Business Development

Changes to social value in procurement will create more opportunities for SMEs

By Hudson Procurement Group
October 2020

Social value in procurement – driving positive change

Social value in procurement refers to the way that your business positively impacts the community and environment. When tendering for public sector contracts, it is imperative to demonstrate how you provide social value.

A new social value model has recently been launched with the aim of;

Creating new jobs and promoting skills;
Encouraging economic growth;
Tackling climate change, and;
Levelling up the UK.

The changes mean that central government will be required to go beyond the Public Services (Social Value) Act 2012. These new measures will come into effect on the 1st of January 2021.

How will the new model be used?

The new social value in procurement model will be used by government bodies to assess the social impact of suppliers.

When evaluating tender responses, government departments will use the new model to score potential suppliers. This scoring will focus on the wider, positive impact that your business will provide whilst delivering the contract.

The new model also means more value for money for the UK taxpayer.

The Minister for Civil Society, Baroness Barren said:

“This hugely positive change will ensure taxpayers’ money supports levelling up across the country, encouraging businesses to give back to their communities and offering more opportunities for our dedicated charities, social enterprises and voluntary groups. This way we can ensure government contracts are helping to tackle economic inequality and support our recovery.”

Social value in tender responses will be assessed based on;

How your organisation supports COVID-19 recovery;
How you are creating new businesses, jobs and skills to tackle economic inequality;
The environmental considerations you take to help fight climate change and reduce waste, and;
The equal opportunity policies you implement and adhere to within your organisation.

Levelling the playing field

This new social value in procurement model will help to level the playing field between large corporations and SMEs. The new system will apply tests that all bidders are capable of meeting, regardless of their size.

Cabinet Minister, Julia Lopez, said:

“Government has tremendous buying power, spending £49bn each year on vital public services. Value to the taxpayer should lie at the heart of our procurement decisions.

Too often, however, ‘value’ has been narrowly defined by price without taking into account other important factors such as the number of local jobs or apprenticeships a contractor will provide, the care they show the environment in their business practices or the number of SMEs involved in their wider supply chain.

We want to see a greater variety of companies deliver government contracts, from every corner of our country – not just because that benefits local economies and communities but because it helps diversify our risk, create a more resilient supplier base and deliver some of our critical priorities.

If we can use government’s buying power to drive that broader value, the better our chances of levelling up our country and investing in our people as part of our COVID recovery.”

Consistency across public sector organisations

With a vast number of government departments across the UK, consistency is vital for ensuring equal opportunities for all suppliers. Therefore, commercial teams, working within these departments, will be expected to complete specific training. This training will focus on implementing the new model and deriving the maximum social value from contracts.

Chair of the Social Value Policy Unit at the Federation of Small Businesses, Arnab Dutt, said:

“I welcome the announcement of social value procurement as an important step forward for public sector supply chains. Its focus on addressing economic inequality, the climate emergency and societal wellbeing is a 21st century agenda.

Social value has the potential to be transformational in bringing opportunity to all parts of our county and the many small businesses that are the lifeblood of our communities.

The Federation of Small Businesses continues to help shape the policy of a dynamic ecosystem for our UK SMEs in collaboration with the public sector, acknowledging that the government’s SME growth agenda and social value policy go hand in hand.”

In summary

The new social value in procurement model will challenge and encourage suppliers to think beyond their own, internal objectives. In the future, suppliers will need to consider the impact of their organisation on the wider community and environment. The actions they then implement will need to be demonstrable in order to be successful in public sector tendering.

The model will also challenge government authorities to choose the best supplier based on more than just price. They will need to assess the positive impacts of their chosen supplier and ensure that they maximise taxpayers’ money. In turn, this also means that suppliers of different sizes can be compared more fairly. Large corporations and SMEs alike will be measured against the same initiatives.

Further support

Do you need support with responding to a tender? Get in touch with our team for a free consultation. Simply call, email or upload your tender specification.

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