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Commissioning for Social Value


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This presentation looks at commissioning for social value: an interim report produced for the Children’s Partnership in March 2014.

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Commissioning for Social Value

  1. 1. Commissioning for social valueAn interim report produced for the Children’s Partnership in March 2014 Photo courtesy of ewan_m via
  2. 2. Contents Introduction What is social value? What is the Social Value Act 2012? Challenges to implementing the Social Value Act Case Study 1 – Knowsley Council Case Study 3 - Durham County Council Case Study 3 – Lambeth Borough Council Lessons learnt so far Resources and further information
  3. 3. Introduction The Coalition Government’s Open Public Services agenda aims to improve public services, by supporting innovation and greater diversity of provision. Achieving this vision will require significant change in the way public services are commissioned. The Public Services (Social Value) Act 2012 is one tool to help improve commissioning. Introducing his Act, Conservative MP Chris White, commented that “The aim of the Act is to support community groups, voluntary organisations and social enterprises to win more public sector contracts.” The Act gives commissioners a green light to consider the additional community benefits that could be achieved, when commissioning a public service. This might mean thinking about what type of jobs or volunteering opportunities could be created, how the community will be involved, or whether the service in question could be delivered in a more sustainable way. Whatever the specifics, the idea is for commissioners to get the maximum value-for- money when commissioning services. The Act is also timely as the Government’s ongoing deficit reduction plans necessitate doing more with less. Yet too often, social value has been overlooked. Indeed some local authorities say they are simply looking for the cheapest bids, whatever the service in question. This is a false economy. To get high quality public services, commissioners should always consider three factors: quality, price and social value. This is the only way to get a true picture of value-for-money. Continued on next slide…
  4. 4. Introduction Continued from previous slide… Since the passage of the Act in 2012, we are encouraged to see many local authorities taking a more active interest in commissioning for social value. This report documents the steps that three councils have taken to develop their social value strategies. In some respects, these councils are leading the way, but they would also agree that they have learnt many lessons and still have further to go. It is hoped that sharing their experiences will usefully inform others who are considering how to commission for social value. The report case studies are based on telephone interviews carried out in March 2014. NCVO plans to conduct interviews with a wider range of councils and will publish a full report later this year.
  5. 5. What is social value? • Social value is about recognising additional social, economic or environmental benefits. • It goes beyond looking at the cost of a given contract, to looking at what additional benefits could be achieved with the spend available. • If £100k is spent on a service, social value asks ‘could that £100k be spent in such a way that it secures additional benefits for the community?’ • For example, when York Council wanted to commission a café for their offices, they consulted with the community and included various social value criteria in their service specification. The contract was won by United Response, a charity, which has provided training and employment opportunities for adults with learning disabilities through the café. • Another example is Blue Sky Development, a social enterprise that employs ex-offenders to deliver grounds maintenance and recycling contracts. By reducing re-offending rates and creating employment for people who face barriers to work, the organisation creates added social value. • In cases such as these, social value can also contribute to savings for the public sector.
  6. 6. What is the Social Value Act 2012? • The Social Value Act was implemented into UK law in January 2013. • It requires public bodies, including local authorities, to consider how the procurement of a service can improve the economic, social and environmental well-being of an area. • Social value must be considered at the “pre-procurement” stage i.e. before a service is tendered for. (See next slide) • Through consultation, the authority should determine any social value considerations and design its procurement materials to enable social value to be considered during the decision-making process. • If a potential service provider then offers added social value, above and beyond the contract specification, it should be possible for the authority to take these added benefits into account. • Chris White MP, author of the Act: “The aim of the Act is to support community groups, voluntary organisations and social enterprises to win more public sector contracts and to change commissioning structures so that a wider definition of value rather than just financial cost is considered.”
  7. 7. Consider Social Value
  8. 8. Challenges to implementing the Social Value Act • A lack of understanding about the advantages of commissioning for social value and how it can contribute to long-term savings and help tackle wider social, environmental and economic objectives. Importantly, social value should help public bodies to secure better value for money. • A disconnect between commissioning and procurement teams. Commissioners can sometimes find their proposals to incorporate social value blocked by risk-averse procurement teams misinterpreting procurement law or looking to make shorter-term savings. More training and strong local leadership is required to establish social value as a priority. • There are few mechanisms to support or monitor the implementation of the Social Value Act. No training was provided to help implement the Act and there is no data available about how it is being used. This makes it difficult to assess implementation and to spread good practice. NCVO is encouraging Government to invest more in training and best practice toolkits. • The Social Value Act only technically applies to contracts above EU procurement thresholds. This means public bodies are not obliged to follow the act for procurements under £173k. These thresholds are set to increase to £600k in 2014. NCVO recommends that – as our case study councils have done – the spirit of the Act should inform public procurement below threshold as well as above.
  9. 9. Case Study 1 – Knowsley Council (1) Background • Knowsley Council co-designed their social value strategy with representatives from the voluntary, public and private sectors. • The strategy fitted with their co-operative principles and policy of growing the social sector (already in place before the Social Value Act). • Knowsley were looking to reduce demand on public services, by making communities more resilient. Social value is seen as a key way of driving the Council’s “social growth” priority. • The Council has taken their social value strategy through the Knowsley Partnership which includes their key partners - each of whom have made a commitment to a joint social value approach.
  10. 10. Case Study 1 – Knowsley Council (2) Delivering social value outcomes • Knowsley Council are setting out social value criteria in all service contracts covered by the Social Value Act, and by using core and added social value are aiming to give a 10-20% weighting in the final assessment of bids. • So far, as part of an on-going initial evaluation, Knowsley Council has identified at least 16 contracts in which social value has been used in the tendering process. • They have tendered contracts using social value in areas of, domiciliary care worth £8m, young carers worth £50k, sexual health worth £2.9m, substance misuse worth £5.3m and smoking cessation worth £1.6m. Organisations that are delivering social value include: • Forward Together (Knowsley’s social sector consortia) who have included social value as part of tender submissions; • Activate Arts who are committed to delivering social value as part of a lease agreement for an old school site; • First Ark (Knowsley Housing Trust) who have a social audit annually and share this with partners.
  11. 11. Case Study 1 – Knowsley Council (3) Strengths of Knowsley’s approach: • Key Council members were involved in Knowsley’s scrutiny committee, which reviewed the Council’s policies on commissioning and social value. • Having “social growth” as a key policy driver has enabled social value to spread to wider parts of the Council beyond the procurement process. • With clear definitions, outcomes and measures, the Council are able to reflect social value clearly in their contract specifications and tender evaluation forms. • The social value model was designed alongside voluntary organisations, enabling them to better understand social value and how to demonstrate it. • Workshops were arranged for the voluntary sector to help them better understand social value and how this factors into the procurement process. • Where the Council looks at transferring assets to community organisations, they link the offer of a peppercorn rent to delivery of social value.
  12. 12. Case Study 2 - Durham County Council (1) Background • Since becoming a unitary council in 2009, Durham County Council has focussed on sustainable commissioning and procurement. • With the Social Value Act becoming law in 2013, the Council already had procedures in place to procure with social value in mind. • In 2013, a social value taskforce was set up - chaired by the Council - with representation from the voluntary sector, local Chamber of Commerce and Federation of Small Businesses. • The Council extended their policy to include contracts outside of public services, such a goods contracts and work contracts. • Durham have set out clear statements of policy to do business with organisations that that could demonstrate positive approaches to environmental, social and economic outcomes. • The Council acts as a hub to other organisations in offering out its procurement services, for example to local bodies such as parish councils and academy schools.
  13. 13. Case Study 2 - Durham County Council (2) Delivering social value outcomes Of a total of 79 invitations to tender (ITTs) above £50,000 since April 2013: • 44 included social value weighting in terms of social, environmental or local economic sustainability. • Of these, 11 related to recruitment and training commitments and 33 incorporated other social, environmental or local economic added value outcomes. Examples of contracts incorporating social value • A framework-based agreement with three contractors to undertake a programme of capital works to the housing stock included social value objectives such as training, education, employment opportunities, waste reduction and recycling. • Framework Tender for Timber Framed Buildings which included economic and social sustainability objectives in terms of training, education and employment opportunities.
  14. 14. Case Study 2 - Durham County Council (3) Strengths of Durham’s approach: • The council engaged with local charities and social enterprises for feedback about the Council’s process, which informed the approach the Council has taken. • Strong political leadership has been key to advancement of Durham’s social value agenda and enthusiasm from technical officers has enabled practical enforcement. • Durham County Council tries to structure its procurement process to ask for outcomes that can be directly and specifically measured. For instance, requiring a specific economic impact or a certain number of people are engaged with. In this way, it has been able to evaluate and measure the impact social value has had in the area. • The Council regularly runs supplier engagement workshops that give advice on engaging with the Council in procurement and how to write bids. • These workshops also act a sounding board for the Council, giving them an understanding of the barriers organisations might face in bidding for contracts and what the Council can do to make the process easier. • They have taken specific steps looking at removing barriers to bidding for lower contracts for voluntary organisations including making sure that any financial requirements are not too onerous and that large contracts are split into smaller lots.
  15. 15. Case Study 3 – Lambeth Borough Council (1) Background • In 2012 Lambeth entered into a broad consultation with local residents, voluntary sector groups and partners on the basis that the current model of service provision was not sustainable within the context of cuts to local government funding. • What followed was the establishment of a co-operative commission that brought together national organisations, politicians, and regional and local groups to share their thoughts on what a co- operative model of local government should look like. This set out a framework for Lambeth’s current model. • Lambeth’s approach was not solely led by the need to rethink service delivery but was part of a wider agenda about what the public sector should look like in the 21st century. • Lambeth have dissolved their service departments and replaced them with three business clusters: an ‘enabling cluster’ which supports such areas as HR, finance, and property; a ‘delivery cluster’ which covers such services as education, housing, social services and parks; and a ‘commissioning cluster’ - a partnership arrangement which includes funding an organisation ‘Lambeth Forum Network’ to act as co-commissioners with the Council. • The Council’s work is guided three broad imperatives: clean streets and a greener neighbourhood; more jobs and sustainable growth; and communities feeling safer and stronger.
  16. 16. Case Study 3 – Lambeth Borough Council (2) Delivering social value outcomes • Lambeth’s co-operative approach to commissioning has been embraced by all public bodies in the area. • Lambeth do not feel constrained by financial thresholds when seeking to build social value outcomes in to the commissioning process. • The Council provide support to their local voluntary sector to help them demonstrate their social value. Programmes incorporating social value • Community hubs will provide safe spaces for residents, community groups, social enterprises and SMEs from which they can operate and deliver services. They will provide a home where community growth, community action, volunteering and enterprise will flourish. • By 2016, Lambeth Council plans for its parks, commons and open spaces to be transformed from a traditional service model into one that embraces co-operative ambitions and behaviours. Community pioneers will be at the heart of driving change which will lead to greater financial security for parks; create new opportunities for employment and education; and improved health and wellbeing. • Remodelling of the library service will include an opportunity for staff to consider a mutual model. Successful delivery of the plan is expected to generate £11.5m of capital receipts for reinvestment over the next four years, whilst securing, or investing up to £18m of assets into the community hub programme.
  17. 17. Case Study 3 – Lambeth Borough Council (3) Strengths of Lambeth’s approach: • Strong political leadership has kept the momentum going and enabled a focus on values rather than process, even when this hasn’t made life easy for some technical officers. • Local councillors were involved in every stage of the planning process, as were the community and service users. The new constitution that resulted gave more powers to cabinet members who now have direct commissioning responsibilities and who have to sign off contracts over a certain size, bringing a democratic dimension to Lambeth’s commissioning process. • Lambeth’s strategy has been to build on an existing strong and diverse social market of small and creative enterprises, community groups, charities resident-led forum and social enterprise. This is seen as an essential step towards commissioning deep rooted social value outcomes. As Lambeth’s cooperative commissioning model develops further they see no reason why more technical areas, which may be seen as outside the realms of traditional commissioning could not be considered where councils are traditionally more risk averse. • To communicate their idea of what social value is, Lambeth are currently developing a handbook aimed at overcoming some of the barriers - such as the language often used by technical officers - preventing greater cooperation within communities and the organisations that serve them. • Over the years the council have also used ‘officer secondments’ into the voluntary sector to help build a better understanding of what the council requires in its procurement process. • Central to their approach is the belief that ‘contract compliance’ should not be something to ‘hit suppliers over the head with’ and that technical officers, providers and users can work together in a triangular relationship to evaluate and improve the commissioning process.
  18. 18. Lessons learnt so far – local authorities • Strong political leadership and ‘buy in’ from elected members is essential for any transformation of local commissioning processes. • Councils should involve the community and service users in designing their approach and identifying local social value priorities – launching an open dialogue and holding regular meetings with the voluntary sector can help to secure this engagement. • Particular effort should be made to retain staff who are core to the transformation of the commissioning culture. Constant flux in personnel is often cited as a major barrier to improving commissioning. • Providing support to SMEs and the voluntary sector to help them navigate and compete in the commissioning process will help to deliver social value outcomes. • Taking time to get things right is important. Councils need to make sure they get their communications clear and avoid mixed messages. For example, as one council highlighted to us, even the word ‘commissioning’ will often have no resonance with local residents and needs to be clearly explained. • There is a widespread but mistaken assumption that seeking social value outcomes runs the risk of legal challenge. The Social Value Act is already part of UK law and states that public bodies are required to consider social value for contracts above EU thresholds. The Cabinet Office has also issued guidance to this effect. New EU procurement directives, scheduled for 2014, will explicitly permit the inclusion of social and environmental criteria in the procurement process through a ‘most economically advantageous tender’ provision.
  19. 19. Lessons learnt so far – central government • Ministers should champion and support implementation of the Social Value Act, as part of their overall commitment to improving commissioning and achieving better value for public money. • There are 100s of local authorities and thousands of councillors across England who could benefit from sharing of best practice about how to improve commissioning and incorporate social value. There should be a specific effort to reach out to elected members. • Building on the Commissioning Academy, high quality training should be provided, particularly for procurement officers, to enable effective implementation of the Social Value Act. This should include identification of barriers facing voluntary sector and SMEs. • There remains a widespread concern that EU procurement rules prohibit the consideration of social value during procurement. This is not the case – as the Social Value Act, Cabinet Office guidance, and new EU directives make clear. Clear messaging on this point from central government will help to build confidence among commissioners – particularly when the new EU procurement reforms take effect later in 2014. • Central government should monitor implementation of the Social Value Act, in order to identify best practice and provide challenge to areas that need to make further progress.
  20. 20. Lessons learnt so far – voluntary organisations • The responsibility to advance any social value agenda does not rest solely with the public sector. Voluntary organisations have to embrace change and adopt a collaborative mind-set towards working with local authorities. • Voluntary organisations should be helping to make the case for social value. Start by familiarising yourself with current Council priorities, and talking to elected members and local authority staff about how commissioning for social value could help to achieve these priorities and better value for money. • Where there is the opportunity to engage in strategic discussions, or specific commissioning processes, voluntary organisations should embrace these opportunities and help to facilitate the involvement of their service users and local community. • Voluntary organisations that want to strengthen their position in bidding for contracts, should consider what added social value they bring and how to communicate this. In some cases, using a tool such as the Cabinet Office’s Unit Costs Database can provide evidence to support your case.
  21. 21. Resources and further information Durham County Council’s Procurement policy and strategy Knowsley: An Emerging Approach to Social Value Lambeth Council's Responsible procurement guide licensing/selling-services/responsible-procurement-guide Public Services (Social Value) Act 2012: 1 year on: value-act-2012-1-year-on Cabinet Office unit costs database: Compact Voice, Social value and the implications for local Compacts: Third Sector Commissioning Guide. NCVO and Voluntary Action Norfolk. The Public Services (Social Value) Act 2012: NCVO’s Open Public Services: Experiences of the Voluntary Sector report provides case studies on: commissioning, supply-chain management, sharing information, managing scale, new forms of finance, and managing risk