Buying organisations are acutely aware of the need to demonstrate good value returns when spending public money. Traditionally, particularly in the case of strategic, more complex procurement, this has been a case of getting the best balance of solution capability and price.
Globally, there has been an increasing trend towards introducing wider benefits through public spending. Especially so more recently in the European Union, where member states (including the UK and its devolved administrations) are required to follow new rules to enable procurement to become a policy strategy instrument. Under these new rules, public procurement procedures will help public purchasers to implement environmental policies, as well as those governing social integration and innovation. Ultimately, by using their purchasing power to choose socially responsible goods, services and works, public authorities can set a positive example; encouraging enterprises to make wider use of social standards in the management, production and provision of services by using the new opportunities to promote social inclusion.
In England, the Public Service (Social Value) Act 2012 states that the buying authority must consider a) how the proposed procurement might improve the economic, social and environmental well-being of the relevant area, and b) how, in conducting the process of procurement, it might act with a view to securing that improvement. Similar language has filtered into the Welsh, Scottish and Northern Ireland policy and legislation.
The introduction of social value
In many countries (not just in the UK), the notion of social value in procurement originated from attempts to expediate the improvement of deprived areas through the creation of jobs, training opportunities and use of local suppliers to encourage localised economic growth. This was somewhat successful but is perhaps representative of a more tactical approach. Approaching these types of policy instruments on a project by project basis is unlikely to have the desired impact.
This new legislation is forcing Government to consider how they advise procurement teams to approach this strategically at a local, regional and national level. How can they facilitate the incorporation of Social Value commitments in ALL procurements? What is the best way to capture the benefits and effectively report on the successes?
This is a challenge – delivery against these commitments could take many forms. It could be that the value is a direct component of the solution, such as creation of local jobs. Alternatively, it could be something which is offered by the supplier of the solution which creates additional value – for example, a community centre is built as part of a new sports stadium construction. These could be two solutions in the same procurement – is it possible to measure which is more valuable?
Incorporating social value in to the procurement process
Commerce Decisions is working with Governments around the world to create a new paradigm for the inclusion of Social Value commitments into procurement processes – designing weighted and rated criteria. These can be easily incorporated into existing procurement processes and are easily understood by Buyers and Industry alike. Implementation of these schemes can be done at a national level and tailored by local teams to reflect their environmental and social challenges – putting more weight on areas which will create the most value on a specific project.
Moreover, Commerce Decisions have the right tools to deliver these policies, with a proven software solution that:
- Tests the assessment scheme, runs scenarios and undertakes sensitivity analysis
- Manages the bidding and evaluation processes
- Tracks and traces bidders’ commitments – jobs created, use of SMEs etc.
Buying organisations have always needed to be able to adapt to large scale change, with the constant pressure of demonstrating a good value return. In addition to technical quality and price, at various points they’ve had to incorporate measurable considerations such as environmental impact. Many organisations with whom we work are now embracing social value as the next critical point of adaptation in the way they run procurement projects.
For more information on social value, and how Commerce Decisions has helped clients incorporate these considerations in to their procurement processes, please contact us or read how Ceredigion County Council implemented AWARD® to overcome their procurement challenges and our blog article on whether you can afford to ignore social procurement any longer.