In September’s incredible new-look edition of Housing Technology, social value cropped up several times. We read about ‘greening your IT procurement’ from Anthony Collins Solicitors which included a reminder that social value also needs consideration in our sector’s procurement processes. We read how Civica will be planting trees and helping with park restoration following winning a contract with Harrow Council. We also read how Hyperoptic can demonstrate the social value of hyperfast broadband through its collaboratively-produced social value calculator.
Procurement Policy Note 06/20
Coincidentally, September also saw the publication by the government’s cabinet office of a Procurement Policy Note (PPN) on taking account of social value in the award of contracts. While this PPN applies from January 2021 across central government, its detail and the associated e-learning for civil servants are also instructive for the housing sector.
The PNN puts flesh on the bones of the existing requirement of the housing sector to consider social value in its procurement activities. It is drafted in full recognition of the current economic context of the global pandemic too. It reminds us that supplier diversity is key to a healthy marketplace and that public sector procurement policy is to increase spend with SMEs, charities, social enterprises and mutuals.
A greater focus on social value is fundamental to developing good, modern commercial strategies which many executives across the sector’s boardrooms are focusing on.
How far could this go?
Since 2018, central government has been mandated to include (not just consider) social value in its procurement activity. All departments are required to report on the social impact of their procurements and specific training is being delivered to departmental procurement teams.
The clear objective is for social value to be embedded throughout the procurement cycle, from business case to commercial strategy and from market engagement to contract management. Value for money (VFM) is clearly the focus of activity, and the point is that today, VFM absolutely includes the social value of contracts.
While not mandated in the wider public and/or housing sectors, surely this is just as much a good idea in housing, ahead of any future pressure from the regulator. After all, this is a regulator which requires housing providers to deliver VFM through ensuring “that optimal benefit is derived from resources and assets and optimise economy, efficiency and effectiveness in the delivery of their strategic objectives”.
The PPN signposts a consistent approach to applying social value in procurement by government. A simple model has been developed in an effort to bring everyone up to a minimum operating level and make it easier and more consistent for suppliers to tender.
The model is built around the following list of themes and outcomes considered important for public procurement and commercial activities, and they have been designed to integrate rather than override existing procurement policies. The five social value themes and eight associated outcomes are:
- Covid-19 recovery: Help local communities to manage and recover from the impact of coronavirus;
- Tackling economic inequality: Create new businesses, new jobs and new skills; and increase supply-chain resilience and capacity;
- Fighting climate change: Effective stewardship of the environment;
- Equal opportunities: Reduce the disability employment gap; and tackle workforce inequality;
- Wellbeing: Improve health and wellbeing; and improve community integration.
How the social value model works
The expectation is that for any public procurement, you choose the outcomes most suited to the subject matter of the contract and to that supply market. You then include questions specifically addressing those outcomes within the tender while noting that for central government a minimum weighting of 10 per cent is to be applied for social value in the evaluation criteria! And don’t forget to add the tangible deliverables to the resulting contract and measure the outcomes during contract management.
In recognising that this is easy to write but hard to implement in a sector which typically undervalues procurement, the onus shifts to programme and project managers to seek out commercial advice to deliver this. Therefore, reflect on how a positive legacy can be achieved through the delivery of the programme or project you are running.
How serious are you about serving communities?
For a sector which outwardly puts its communities at the heart of its operations, taking social value seriously in procurement surely shouldn’t need central government to take the lead, but perhaps this new PPN does at least provide a springboard for the sector to voluntarily raise its game on this key issue and show central government how it’s done.
For suppliers to the sector, I would urge you to get familiar with these themes and outcomes and begin to pre-empt questions in these areas. Start to proactively build your responses and track records in these areas so that you stand a good chance of maximising your chances of winning contracts in future.
Chris Cliffe is a director of CJC Procurement.