit for translating public policy
intentions into actionable outcomes, although it often remains outside the
traditional procurement discourse, which primarily prioritises financial
efficiency.
The
shift in procurement practices reflects a growing recognition of the need to
inform the market rather than solely cater to it. This change in perspective
necessitates rethinking how procurement activities are structured, promoting
flexibility, responsiveness, and a more equitable distribution of risk. As
organisations and networks adapt their strategies to incorporate social value,
there is an opportunity for further dialogue aimed at practical solutions that
can effectively drive meaningful change in local communities.
The Public Services (Social Value) Act 2012
The
Public Services (Social Value) Act 2012 is a significant piece of UK
legislation integrating social value into public procurement. It aims to align
procurement practices with social value objectives, enhancing social, economic,
and environmental well-being through public spending. The Act requires public
authorities to evaluate the positive impact of their procurement activities on
community well-being and encourages bidders to consider their contributions to
these outcomes.
The
Act applies to the 'Public Contract Regulations,' which incorporate the EU
framework in England. It encompasses a range of stakeholders, including public
sector entities and service providers that fall under its jurisdiction and
those who offer guidance and support to these groups. By emphasising the
importance of social value in procurement processes, the Act aims to create a
more holistic approach to public spending that prioritises community benefits
alongside traditional economic considerations.
The
legislation mandates that public authorities consider the implications of their
purchasing decisions, particularly how these choices can be leveraged to
promote economic, social, or environmental enhancements. Numerous instances
illustrate this principle, such as the preference for local colleges over
national training providers of “Not in Education, Employment, or Training”
(NEET) apprenticeships, as local institutions possess a deeper understanding of
community-specific challenges and can generate more significant societal
benefits. Additionally, approximately 44% of public sector health expenditure
now falls under the purview of this Act, emphasising its broad applicability.
Suppliers
must also consider the Act when submitting bids, detailing the social value
they can contribute beyond the primary service offered. It is important to note
that the assessment of social value proposals does not necessarily have to be
included in the overall evaluation of tenders, depending on the discretion of
the contracting authority. Furthermore, transactions involving the sale of
public service contracts during mergers or acquisitions may be exempt from the
stipulations of the Act, highlighting the complexities involved in implementing
social value legislation.
The Key Provisions of Social Value
The
Public Services (Social Value) Act 2012 mandates that public authorities
evaluate how their contracting activities can enhance their respective
communities' economic, social, and environmental well-being. This section
highlights the principal elements of the legislation, which encompass the
necessity to assess pertinent areas, balance social, economic, and ecological
advantages, engage with stakeholders, and publish policies and results related
to social value procurement. It also emphasises measuring and enforcing
outcomes while ensuring adherence to social value legislation.
Several
existing procurement policies and frameworks within the public sector advocate
for a broader interpretation of 'value' to guide procurement decisions. This
approach encourages authorities to look beyond mere financial considerations
and to incorporate a more holistic view of the benefits that can be derived
from their procurement activities, ultimately fostering a more sustainable and
socially responsible procurement landscape. One of the Act’s main provisions is
to require public authorities (including non-governmental and
not-for-profit entities) to engage with local people and businesses when:
- Setting
social, economic, and environmental outcomes for an area as part of the
output and outcome specification.
- Consider
local labour and supply solutions during the market engagement.
- Evaluating
the social, economic, and environmental value of the outcomes produced by
the services sought or commissioned.
Achieving
specific goals through public sector procurement, such as creating job
opportunities for young people, is a contractual obligation for suppliers. This
requirement differs from operational aspects, like ensuring fair wages for
employees. It's essential to distinguish between these approaches to enhancing
social impact, especially as legal frameworks increasingly scrutinise
social-focused specifications. The contracting authority’s level of detail and
the alignment of outcomes with services delivered are critical factors in this
context.
Additionally,
public authorities are mandated to engage with stakeholders, including
organisations from the voluntary, community, and social enterprise sectors,
before initiating consultations on their procurement strategies. This
engagement is essential for identifying relevant social value outcomes that
should be integrated into the procurement process. By fostering collaboration
and understanding the community's needs, authorities can better align their
procurement practices with broader social objectives, ultimately enhancing the
overall impact of their initiatives.
The
most pertinent outcomes align with a region's local 'well-being' strategy.
Public authorities must assess the results generated by the goods, services or
works procured and their alignment with the desired outcomes outlined in the
contract award criteria. Courts cannot enforce compliance with the Act
retroactively, which means that a supplier who has adhered to the 'spirit' of
the Act is likely to be recognised as the most economically advantageous option
based on the award criteria.
The Practicalities of Implementing Social Value
Requirements
In
some areas of the United Kingdom, compliance with social value legislation can
be enforced through the High Court, allowing for the possibility of claiming
damages from public authorities in specific circumstances. Nonetheless, there
are no penalties or compensation parameters available for
non-compliance. If a contracting authority remains non-compliant in terms
of its social value obligations, this can be contested in writing and escalated
to the appropriate legislative government department for further review.
Engaging
with public authority procurement functions highlights several challenges and
strategies related to the compliance and implementation of the Public Services
(Social Value) Act 2012. Survey responses reveal four distinct approaches to
integration. These approaches vary from local authorities fully embedding
social value into their overarching strategies and all major procurement
decisions to those implementing just one or a few procurement initiatives that
include social value. Additionally, central government is conducting further
research into social value inclusion to ascertain a more in-depth review of the
success of social value initiatives.
Navigating
compliance with the Act presents significant challenges for procurement
functions, particularly regarding the necessary training and resources. Many
local authorities find it challenging to fully understand the Act's mandatory
and discretionary aspects. Furthermore, a notable lack of training and written
guidance is available, which hinders their ability to integrate social value
effectively into their procurement processes.
Integrating Social Value Within the Third Sector
The
third sector encompasses the economy that operates independently of the public
and private sectors. It is characterised by its non-governmental and
not-for-profit nature. Commonly referred to as the voluntary or charity sector,
this area plays a crucial role in community engagement.
A
review of local authorities' education and early years sectors indicates a
commitment to building collaborations with the third sector. This highlights
the importance of social value beyond the basic training standards imposed by
the legal and financial limitations of the education sector, inflicted by
government and society at large. While the implementation of social value
legislation differs among large, medium, and small organisations, the
underlying challenges remain similar.
These
challenges include the necessity for adequate time to evaluate social value,
the accessibility of resources, and the drive to modify procurement practices.
Research suggests that smaller businesses are often more motivated by social
value than their larger counterparts. In contrast, larger companies,
particularly those with revenues exceeding £10 million, frequently focus on
commercial performance, corporate branding, and leadership dynamics, with a
tendency for owners to be strategically sales and profit-focused.
Compliance
with social value legislation requirements is a recurring concern, even among
those familiar with integrating social value into their operational decisions.
The financial performance of procurement outcomes has been highlighted as a
barrier to increased integration of social values in organisational commercial
activities. The evidence indicates minimal resistance to implementing the Act
at the grassroots level; where resistance exists, it typically stems from a
lack of understanding amongst those procuring products, services or works.
Successful
implementation of social value hinges on a strong commitment from leadership,
training for procurement personnel, and a strategic approach to prioritising
resources at various governmental levels. Each authority must address gaps in
understanding, resources, capacity, and confidence among contract holders.
Furthermore, monitoring and evaluation frameworks have been established to
facilitate the measurement of changes and the benefits delivered to
communities.
The Public Services (Social Value) Act 2013 - Key Changes
and Amendments
Since
its inception, the social value legislation has undergone numerous
modifications and updates. These adjustments reflect the UK Government's
ongoing dedication to refining the legislation in response to insights gained
from its implementation, stakeholder input, and societal priority shifts. The
evolution of this legislation aims to enhance the clarity and effectiveness of
policies and guidance regarding how contracting authorities should incorporate
social value considerations into the procurement process and award decisions.
The
recent amendments are intended to bolster the legislation's role in
facilitating contractual outcomes by various entities, including voluntary,
community, and social enterprise organisations and educational institutions. By
providing additional context and more explicit directives, these changes are
expected to encourage more significant investment in the UK, ultimately
fostering a more robust framework for social value integration in public
procurement practices.
The
Public Services (Social Value) Act 2013 is an essential piece of legislation in
the United Kingdom to enhance communities' social, economic, and environmental
well-being. This Act requires public authorities to consider how the services
they procure can benefit society, particularly when awarding contracts.
Implementing this Act has encouraged a more integrated approach to public
service delivery beyond merely focusing on financial savings.
One
of the key features of the Act is its emphasis on promoting social value in the
procurement process. This means that when public bodies decide which companies
to hire for services, they must consider the cost and quality of the services
and the broader impact of those services on the community. For example, a local
council might decide to award a contract to a cleaning service that employs
local workers and utilises environmentally friendly products over a cheaper
option from a distant company. This decision would support job creation and
promote sustainability in the area.
The
Act has influenced numerous sectors, including health, education, and housing.
In the health sector, for instance, providers are encouraged to offer more than
just medical services to patients; they are also prompted to engage in
community outreach, support local health initiatives, and address the social
determinants of health. This is particularly pertinent as public health systems
strive to become more integrated, focusing on the well-being of communities
rather than individual care.
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