The growing importance of social value in public sector contracts
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social value in public sector

The growing importance of social value in public sector contracts

from  October 23, 2020 | 3 min read

Public sector organisations are increasingly selecting suppliers based on how much social value their services contribute to the community. During these challenging times, anything that makes public money go further is of vital importance.

For IT vendors like us, demonstrating social value used to be a nice-to-have. That’s all changed. Vendors are now scored on what they will do for the community.

This element is weighted between 5 and 20 percent, and tenders are increasing based on formal metrics such as those developed by the National TOMs Framework (in the UK), and equivalents in other countries.

So, for contract tenders, it’s vital that both public sector organisations and their suppliers understand the initiatives, the relevant legislation, and the available support.

Why a National Measurement Framework?

The aim of one such initiative — the National TOMs Framework in the UK, for example — is to provide a minimum and consistent reporting standard for measuring social value. It’s based around five principal themes (jobs, growth, social, environment and innovation), with associated outcomes and measures.

For organisations not currently doing this, it enables them to embed social value into their procurement and management processes. For those already measuring social value, TOMs helps them integrate these standards and measures into their approach.

TOMs follows the Public Services (Social Value) Act 2012, which many public sector

organisations need to comply with. Under the Act, public sector organisations are encouraged to demonstrate how their services provide value for money and how they’re building social value into their procurement and commissioning processes.

The TOMs toolkit enables commissioners to see the economic breakdown of each measure by supplier so they can see which businesses are providing the most value to their local authority and community, and therefore make sustainable and economically smart decisions to help their public pound go further.

Significant benefits

Carl Hedberg, from the Social Value Portal, says in this video: “Those local authorities that are using TOMs and fully exploiting the potential of the Social Value Act are reporting very significant benefits, anywhere between 20 and 50 percent of added value. Replicating this across the whole of the [UK] public sector would bring additional value of over £48bn. Extended further across planning and development and we would gain another £15-25bn. In challenging times, these are compelling numbers.”

Social value during COVID

Dealing with the social and economic effects of COVID-19 calls for both immediate and longer-term responses, so social value at this time is more important than ever. Before the COVID-19 outbreak, social value appeared to be gaining momentum across public sector organisations – increasing in size and scope and occupying a greater proportion of the tender evaluation process. And the pandemic has definitely brought it into sharper focus.

A 5-20 percent weighting

While the Social Value Act only urged more public sector bodies to consider social value during bid reviews – alongside quality and cost – 2018 and 2019 saw a reinforcement of this commitment.

With the introduction of the common values procurement framework it was recommended that social value should make up a minimum 10 percent weighting when reviewing tenders. It also now has to be accounted for, not just ‘considered’. In our experience, as suppliers to public sector organisations, this weighting can be between 5 and 20 percent.

Social purchasing in Canada

In Canada, unlike in the UK, there is no legislation to support Social Value (or Social Purchasing as it’s known there). Despite this, a mixture of Canadian not-for-profits, voluntary organisations and social enterprises, are involved in Social Purchasing. And a lot of work is being done in the background to form a base for possible legislation. 

More information

Social Value International is formed of members who share a common goal: to change the way society accounts for value. Its National Networks, which span the globe from Australia to the UK, Sweden, the US and Canada, promote the Principles of Social Value, refine and share practice, and build a powerful movement of like-minded people to influence policy.

If you’d like to know more about Unit4 solutions for the public sector, please visit our public sector industry page.

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