With The Procurement Act 2023 (the Act) now firmly in force, charities and social enterprises navigating public sector procurement—whether as contracting authorities or as eager suppliers—are encountering a significantly recalibrated landscape. Among the many pivotal shifts introduced by the Act, the concept of social value is notably emerging from the shadows, poised to fundamentally reshape how public sector contracts are awarded and delivered.
For years, ‘social value’ in public procurement felt like the quiet kid in the corner, always acknowledged but rarely truly invited to participate. Enter the Act, which just dragged it onto centre stage. This isn’t just a reshuffle; it’s a full-on revolution transforming social value from a shy “nice-to-have” into the non-negotiable headliner. So, for charities and social enterprises navigating the public sector arena, get ready: this is your golden opportunity to shine.
The Procurement Act for Charities: A Very Brief Recap
We’ve written and spoken extensively on the opportunities the new Act creates for charities and social enterprises. For a deeper dive into the key changes and how the Act works please see our detailed guide.
In short, the Act has promised to improve efficiency and transparency while giving greater freedom to contracting authorities and suppliers to design their own contractual processes in ways that work for them. Think of it as making it easier to do good. Key terms to keep in your back pocket include:
- Contracting authorities: Publicly funded or controlled bodies subject to procurement regulations. Some charities and social enterprises qualify due to their funding or governance structures.
- Suppliers (and bidders): these are people and bodies who engage with contracting authorities in order to win and then provide public sector contracts. Again, many charities and social enterprises are in the business of trying to land these contracts and service them to their best abilities.
- Tenders, Frameworks, Awards: these are mechanisms through which contracting authorities select supplier(s). The Act gives lots more powers to contracting authorities to set standards and make their own decisions, as long as they do so rationally and transparently.
One of the main drivers behind the Act is the desire to improve service delivery and economic growth, including broadening out supply chains. Notably, there is a new duty for contracting authorities to reduce barriers for small and medium enterprises (SMEs) which includes most charities and social enterprises.
What is this “Social Value” all about?
As many in the sector will know, “social value” encompasses a vast range of concepts, from the Institute of Social Value’s “8 principles” to the headline objectives of the Public Services (Social Value) Act (the Social Value Act) of maximising “economic, social and environmental benefits”.
At its heart, social value refers to the broader benefits that a service delivers beyond immediate economic returns. This might include local job creation, environmental sustainability, community engagement, or improved wellbeing. It’s about recognising value that isn’t always quantifiable in monetary terms. As Robert Kennedy (RFK, not RFK Jr…) put it, GDP and similar methodologies:
do not allow for the health of our children, the quality of their education or the joy of their play… it measures everything in short, except that which makes life worthwhile
For charities and social enterprises, many of whom already embed these outcomes into their day-to-day work and who have a clear direction through their charitable and not for profit purposes, the concept will be second nature.
Recognising these outcomes and following significant engagement by the UK Government with the voluntary sector, the Social Value Act came into force in early 2013. The Social Value Act placed a duty on public authorities (read ‘contracting authorities’) to “consider” economic, social and environmental objectives in the areas in which they operated when tendering for non-framework contracts. However, enforcement was weak, measurement unclear, and above all else, procurement legislation still favoured a straight “price v quality” matrix.
Following a Cabinet Office review led by Lord Young in 2015 the UK Government did publish binding policy guidance for central government contracting authorities and developed a more comprehensive assessment framework, aka the ‘Social Value Model’ (the Model) in 2021. In turn, the Model has received some criticism that it is unfairly bureaucratic (biased against SME suppliers) and tries to measure social value in numerical terms, focussing on easily quantifiable outcomes but overlooking more nuanced and qualitative aspects of social value.
Social Value & The Act: The plot thickens
The new Act builds on the Social Value Act and the Model, giving contracting authorities more freedom to define social value criteria but in connection with the UK Government’s own social missions. This is despite the fact that the phrase “social value” is never mentioned in the Act! Instead, charities and social enterprises must look to accompanying policy guidance for direction.
From MEAT to MAT: A tasty change
One of the juiciest changes? The shift from awarding contracts based on the “Most Economically Advantageous Tender” (MEAT) to the “Most Advantageous Tender” (MAT). This might sound like alphabet soup, but the implications are profound.
Under MAT, contracting authorities can consider a broader range of factors when evaluating bids. This includes not just price and quality, but also the social, environmental, and economic impact of a proposal. For charities and social enterprises as suppliers, this opens the door to making a compelling case for the added value they bring: value that may not be easily quantified in pounds and pence, but which is deeply felt in communities.
While the Act does not mandate a fixed percentage weighting for social value in tenders, it does require contracting authorities to consider how procurement can deliver public benefit. This creates a strong incentive to embed social value into tender criteria.
Active Policy Making
The National Procurement Policy Statement (NPPS) reinforces this shift and sets out the stall far more clearly on what it means to maximise both economic and social value. Contracting authorities must “have regard” to the NPPS when making procurement decisions and the NPPS instructs contracting authorities that they must consider how they can promote social value.
The NPPS outlines the Government’s strategic “missions” in the delivery of procurement, namely:
- Kickstarting economic growth (including supporting SMEs);
- Making Britain a clean energy superpower;
- Reducing crime and recruiting from groups that struggle to access employment opportunities;
- Breaking down barriers to opportunity by addressing skills gaps, facilitating access to training and removing barriers to entry for young people and under-represented groups; and
- Supporting good physical and mental health and rebuilding the NHS.
These missions are about supporting wider social outcomes and using procurement as a tool to benefit society. It adds more meat (pun not intended) to the Social Value Act’s three headline objectives. Both supplier charities, social enterprises and their contracting authority counterparts would do well to link their social outcomes to the language of the NPPS.
And there’s more! Effective from October this year, the Cabinet Office’s new ‘Procurement Policy Note, aka “PPN 002” introduces a significantly revised Social Value Model that builds in exemplar criteria, objectives and reporting metrics for assessing social value in tenders, again couched in the Government’s “mission-based” language. Interestingly, contracting authorities are told specifically that they must “apply a minimum 10% weighting (or equivalent measurement) of the total score, for social value” in tenders. That’s a pretty hefty chunk.
PPN 002 applies to all central government bodies acting as contracting authorities so is not binding on other types of contracting authority (e.g. local authorities). However, other organisations are expressly invited to apply the same or a similar approach to their own tenders. You would therefore expect to see adaptations of this model appearing across the not for profit sector over the next few years.
How Charities and Social Enterprises Can Showcase Social Value
For charities and social enterprises bidding for public contracts, the challenge is to translate their mission-driven work into procurement language. This means clearly articulating how their services deliver social value, backing this up with evidence, and with commitments that are realistic, measurable, and deliverable.
Some practical tips include:
- Tell the story: Use case studies and testimonials to bring the impact to life. Procurement officers are people too, and stories resonate.
- Use the criteria and metrics in the new Social Value Model: While not everything can be measured, data on outcomes, such as the number of people supported into employment, reductions in hospital admissions, or improvements in mental health, can be powerful.
- Align with local priorities: following the Social Value Act, many local authorities have their own social value frameworks or strategies. Referencing these directly in your bid shows that you understand and support their goals.
- Collaborate: Consider forming consortia with other charities or social enterprises to offer a broader package of social value. This can also help meet capacity or geographic requirements.
Social Value for Contracting Authorities
For charities and social enterprises acting as contracting authorities, the Act offers new flexibility to design procurement processes that prioritise social value. Lead by example! Charities and social enterprises can show how procurement can be a force for social change, not just a transactional process.
This includes the ability to:
- Set bespoke award criteria that reflect the outcomes they want to achieve.
- Use pre-market engagement to shape tenders in collaboration with the sector.
- Split contracts into lots to make them more accessible to smaller, local providers.
- Design flexible procedures that allow for innovation and adaptation.
Remember, social value is not a “one and done” consideration. The Act’s lifecycle approach means that performance will be monitored throughout the contract. Charities and social enterprises should build in robust governance and reporting mechanisms to track and demonstrate their impact over time.
The Road Ahead
Integrating social value into the Procurement Act isn’t just a technicality; it’s a cultural evolution. Primarily, it is also a clear signal that public money should work harder, delivering not just services but tangible social outcomes.
For charities and the wider non-profit sector, this is your moment. You’ve been pioneers in delivering social value for ages. Now, you have the chance to shape how it’s understood, measured, and truly rewarded in public procurement. Ready to seize the opportunity?
To hear the authors of this articles discuss the subject, listen to the latest episode of our Legal Perspective podcast, Charity Law Conversations: David Emery on the Procurement Act 2023.
If you have any questions about this article or on the issues that it has raised, please do contact its authors for further advice and support.