Stone King’s response to the recent ‘social value in government procurement’ consultation

Social Value is now an established concept in the commissioning of public services, though there is still a long way to go for it to become as central as it should be. The Public Services (Social Value) Act 2012, has been the main stimulant to progression in the UK, though Social Value was already promoted in public procurement law under the European Commission’s Social Business Initiative. The latest development is the proposition that Central Government should follow Local Government in placing priority on developing Social Value principles and a Cabinet Office public consultation on this subject finished on 10 June.

Stone King’s Julian Blake, a Partner in the Charity & Social Enterprise Team sought to highlight some specific key points in its submission to the consultation, and these are detailed below.

Consultation question 1: Do you agree with the proposed policy metrics in the model in the attached annex? Do you have examples of such metrics being successfully used in public procurement?

These are one version of possible metrics. The actual metrics used should be determined and prioritised by reference to the social policy imperatives that most relate to a particular service and should be variable by reference to the capacity of a service supplier to deliver relevant Social Value.

The best example of a policy incorporating these principles of which we are aware is Oldham Borough Council’s “Approach to Place Based Working”, led by Rebecca Sutcliffe, Strategic Director of Reform. This starts with overarching imperatives of: “Thriving Communities; Co-operative Services; and an Inclusive Economy” and builds an appropriately complex and coherent, multi-level Social Value model from that strategic starting-point.

This is an approach we commend, though the application will be different in the context of Central Government.

Consultation question 2: Do you agree that the proposed minimum 10% weighting for evaluating social value in the bid is appropriate?

A particular percentage weighting is process-driven and in reality, arbitrary.

The UK “Best Value” regime under the Local Government Act 1999 and the European Union’s Public Procurement regime, incorporated into UK law in the Public Contracts Regulations 2015, both apply a properly purposive and more integrated approach, recognising Social Value, in public services, as an equal third element in evaluation. Essentially, the optimum balance of: Price; Quality; and Social Value is required.

Social Value is less tangible than price and inter-related with quality. It, therefore, properly requires greater application than the other two factors in evaluation, most particularly including the exercise of active, objective professional judgement.

In the UK, “Best Value” means: “having regard to a combination of economy, efficiency and effectiveness as well as the overall value, including economic, environmental and social value”. Social Value will properly and naturally count significantly higher in public services.

In the EU, “Socially responsible public procurement means buying ethical products and services and using public tenders to create: job opportunities; decent work; social and professional inclusion and better conditions for the disabled and disadvantaged”.

Consultation question 3: Does the proposed approach risk creating any barriers to particular sizes or types of bidders, including SMEs or VCSEs? How might these risks be mitigated?

Social Value, properly applied in the area of public services, should work to highlight the distinctive Social Value delivered by SMEs, which are socially responsible businesses and mature Social Enterprises and should, thereby, promote an ecosystem conducive to the distinctive role of traditional VCSEs.

There is a major risk if Social Value is applied without serious consultation, as a public sector demand, rather than with consultation, prior to and during procurement, as a public sector/public benefit sector dialogue.

There is a major risk if Social Value policies are not applied in accordance with the fundamental EU Treaty principles of: Equality of Treatment; Non-Discrimination; Proportionality and Transparency.

There is a major risk if Social Value policies are applied within misconceived procurement procedures that continue to apply crude tests to financial viability, so that large and commercial organisations are distortingly favoured over smaller and more public-benefit focussed organisations.

Consultation question 4: How can we ensure government’s existing procurement policy mandates (for example on levelling the playing field for SMEs) take precedence in designing the procurement?

See answer to Question 3.

Additionally and most fundamentally, develop a working concept of Social Value divided into three distinct categories:

“Added Social Value” – what may be added, as a supplement, to the main service to add further value. For example, requiring apprentices/disadvantaged workers in construction projects. This is currently the main focus of Social Value.

“Purpose Social Value” – the value derived from a service supplier and its workforce being dedicated, through its own purpose and mission to delivery of the required and desirable service outcomes and impacts. This may provide major enhancements. This is currently demonstrated by mature Social Enterprises (for example those participating in E3M) and progressive Responsible Businesses, especially SMEs with a serious connection to their communities.

“Impact Social Value” – the most important of the three categories. This places the focus on the overall beneficial effects of service design, development, delivery and improvement. It promotes service integration; preventative and curative engagement, saving the costs of the same levels of need continuing; and long-term service planning and sustainability.