An Introduction to Social Value in Procurement FAQs
Introduction to Social Value in Procurement – FAQs Q1: What is social value? A: There is no single, universally accepted definition of social value. Social value relates to the positive impact delivered by an organisation as a result of their activities. This positive impact can be directly through the day-to-day activities of an organisation, but in the context of a public sector contract it must be additional social, economic and environmental benefits delivered by suppliers within a defined geographic area beyond the goods/services being procured.
Q2: Why is social value important when tendering for public sector contracts? A: Central Government legislation and guidance requires that public sector buyers must consider how they can maximise public benefit and positive impact by achieving wider socioeconomic benefits when procuring goods/services. As a result, tenders typically include a social value question or section weighted at 10% of the overall evaluation. From a supplier’s perspective, this means social value will help to inform the award of public sector contracts, so it is important in order to maximise competitiveness at tender stage. Social value is also important to suppliers in a public sector tendering context as winning contracts will provide further opportunities to have a positive impact.
Q3: Outside tendering for public sector contracts, are there any other reasons why social value is important to a supplier? A: An increased focus on social value has the potential to deliver various benefits for a supplier beyond increasing the competitiveness of bids for public sector contracts. A demonstrable commitment to social value could enhance a supplier’s reputation amongst current and prospective customers, including those in the private sector, and help to attract and retain staff. There may also be new, potentially innovative or efficient ways of working that arise from integrating social value considerations within day-to-day operations.
Q4: What kinds of initiatives and activities would deliver social value? A: There are an unlimited range of initiatives and activities through which suppliers can deliver social value. Examples include creating new jobs and appointing local SMEs as supply chain partners to deliver economic benefits; implementing measures to improve
physical and mental health and wellbeing amongst the workforce and volunteering to benefit society; and planting trees or improving green spaces to positively impact the environment. Organisations and suppliers should consider how to maximise impact through their initiatives and activities, often by achieving a combination of economic, social and environmental benefits, for example, making job opportunities visible to disadvantaged groups or delivering training workshops online to maximise access and reduce carbon emissions associated with travel.
Q5: Is social value the same as corporate social responsibility (CSR)? A: No, while the two may be related there are some important distinctions. In the context of procurement and tendering, social value is contract-specific and relates to a supplier positively impacting a defined local area through quantifiable commitments. CSR is organisation-wide and relates to suppliers being accountable and able to demonstrate compliance with relevant legislation and standards (i.e. they are a ‘socially responsible’ organisation).
Q6: If an organisation is a start-up/newly incorporated or a micro-SME, can they still deliver social value? A: Yes, organisations of all sizes can deliver social value by leveraging existing resources and relationships and considering proportionate ways in which they can feasibly deliver a positive impact locally. In the context of procurement and tendering, commitments would be forward-looking and related to the contract in question so suppliers would not be constrained by having not delivered social value previously.
Q7: What is meant by relevance and proportionality in relation to social value? A: In the context of a public sector tender, a buyer’s expectations with respect to social value should be relevant to the nature of the works/services to be provided and the geographical area in question, as well as proportionate to the value and duration of the contract. Suppliers will be evaluated with these principles in mind. From a supplier perspective, these principles also apply in terms of how they as an organisation are best placed to have a positive impact and deliver new or additional value locally.
Q8: Can social value only be delivered by an organisation directly?
A: No, social value can also be delivered by, or in partnership with, both suppliers and subcontractors. In the context of tendering for a public sector contract, social value commitments made by supply chain partners can be included in an organisation’s bid as long as they are specific to the contract in question. On the other hand, a supplier can ‘advertise’ the social value they generate, or can commit to delivering, to make them a more attractive partner for another organisation, for example, a specialist provider looking to deliver work on behalf of a Tier 1 contractor.
Q9: How can suppliers provide specific, measurable commitments which are relevant and proportionate to a contract if the scope is undefined at tender stage? A: For contracts where the scope is undefined at tender stage, for example, a framework agreement, suppliers can still provide specific, measurable commitments by presenting these as conditional and based on the work which is ultimately delivered (e.g. making commitments per project, per £100k of framework turnover, etc.). As well as providing the buyer with what they need to assess commitments quantitatively at tender stage where that is required, this approach will also help suppliers to demonstrate they have incorporated the principle of proportionality within their commitments.
Q10: If a supplier does not have a presence within a particular area, how can they commit to delivering social value there when tendering for contracts in that area? A: Suppliers should think about what they can do, considering the key social value principles of proportionality and relevance to the contract in question, rather than focusing on what might not be feasible. They can therefore consider commitments which could be delivered remotely, through their supply chain, and/or by partnering with other organisations/charities in the area in question. Suppliers should also keep in mind that their commitments are forward-looking and contract-specific, so they are in no way constrained by what they currently do or have done in the past.
Q11: Will delivery of social value be monitored and measured by public sector authorities throughout a contract? A: Yes, social value will be monitored and measured throughout the delivery of a contract, with the commitments made at tender stage being contractually binding. For this reason, tender questions on social value often ask suppliers to describe their proposed approach to monitoring, measuring and reporting social value delivery throughout a contract. Suppliers will also be required to evidence social value delivery.
Q12: How can a supplier evidence delivery of social value? A: Social value delivery can be evidenced in a variety of ways, both quantitative and qualitative. A supplier can track and report the amount of social value they are delivering by recording details such as number of people recruited or retained to deliver a contract, hours allocated to volunteering and supporting community projects, and the value of donations to local charities. The impact of a supplier’s social value initiatives could be evidenced through case studies, photographs and feedback or testimonials received from beneficiaries.
Q13: What is the TOMs System? A: TOMs (which stands for ‘themes’, ‘outcomes’ and ‘measures’) is a social value measurement system developed by Social Value Portal in conjunction with organisations from the private, public and third sectors. It provides a standardised approach to ‘valuing’ commitments made by bidders at tender stage, and tracking and measuring social value delivered by suppliers.
Q14: Are there any other social value measurement tools available? A: Yes, there are many other social value measurement approaches, tools and systems used. Examples include Thrive, the Housing Associations’ Charitable Trust (HACT) Social Value Bank, Social Value Engine and SROI (social return on investment). The TOMs System is one of the most commonly used approaches in the context of public sector tendering, as it allows buyers to assess different suppliers’ commitments like for like and provides a mechanism for monitoring, measuring and reporting social value delivery consistently, but there are other tools and systems available.
Q15: Why do many of these social value measurement approaches, tools and systems use monetary/financial values? A: Monetary/financial values are commonly used as a proxy to standardise social value measurement, allowing for like-for-like comparison between bidders committing to deliver social value in different ways. In general, these values do not indicate a direct cost or level of investment from a supplier, or relate to a sum of money being exchanged between suppliers and local authorities, charities, etc. There are also measurement tools which use credits or points as a proxy for the same reasons.