Procurement Policy Note 06/20: Taking account of social value in the award of central government contracts
On 30 November 2020, the Cabinet Office supplemented the information provided in PPN 06/20 “Taking account of social value in the award of central government contracts” (first published on 24 September 2020) with the publication of the Social Value Model, the Guide to using the Social Value Model and a Quick Reference Guide.
PPN 06/20 launches a new model to deliver social value through government’s commercial activities. The model is designed to help in-scope organisations (all Central Government Departments, their Executive Agencies and Non Departmental Public Bodies) to take account of the additional social benefits that can be achieved in the delivery of their contracts, using policy outcomes aligned with Government priorities.
The PPN was effective immediately from the September publication date, with the Social Value Model to be applied to all new above threshold procurements (currently covered by Part 2 of the Public Contracts Regulations 2015) from 1 January 2021.
This PPN should be read in the context of the significant amount of information already produced this year by Government which focusses on value-led procurement. This includes amendments to HM Treasury Green Book.
So what is new?
In-scope organisations should now 'explicitly evaluate' social value in their procurements. They must use criteria that are related and proportionate to the subject matter of the contract and this is a significant change, given that previously they only had to "consider" social value in relation to services contracts pursuant to the Public Services (Social Value) Act 2012.
Social value is now to be made a mandatory award criterion. The PPN provides that a minimum weighting of 10% of the total score for social value should be applied in a procurement to ensure that it carries a heavy enough score to be a differentiating factor in bid evaluation. The PPN notes that a higher weighting can be applied, if justified.
So what is included in the Social Value Model?
The Social Value Model and Annex A to the PPN sets out a list of 5 priority themes and 8 outcomes which contracting authorities can use (although they do have discretion as to which ones they use for any single project).
The 5 key themes are:
- Covid-19 recovery,
- tackling economic inequality,
- fighting climate change,
- equal opportunity; and
Also included is comprehensive standardised information to accompany each of the outcomes, standard award criteria, delivery objectives that describe ‘what good looks like’, and metrics for contract management and reporting. Key to the approach adopted by the Social Value Model is the "Golden Thread": that takes social values through from government priorities to the development of strategies and business cases for programmes and projects, through to procurement specifications.
Issues around standardisation to consider
It is clear throughout the PPN that the Social Value Model has been designed to create a standardised and complete approach to incorporating social value in a procurement. Significant detail has been provided for all of the award criteria and sub-criteria, scoring rules, reporting metrics, questions and answers for bidders etc.
This standardisation is meant to reduce burden on the Government Commercial Officers. However, the PPN states that the social value element of a procurement can also be used as a differentiator. Regardless of the discretion a client has to pick and choose its own themes and outcomes; once the Social Value Model has been used, how much of a differentiator will it be?
The standardised approach may also lead In-Scope Organisations to adopt a "DIY" approach and seek to implement the social value model without expert advice or support. Maximisation of "impact per £ spent" requires significant thought ahead of a procurement going live. It also needs someone to navigate the "golden thread" between the community impact plan, through procurement documents to contract specifications, performance measurement systems etc. to ensure that an In-Scope Organisation effectively converts its desired outcomes into award criteria, sub-criteria and contract terms.
Further, the allocation of 10% weighting in a public procurement process makes social value a significant criterion that needs to be carefully designed and communicated in the procurement documents, not least to ensure that it is transparent, treats all bidders equally and is proportionate and linked to the subject-matter of the contract.
While it is undesirable to create an entire industry out of including social value in a procurement, its inclusion in a procurement should not be reduced to a tick-box/output-led exercise - as contracting authorities will then fail to secure the impact it desires. Instead, a contracting authority should consider, in light of the Social Value Model and its ideas as to how it should be embedded in a procurement and contracting process, what assistance it needs to maximise the effectiveness and impact of its social value requirements.
It is clear from the timing of the publication of the Social Value Model that Government envisages a central role for value-led procurement and the promotion of social value through procurement in a post-Brexit landscape. Contracting authorities should embrace the opportunities that this value agenda creates in order to maximise the returns on every £ it spends.