By Clive Booth FCIPR FRSA, founder director of www.esgfoundation.org
From now a contract’s Social Value must be included in all bids for Central Government work.
Perhaps because it was buried under the weight of noisier Brexit and pandemic-related announcements the UK Government’s Action Note PPN 06/20 September 2020 went largely unheeded when it quietly appeared on the Gov.UK website on 23 September.
But mark the date. It deserves to go down in history given the responsible stewardship the government has committed itself to from 1 January 2021 when awarding government contracts.
That’s the ‘S’ in Environmental, Social and Governance (ESG) reporting. Not just the environmental impacts – we’ve been doing those for years. Or the value for money costs – we’ve been doing that even longer, since Noah’s accountants reviewed the tenders to construct the Ark. From now on it’s a mandated criteria that to procure a piece of government work you must account for Social Value outcomes such as:
- Creating new businesses, new jobs and new skills
- Tackling economic inequality by increasing supply chain resilience and capacity
- Fighting climate change by effective stewardship of the environment
- Reducing the disability employment gap and tackle workforce inequality
- Improving health and wellbeing
- And, improve community integration.
There can be few policies which will have such a profound – and beneficial impact – on the behaviours of both public and private sector companies.
I’ve printed below some of the helpful sections of Taking Account of Social Value in the Award of Central Government Contracts below in full.
“The Procurement Policy Note (PPN) launches a new model to deliver social value
through government’s commercial activities. Central government organisations should use this model to take account of the additional social benefits that can be achieved in the delivery of its contracts, using policy outcomes aligned with this Government’s priorities.
“Social value should be explicitly evaluated in all central government procurement, where the requirements are related and proportionate to the subject-matter of the contract, rather than just ‘considered’ as currently required under the Public Services (Social Value) Act 2012. Unnecessary burdens should not be placed on commercial teams or suppliers.
“In scope organisations must familiarise themselves with the social value priorities and outcomes that can be applied in new procurements. Must ensure all those involved in commercial activity in the organisation complete the e-learning on social value which can be accessed via the Government Commercial College.
“Whilst the overarching objective for the Government’s commercial activities will remain achieving the best commercial outcome, it is right that the Government applies its commissioning to supporting key social outcomes. The public sector must maximise social value effectively and comprehensively through its procurement. Applying social value requirements in procurement can have a significantly positive impact by broadening the benefits that are delivered.
“In 2019, the Cabinet Office consulted on aspects of the model including the delivery metrics. The Government response to the consultation has been published alongside this PPN. A joint team from Cabinet Office and the Department for Digital, Culture, Media and Sport (DCMS), working with Claire Dove, the Government’s Crown Representative for Voluntary, Community and Social Enterprises, have designed a social value delivery model for central government buyers drawing on examples of best practice in local government. Commercial specialists, policymakers, small and large businesses and the VCSE
sector have been engaged in the design.
“This consistency means the process for defining social value will be standardised. It provides a clear, systematic way to evaluate these priority policies in the award of a contract. Evaluation of the social value aspect of bids should be qualitative so all potential suppliers, including SMEs and those new to government business, can successfully bid by describing what they will deliver and how they will deliver it (i.e. it is the quality of what is being offered that will count in the evaluation, not the quantity). The model has also been updated to reflect the impact of COVID-19.
“Application of the model will be mandatory in central government but commercial teams retain flexibility in deciding which of the outcomes should be applied to their particular procurement to ensure relevance and proportionality. A minimum weighting of 10% of the total score for social value should be applied in the procurement to ensure that it carries a heavy enough score to be a differentiating factor in bid evaluation; a higher weighting can be applied if justified.”
It’s been said that ESG reporting has benefited from the heightened attention it was given during the pandemic. Public Policy Note 6/20 goes much further in making ESG a ‘nice to have’ to a ‘must have’ reality.
The Cabinet Office and DCMS deserve congratulating on pushing this forward.