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Putting social value at the heart of procurement

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The Social Value Act has been in place for some time now and places a duty on contracting authorities such as schools, academies and colleges to consider how to improve the social, economic and/or environmental wellbeing of your area when procuring service contracts that exceed the EU procurement regulation threshold. Using some real life examples, this article aims to provide some practical tips to get you started.

Step 1 – Identify what the social values of your institution are

Many educational institutions have social value built into their mission statements and this is normally a good place to start. An example is Cambridge Regional College’s vision, which is “to be outstanding in enabling students to excel and for serving employers and communities.” Its mission is “to transform lives and create prosperity by delivering technical and professional education that meets the needs of students, employers and communities in Cambridgeshire.”

Another example is one of Preston College’s strategic objectives “To encourage access and engagement with the Preston and central Lancashire community, and through its civic responsibilities, support the community agenda.  Work with partners to provide a more coherent offer for Preston.”

An alternative source of your institution’s social values can be its policies and procedures. An example is Sheffield College’s environmental policy which states the College “acknowledges that it has a responsibility to seek to reduce its environmental impact and should take every opportunity to do so, exercising proper control over all its activities, the use of resources, the recycling and management of waste streams and using its influence on both its own and the wider community.”

Additionally, many educational institutions will have key stakeholders such as Community Engagement Officers who will be a great source of knowledge on specific social value agendas key to your institution’s local communities, schools and charities. Also, Student Unions are often involved in programmes to support the wellbeing of students and local communities and would be a key stakeholder in social value objectives. Other key stakeholders include your local authority who will have a stake in social value agendas in your region and you might be able to work together to secure these.

Step 2 – Translate these values into verifiable requirements

Once you have identified the social values of your institution, consider if it's possible (and relevant) to translate these into verifiable requirements in your tender specification. Consultation with both the supply market, your institution’s key stakeholders and your local community prior to embarking on a procurement procedure will help. It’s important that any social value requirements are both relevant to the contract subject-matter (do not impose unnecessary burdens that will deter suppliers from bidding), or have serious negative impact on costs or disadvantage non-local bidders, for example by requiring them to have a local base or use local materials. Engagement with the market before the procurement commences about your social value objectives will help identify and mitigate risks. An example of this would be if your initial specification includes information that is counterproductive for your suppliers in delivering social value. Engagement with the market at an early stage will identify this and allow you to change your specification to accommodate the outcomes you wish to achieve.

You can set out specific social, economic or environmental requirements that you want delivered (where these are relevant to the contract subject-matter) or you can define your service using desired outcomes instead of specific social value solutions. Below are some illustrative examples of requirements that you could adapt and use in your own service design specifications, split into four key areas: Community, Skills, training and recruitment, Supply chain and Environmental management.

Community

An example would be if your student union has a section dedicated to supporting the welfare and diversity of the institution’s students with a social objective of supporting students in the management of their personal finances. When procuring banking services, the institution could require the supplier to support the student union as part of this contract, through the delivery of advice for its students in relation to banking and financial matters.

Alternatively, if you have a local foodbank and wish for surplus food from the institution to be passed onto them, when specifying your outsourced catering contract you could require the supplier to engage with the foodbank to ascertain what produce left over from the delivery of the contract could be donated.

Skills, training and recruitment

When a contract involves a supplier’s employees to work onsite at your institution, you could require the supplier to provide additional social value through its recruitment to positions wholly associated with this service – leaving it open to the bidder to identify how they can add value to the community through inclusive recruitment while delivering your service. Alternatively, if you are situated in an area with a large armed forces presence you could require the supplier to employ a diverse workforce for the delivery of the service including the employment of veterans and service spouses/partners, see the Armed Forces Covenant

An alternative approach could be to require that opportunities arise through the delivery of this contract, requiring the supplier to generate employment and training opportunities for targeted groups you have identified through work with your local authority, social care and or voluntary groups such as: long-term unemployed, young people (including school-leavers, young unemployed and/or student graduates), people with disabilities and other groups.

Supply chain

Should you have any contracts that involve sub-contracting by the main contractor, such as a works contract for buildings you could encourage suppliers to publish supply chain opportunities associated with the contract on Contracts Finder, to remove or reduce participation barriers for VCSEs and SMEs.

Environmental management

When you have contracts that are typically longer term in duration and where there are potential environmental impacts such as outsourced cleaning contracts, the institution could require the supplier to work with them to identify opportunities to introduce innovation, reduce cost and waste and ensure sustainable development is at the heart of their operationWorking with third sector organisations is a good way to identify these opportunities, especially waste reduction.

You could go further and require suppliers to identify how they will measure, minimise or offset any negative environmental impacts relevant to this service, as a minimum including; reducing greenhouse gas emissions, sending less waste to landfill and reducing the overall amount of waste produced and reducing water consumption.

Step 3 – Choose your route to market to maximise social value benefits

Before embarking on a procurement, evaluate your options as to how the goods or service could be procured and whether how you procure can have a positive impact on your institution’s social value objectives. An example of this would be if one your institution’s social objectives is to reduce its impact on the environment in terms of carbon reduction and greenhouse gas emissions. You could look at the way you procure goods that are regularly delivered to your premises and consider ways in which you could reduce the frequency of deliveries. You could consider collaborating with other local organisations to procure the goods, appointing a single supplier with co-ordinated delivery schedules to reduce the number and frequency of delivery vehicles on your local roads. Items that are regularly ordered such as paper, stationery, janitorial goods, PPE and teaching supplies might be good candidates for this approach.

It would also be advisable to consider if there is an existing framework in place you could call off from. Most of these frameworks will have already considered social value in relation to the subject matter of the specification. It could also provide you with additional opportunity to determine if you want to know more from bidders at the call off stage or if sufficient information has already been provided. Most suppliers already have social value offerings, you now need to encourage them to tailor this offering to your locality for the benefit of your community.

Step 4 – Evaluation of a supplier’s ability to meet your social value objectives

When conducting procurements above the EU procurement regulation threshold, it’s mandatory to use the Cabinet Office Standard Selection Questionnaire which does include an evaluation of a bidder’s social value obligations in terms of breaches of relevant legislation. One of the discretionary grounds for excluding a bidder is a positive answer to any of the following without sufficient measures being taken to demonstrate the reliability of the organisation:

“Please indicate if, within the past three years, anywhere in the world any of the following situations have applied to you, your organisation or any other person who has powers of representation, decision or control in the organisation;

  1. Breach of environmental obligations
  2. Breach of social obligations
  3. Breach of labour law obligations"

Whilst these questions are mandatory in higher value procurements, you could consider setting similar minimum standards in lower value procurements which bidders are required to pass before having their tender evaluated and of course, if a framework agreement is being used, this type of assessment on a supplier’s social value sanctions will already have been carried out.

When deciding on your award criteria to determine which bidder will win the tender, the procurement regulations explicitly allow social considerations to be included in award criteria, provided they meet certain principles that all criteria must adhere to i.e. best price-quality ratio, being related to the subject matter of the contract and conforming to the principles of procurement; proportionality, non-discrimination and transparency. 

An example could be the award criteria for a printer, it may include the following costs: acquisition price, cost of consumables (ink), electricity consumption, cost connected to dismantling and recycling, plus factors for user-friendliness, level of noise emission, use of recyclable materials for the production of the printers, involvement of persons from a disadvantaged group in the production process, length of warranty and aftersales service, depending on what social benefits are important to your institution, as detailed in your specification.

An example of what would not be permissible: in the case of a contract incorporating social considerations, in a construction contract where the subject-matter of the contract consists of building a school, an award criterion based on how much money the contractor would transfer to the local community outside the contract is not legally permissible, as it would not be linked to the subject-matter of the contract.

It is also worth noting that the EU Procurement Directives (recital 97), on which UK procurement law is based, confirms that contracting authorities are not permitted to require tenderers to have certain corporate social or environmental responsibility policies in place generally.

Step 5 - Ensure the social benefits are fulfilled through contractual performance

Contract performance clauses set out how the contract should be performed. It is possible to include social, employment-related and/or environmental contract performance conditions where appropriate, providing they are linked to the subject-matter of the contract and had been previously indicated in the procurement documents.

Contract performance clauses are obligations which must be accepted by the successful tenderer and which relate to the performance of the contract. Contract performance clauses should not play a role in determining which tenderer gets the contract (provided the successful supplier has undertaken to meet the conditions).

Contract performance clauses are generally the most appropriate stage of the procedure to include social considerations relating to employment and labour conditions of the workers involved in performance of the contract. They may, in particular, be intended to favour on-site vocational training, the employment of people experiencing particular difficulty in achieving integration, the fight against unemployment, to recruit long-term jobseekers or to implement training measures for the unemployed or young persons.

It is also important to verify that contractors are complying with any social obligations and legislation through effective contract management procedures. Some contracts will be higher risk than others, for example in a contract to provide cleaning services where a number of environmental and social contract performance conditions have been set, these may be breached by the main contractor through the use of cheaper non-environmentally friendly products, unchecked electrical equipment, incorrect disposal of waste and use of illegal immigrants or slave labour. It may be prudent for these contracts to include monitoring of contractual key performance indicators on social and environmental factors, via site visits, regular contract management due diligence checks on the contractor or sub-contractors. Suppliers are often able to offer a KPI dashboard which also includes the social value activities to aid monitoring and reporting on social value outcomes and evaluating the financial benefit provided. This might sound complicated but many suppliers are keen to promote their business value to the community and have tools in place to support this.

Conclusion

We trust this article has given you some food for thought in terms of how you might be able to embed social value in your procurements and not just for high value service contracts where the Social Value Act requires you to consider what could be achieved. Should this not be motivation enough, do watch this inspiring video from Wagstaff (one the suppliers on the CPC Office and Residential Furniture framework), about their social value objectives and their work with the Waste to Wonder project!

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