Social value in procurement refers to the consideration of wider social, economic, and environmental factors when making procurement decisions. It involves the integration of social value criteria into the procurement process, which can help to ensure that procurement decisions not only deliver value for money but also deliver positive social outcomes.
It would be easy to pass this off as a buzzword, but this isn’t a new concept, social value goes back centuries and there are so many great benefits to thinking beyond the purely financial cost of a contract, and to consider how the services you commission and procure can improve the economic, social, and environmental wellbeing of an area as well.
The business benefits of social value
Incorporating social value into procurement can bring several benefits to businesses, including:
- Competitive Advantage: By considering social value in procurement, a business can differentiate itself from competitors by showcasing its commitment to social and environmental responsibility. This can help build a positive brand image, increase customer loyalty, and improve reputation.
- Improved Stakeholder Relationships: By prioritizing social value, businesses can foster stronger relationships with stakeholders such as customers, employees, and suppliers who are increasingly interested in sustainability and social responsibility.
- Risk Reduction: By considering social value, businesses can identify and mitigate potential risks associated with social and environmental issues such as supply chain disruptions, reputational damage, and legal compliance.
- Cost Savings: Considering social value can lead to cost savings in the long run. For example, sustainable procurement practices can lead to reduced waste and energy usage, which can result in cost savings over time.
- Enhanced Innovation: Incorporating social value into procurement can lead to increased innovation by encouraging the development of new products and services that address social and environmental challenges.
Social value and public sector organisations
The Public Services (Social Value) Act 2012 requires all public sector organisations and suppliers to look beyond the financial cost of a contract, and with funding cuts, local authorities are looking at how to make their limited resources go further. Councils, along with the rest of the public sector are encouraged to use procurement to achieve wider financial and non-financial outcomes, including improving wellbeing or individuals, communities, and the environment by making social value a decision-making criterion when awarding contracts. To help, the Local Government Association provides a Social Value Toolkit for District Councils.
But what about those bidding for public sector contracts?
The expectations for bidders to demonstrate clear and measurable impact in tenders has intensified and often a weighting of 20% has been attributed to social value criteria. Typical social value tender questions /responses might include,
Economic examples:
How your contract might
- create jobs, training, apprenticeship schemes for local people.
- progress towards paying a living wage.
- Support a local supply chain.
- Invest in local businesses.
- Provide/promote opportunities to work with local voluntary / community organisations.
Social examples:
How will your organisation work to help others?
- Improve the health & wellbeing of residents/employees.
- Help local charities / community groups.
- Promote social integration.
- Support local culture and heritage.
- Create volunteering opportunities.
Environmental examples:
- Reducing energy and fuel consumption.
- Minimising waste through re-use and recycling.
- Minimising pollution.
- Saving energy.
- Promoting initiatives which retain, protect, or enhance the local natural environment.
- Incorporating sustainability considerations into your supply chain.
It is important that all businesses create a culture of social value, so that when it comes to bidding for public sector contracts it’s already something that is inherent within the organisation and you don’t need to start from scratch. At Alphatec, we pride ourselves in embedding our climate and environmental policy and corporate social responsibility policy into everything we do, and social value in procurement serves as a reminder for us to continually build on this and improve our value to society, the economy, and the environment even further.
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