The future of social procurement
This article was written by Interim CEO of Social Value UK, Catherine Manning.
This month Supply Change held their first Social Procurement Festival, a great day bringing together suppliers and buyers with a shared vision of increasing their social value to make connections, and hear from leaders across public, private and civil society about how they are maximizing social value through procurement.
This blog is a few reflections on social value and procurement, some of the movements taking place here in the UK, and ‘what next’ if we are serious about driving increased social value through our procurement spend.
Increase in need
The importance of social value in procurement is becoming more obvious by the day. In procurement Social Value is about making sure that what we buy is creating benefits for people, stakeholders and society as a whole. In the context of the pandemic, there is a huge increase of need both socially and environmentally, as well as growing recognition of the embedded structural inequalities we need to tackle. If we are honest, we can see that inequality is getting worse not better and there is a critical need here in the UK. Trust is needed on all sides to develop the collaboration necessary to address these, and there is increasing pressures for organisations on all sides to respond to these growing needs.
Huge opportunity, big risk
The opportunity is huge – £290billion per year in public sector procurement. But, so therefore is the risk. A risk if not considering social value, but also a risk in doing so. As social value weighting in contracts shifts with greater weight on the social value element, the importance of confidence in claims and management of contracts is increasing – this doesn’t just mean robustness of metrics, but that these are actually reflective of people’s lives and experiences – are we checking numbers or checking standards of practice and process? Social value is about people’s lives, changes to people’s lives, and making those changes better, our social value practice should be about accountability for that change to those affected.
Actions to date
There have been many steps over the last decade bringing us towards embedding social value into procurement. Some (not all) captured here…
- The launch of the Public Services (Social Value) Act in 2012, and the strengthening of this in 2018 moving from ‘consider’ to ‘account’ for social and economic benefits, following significant failures such as Carillion which shook people and organisations across all sectors.
- The launch of the Procurement Reform (Scotland) Act 2014, requiring procurement to consider how to ‘improve the economic, social, and environmental wellbeing of the authority’s area’ in Scotland
- The Wellbeing of Future Generations Act Wales 2015, world leading in its requirement for public bodies in Wales to think about the long-term impact of their decisions, to work better with people, communities and each other, and to prevent persistent problems such as poverty, health inequalities and climate change. Recently a Wellbeing of Future Generations Bill is being driven forwards for the UK in Parliament which would be a huge step forwards in considering long term wellbeing in our UK public provision.
- Late in 2020 Central Government publish PPN 06/20 and the associated Social Value Model, requiring all Central Government contracting authorities to take account of social value. The strength of the language on taking account is important here, along with other laudable aspects of the model, as well as some areas where more could be done. There are many training sessions and workshops taking place to help us all to use the model, including some through the SVUK team.
- Recent review and changes to the Green Book in 2020 which sets out how decisions in major investments are appraised with the aim of assisting to create proposals that meet government policy aims and deliver social value. The changes aimed to address issues with the guidance that could have led to disproportionate investment away from poorer areas, directly contradicting the government’s Levelling Up agenda.
- A recognition of the importance of cross sectoral collaboration to meet our shared societal needs can be seen through the development of the Outsourcing Playbook in 2018, and subsequent updating in 2020 to improve relationships with the private sector, and importantly also with social enterprise and charities.
- Underpinning sustainable procurement is ISO 20400 guidance for Sustainable Procurement, linked to ISO 26000 for organisations acting in a socially responsible way.
- Updates to overall procurement practice are being pushed forwards through the Transforming Public Sector Procurement Green Paper, which is aiming for value for money, innovation , greater engagement with small businesses, charities and social enterprises, value and transparency and continuous improvement. The aim is leveraging public procurement to support strategic priorities and to achieve social and environmental value beyond the primary benefit of the specific contract, and a move from MEAT (most economically advantageous tender) to MAT (most advantageous tender).
Standards of practice matter
This could all indicate a direction of travel, and see change for how we do procurement, and therefore what goods, services and works get resources and what activities take place that affect all of our lives. But the devil is in the detail. Practice, implementation and standards matter. There has been a lot of development of practice with use of shared measurement frameworks such as the National TOMs , or more bespoke practice development through calculators such as Social Value Engine, Social Profit Calculator, the long established HACT Social Value Bank , and more recent developments such as the CLES and Making Spend Matter ‘Spend Analysis Tool’.
There are also movements in the development of overarching standards of sustainability accounting, Sustainability Accounting Standards, looking at the financial impacts of sustainability concerns, have been around for a while, as have other ESG frameworks (CDP, CDSB, GRI, IIRC and SASB). More recently, the WEF released a report on common metrics and disclosures for ESG. The UNDP SDG Impact Programme have released SDG Impact Standards for Private Equity, Bonds and Enterprises. Importantly they are also looking at assurance of these in practice.
In the UK we have also recently welcomed the BSI BS 8950 Guide to Enhancing Social Value an important step with a focus not just on understanding social value, but enhancing it, and explicitly recognising that to do this we have to acknowledge that some impacts are unintended, and some negative, and that rather than focusing on a single tool, we should be focusing on shared standards of practice and the right tools and measures for our own context.
Challenges and first steps
These broad movements can help with driving us to be able to take our first or next steps, and there are more and more people wanting to do so. There are things we can all do to help each other to move forwards together:
- Transparency around practice, sharing of practice will be key for us to move forwards. There is a varied understanding of ‘good’ and ‘bad’ practice making it challenging to know where to aim for next steps. Talk! And listen. Reach out to those that are already ‘doing it’ – and encourage all of those already doing it to share.
- How we define value matters – value to whom. Is it us defining what is important, or are we asking those affected? There are still a wide range of understandings of social value (the UKGBC Social Value Framework lists 23 different definitions!). Gain a shared understanding of what social value is – about peoples lives – in your company but critically with those that are affected and use this to engage across your company / suppliers and communities.
- Being willing to change practice – everyone needs to be willing to change if we are going to address the big challenges we all face. This isn’t just about process change, this is about mindset and culture change
- Focus on collaboration – make links with social enterprises and social purpose organistions. Social Value Brokerage is key, as is supporting our networks and supply chains. Capacity building for suppliers (VCSE / SMEs) is really important, as well as addressing barriers to access.
- What we measure and what we manage matter – there is still conflation of outputs of an activity, and the social outcomes or ‘changes’ people actually experience. Management of social value claims throughout a contract is imperative.
- Who is checking? Assurance or verification of social value claims is increasingly important. Social Value UK have been at the forefront of social value assurance since the start of the network, and there is increasing recognition of the need for independent verification, not just of number but of practice. SVUK advocate for the Social Value Principles which is an accountability framework first and foremost.
There is lots to do! And we have a strong and supportive network here at Social Value UK, helping one another to speed up and take our next steps together. Social value in procurement is an immensely important driver to make the changes we all need and address the challenges we face. There is certainly more to come, we are looking forward to working with you all!