Social value is nothing new, although there has been an increased interest in the UK due to the Social Value Act 2012.
Birmingham City Council’s approach to implementing social value in commissioning and procurement – good example of strategic leadership and provision of tools to achieve social value in individual contracts.Risk adverse and process driven nature of procurement - In order to break this down in all areas of procurement, but particularly when considering social value, it is necessary that there is strong leadership from the top. If the council leader or mayor demands social value is included, this provides protection for individual procurement officers and can make them less risk adverse.In order to comply with EU procurement rules, any social value requirements have to relate to a contracting authorities own strategies and policies. By setting out social value priorities, as Birmingham and some other UK councils have done, this requirement is covered.Somecouncil’s, including Birmingham, are requiring contractors to pay the living wage, which is higher than the legally mandated living wage. This is permissible under EU procurement law, but only for those employees working directly on a contract. Authorities cannot insist that a business pays all its staff the living wage.
Procurement rules have always allowed social value to be taken into account. European Commission 2010 guidance, “Buying Social: A guide to Taking Account of Social Considerations in Public Procurement”, covers the promotion of employment opportunities, social and labour rights, social inclusion, ethical trade issues, corporate social responsibility and promoting Small to Medium sized businesses.The commission intended this guidance to highlight the contribution public procurement can make to stimulate greater social inclusion”So, why have we not seen more social value commissioning. I believe it is due to the complexity of procurement rules. People are unsure what they can and can’t do. Also short term savings being prioritised over long term value.One of the areas that is very clear in procurement rules is the principle of non discrimination against bidders from other member states. However, growing the local economy is a priority for many local authorities.
The principle purpose of the Directives remains that of opening up procurement markets to competition across the EU, but the new rules have also ben revised and modernised “in order to:-increase the efficiency of public spending, facilitating in particular the participation of small and medium-sized enterprises in public procurement and to enable procurers to make better use of public procurement in support of common societal goals (Recital 2)The new rules now clearly state that award criteria can include social and environmental characteristics. Contracting authorities may exclude a tenderer who does not comply with certain social and environmental laws.There has also been removal of the distinction between Part A and Part B services and the introduction of a new “light touch” regime for health, social and related services. Again, changes here are not radical, because Part B services were effectively light touch anyway. But it could help social purpose organisations and the creation of social value in a number of ways:National rules have to be developed by each country for light touch services. There is the opportunity for this to lead to a simple, proportionate process. National rules could include not using price only to evaluate tenders and a requirement to consider social value. However, if requirements are not clear, public bodies could go back to following the full rules, as often happened with Part B services.The other benefit of the “light touch regime” is that the threshold is raised to 750,000 Euros. It then provides greater clarity that any contracts below this threshold will sit outside of the European Procurement Directives. This removes the fear of breaking the EU rules and may provide the space for procurement to become less risk adverse and more creative. It could lead to better dialogue with social purpose organisations and more innovative solutions to social problems.Other requirements of the new Directives that are aimed at helping small organisations win contracts, and therefore should be beneficial to social purpose organisations include:Large contracts must be dividedinto separate lots. If not, then this has to be justified. This could help stem the move to larger and larger contracts, which are often seen to be more efficient, but can exclude small and local bidders. Public bodies cannot require the minimum turnover of organisations to exceed two times the estimated contract value. But we feel more needs to be done to stop discrimination against not for profit organisations in financial evaluation.Clarification has been provided that contracting authorities may consult with service providers before going out to tender. We need more of this and it to be done better. And when considering social value, consultation needs to include wider communities.Finally, reserved contracts, for organisations whose main aim is the employment of disabled or disadvantaged persons. These contracts can now be awarded where 30% of the workforce is disabled or disadvantaged. Previously it was 50%.
Eu procurement workshop
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Maximising opportunities for social value
creation in the context of EU procurement
Policy and Research Officer
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• UK implementation of social value
• What the procurement rules do and do not allow
• The new EU Procurement Directives
• Complexity and challenge
• Lessons learnt
• French example: presentation of the social/ disability
• Discussion: sharing learning, moving forward
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So what is social value?
• A way for public bodies to achieve wider policy
objectives through their purchasing power.
• Additional outcomes/benefits that are not
directly related to the original intention of the
service. These outcomes benefit the wider
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• Clear political commitment to social value through Cabinet
backing, social value aligned to the leader’s policy statement
and tools such as the Business Charter for Social
Responsibility to provide instruments for securing value.
• Future commissioning and contracting decisions will take
account of the principles of the charter and it will form part of
the terms of new contracts
• Examples include: a requirement to pay living wage, support
the local economy by choosing suppliers and sub-contractors
close to point of delivery, Provide support to third sector
organisations and work with third sector organisations to
deliver services and contracts
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• Procurement rules have always allowed social value
to be taken into account
• But do not allow anything that will discriminate
against bidders from other member states –
contracts cannot be reserved for bidders from a
certain area or a certain sector.
• Part B contracts – UK has tended not to apply
different processes for Part B services. Have moved
away from grants and reserved contracts
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The new EU Procurement Directives
• Increased focus on achieving wider policy objectives
through procurement , but no dramatic changes
• Stress the types of services not covered by the
Directives and introduce the “light touch” regime for
health, social and community services
• Remind us that procurement rules regulate ‘how’
goods and services are procured, not ‘what’ is
procured. It is for contracting authorities to decide
what they value.
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Complexity and challenge
• Risk adversity
• Short term cost versus long term savings
• Silo working
• Supporting the local economy without breaking the
principle of non discrimination to other states
• Measurement and evaluation – for both providers
and commissioners. Evidencing ‘what works’.
• Making the new “light touch” regime work
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• Strong political leadership is needed to embed across
commissioning and procurement.
• Corporate wide social value policies and strategies
should be adopted.
• Communities and social purpose organisations need
to be more involved in creating solutions.
• Measurement and evaluation continues to be
complex and confusing.
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• What are the main challenges and barriers to
achieving social value:-
1. Because of the EU Procurement rules
2. At a local/national level
• What can contracting authorities do to
overcome these barriers?
• What do voluntary sector and social purpose
organisations need to do?
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Find further resources on social value at