Public procurement:  Enabling Social Value in the New Normal

10 June 2020, Iain C. Steel

As many organisations continue to edge forward out of at least the immediate impact of the pandemic, there is an increasing narrative calling for them to use this as an opportunity to formulate a 'new normal' for the emerging economy.

From various quarters, this is described as an economy that is 'fairer', 'sustainable', 'flexible' or 'more humane'.  But what can public procurement professionals do to contribute towards the 'new normal'?  Are they capable of improving social value?

What is social value?

Most procurement and commissioning professionals will have some understanding that there is a requirement to at least consider social value when defining procurement requirements.  Social value varies by need, however the overriding consideration is that successful outcomes lead to improved benefits.  For example;

Social

• Resources and interventions targeted to address critical social issues;
• Employing a diverse workforce;
• Establishing relationships with social enterprises / charities for reciprocal benefit;
• Improved labour standards;
• Encouraging wellbeing and mental health.

Economic

• Levelling-up regional unequally developed economies;
• Thought leadership and innovation from suppliers includes social, economic and environmental issues;
• Investment for inclusive growth, economic output, and improved productivity;
• SME suppliers are supported to bid for work;
• Job creation / employing from disadvantaged groups;
• Opportunities for inward investment are supported.

Environmental

• Environmental improvement strategies;
• Reduction in landfill waste;
• Heritage and wildlife protections;
• Nuisance reduction (e.g. light, noise, odour, traffic generation).

Policy and strategy should involve collaborative working across the beneficiary communities as well as within the client organisation.

Existing toolkit

There is, however, a nervousness around incorporating social value requirements into procurement.  There are a number of reasons for this, however the most often cited is the tension between wishing to improve social value outcomes in the organisation and the risk of potential challenge on the grounds of equal treatment of suppliers across Europe under the Public Contracts Regulation 2015.  It is not uncommon for organisations to consider that their desire for improved social value needs to be placed in the 'too difficult' or 'too risky' pile.  This tension continues to exist, however there are actions that public procurement professionals can take:

• Define and measure:  Social  value can, correctly, mean a multitude of different things in different circumstances.  It is therefore important to understand the desired outcomes at an organisational level and measure against a baseline.  Deliverables could be defined in many ways, however they must be deliverable with stated measurable objectives.
• Policy vs strategy:  Many organisations have a policy around social value, however it is less common that this is developed into an actionable strategy.  A policy on its own is unlikely to lead to improved outcomes.
• Accountability and responsibility:  Action only becomes a priority when it is someone's 'job'.  Consider a dedicated member of staff to lead implementation, training and education.  Shared accountability is equal to no accountability.
• Relevance:  Any social value requirement must, in some way, be demonstrably linked to the subject of the procurement.  Social value should be an ongoing requirement for the contracting authority, and this can be factored holistically into spending and category plans and subsequently correlated with social value outcomes.  When spend plans are linked to wider holistic deliverables, it is easier to remove siloed thinking.
• Value for money:  Ensure that there is  a clear knowledge of what is and what isn't value for money.  Most procurement professionals are acutely aware that value for money does not mean the lowest cost, however this message is often lost when there are poor communication links between the cost centre owner and the service beneficiary.  It is important to identify who the ultimate customer is for a service, not just the internal customer holding the purse strings, and make sure that the objectives are clear at all stakeholder levels.
• Consultation:  Wherever possible, ensure that supply markets are consulted before formal procurements are undertaken to help develop specifications that incorporate the needs of the user that can be evaluated compliantly.  This can be achieved by widening the consultation to include users, social sector organisations and the supply chain.
• Work within your target community:  Social value in supply chains can be directly improved by public sector practitioners becoming engaged in the delivery of seminars, training and mentoring in the wider community.  It is no longer sufficient to send out an advert for a requirement and wait to see what comes back.  Organisations should engage with target communities to help businesses to respond meaningfully to their requirements.  This isn't about helping you to identify a favoured respondent, it's about helping organisations to improve their ability to understand the often opaque procurement practices and regulations and to improve the quality of responses.  This has a wider benefit in that your evaluation processes become about determining the best bid, rather than determining who was most able to follow the process.
• Proportionate, clear, relevant, enforceable criteria:  It should go without saying, but are you clear that your definition of outcomes an their measurement is sufficiently transparent to your bidders?  I have seen many procurement procedures where there is a desire to do 'something' in relation to social value (often because a poorly defined, woolly policy demands it), but there is absolutely no clarity on what that 'something' is in relation to the specific procurement.  Not only is this then a box ticking exercise, but it is almost guaranteed that this 'requirement' will be bottom of the list when it comes to measurement and enforcement.

It is likely that the impacts of the pandemic will continue to be felt for many years to come, whether in our personal lives, our relationships or our financial and economic lives, but can we move forward to improve our procurement and supply chain practices to include wider societal benefits?  I, for one, believe we can.  We know more now than ever before about the fragility of our supply chains and the importance of resilience; we in procurement are well placed to play our part.

We have talked about the need to improve social value outcomes through procurement for decades, and have even dabbled in its implementation.  We can do more.

(This article was first published in the May / June 2020 edition of In-procurement Magazine, Front Cover and pgs. 16-18).

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