Social value from targeted procurement

Tackling poverty through employment is an essential part of sustainable development. Personal well-being, social cohesion and inclusion, and opportunities for all are part of the UK’s principles for sustainable development that all contracting authorities need to consider, not just those focusing on tackling poverty and disadvantage. Targeted recruitment and training, and procurement which is more friendly towards small and medium-sized enterprises (SMEs) are key considerations in sustainable procurement.
Processes for sustainable procurement in England are relatively weak on these social measures to help address poverty. Change will be more effective if contracting authorities are supported, encouraged and rewarded through key parts of the delivery process. For example, Value Wales provides training on community benefits for the public sector and a web-based community benefits mailbox where procurement teams can post questions and get advice.
Overcoming barriers
Targeted recruitment and training requirements can be delivered at little or no extra cost, and the best contractors on a range of quality measures also score highly on this requirement. Contractors are willing to deliver social and community benefits and get better at doing so over time, in part because they recognise the business benefits.
Social enterprises are good at delivering social and community benefits, but face barriers in competing for larger contracts. More would be achieved by including community benefit requirements in larger contracts, which private companies mostly deliver. The barriers to social enterprises participating in public procurement exercises are similar to those facing other small and medium-sized enterprises (SMEs). Providing some smaller ‘lots’ within procurement contracts is key to increasing tendering opportunities for social enterprises and SMEs.

Procurement issues
The core requirements of a contract reflect what the purchaser has decided to buy – including social/community benefits – and value for money (and best value for a local authority) can properly reflect the cost of delivering all of the core requirements. Social and community benefits that are not core requirements should not be part of the value for money decision, although they can of course improve the value for money being achieved.

However, the fact that social benefits are core requirements does not in itself make them affordable, and a lot of the resistance to including these requirements may reflect a concern that budgets provided for what was traditionally purchased will now be spent in these areas.
Affordability is not the only such concern. Procurement teams will also want to consider the potential impact on quality and timely delivery, although there can be positive outcomes here also.
It is important to consider these other procurement issues when developing the specification for community benefit requirements, for example by focusing on benefits that can be achieved by different ways of working rather than by additional requirements that could add cost or by identifying additional budgets that can be used to fund the additional requirements.

Delivering social value
A number of umbrella organisations within the third sector have sought to emphasise the social and community benefits that the sector can deliver. This has been important in winning support for the Social Value Act in England and Wales. However, in terms of procurement processes social enterprises must bid for contracts in the same way as any other organisation. Once a procurement has been started, a contracting authority cannot favour any type of organisation.
A purchaser’s decision to procure social and community value may improve a social enterprise’s chances of bidding for a public contract successfully, because they may be better equipped to deliver this element of the outcomes. However if a contract or subcontract is critical to the delivery of the works/services, the purchaser and main contractor will probably want to impose conditions that will ensure that its critical path outcomes can be met. These conditions may not be acceptable to the social enterprises in the market.
What is critical for social enterprises are the barriers to their participation that result from: the scale and value of contracts being let and the technical and financial criteria that they have to satisfy.

Lessons learned
Over the last decade a substantial body of good practice has been developed. The lessons learned can be applied to services and supplies contracts at a general level, but in each sector there will be a need to develop skills and experience in drafting and facilitating social benefit requirements.
Perhaps the most important and transferable lesson is that the best outcomes will be achieved where the principles of good procurement are applied to the social and community benefits requirements, including: adopting a clear and ideally measurable specification; selecting a list of bidders to tender who have experience and/or commitment to delivering the requirements; giving weight to the social /community benefit requirements in the award process; and enforcing the contract requirements.
These principles will be easiest to apply where the requirements are a part of the subject of the contract, i.e. a core requirement. This can be widely achieved by the purchaser adopting an explicit corporate policy on what social/community benefits it will seek from its procurements.
Approximately 50 per cent of the beneficiaries of the target recruitment and training requirements come from localities with high levels of deprivation. This use of public procurement to help address poverty relies on three interventions in the contracting process: understanding what is required to make a difference to poverty and using this in the drafting of the specification and contract conditions; identifying a ‘supply chain’ of organisations that help the contractor to deliver the requirements; and the collection of monitoring data and using this to enforce the relevant contract decisions.

Sustainable development provides a clear route between policy and practice that public bodies can use in their procurement processes. There is a commitment to this in Scotland and Wales and an emerging approach in Northern Ireland, while the Public Services (Social Value) Act 2012 has the potential to improve the position in England.
However, there is potential for the UK government to use sustainable procurement more widely. With concerns about growing poverty, declining social mobility, and the problems facing lower-skilled or less experienced workers the ‘just society’ elements of sustainable development need higher priority in public sector purchasing.
It would be possible to achieve a significant impact on poverty and social mobility if the whole of the public sector committed itself to generating a year’s work for a person from a target community for each £1 million in contract value, with a strong focus on targeting the most disadvantaged in the labour market.

Further information
The full report can be downloaded from the Joseph Rowntree Foundation’s website:

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