The new Act will refocus attention on the public benefit purpose of commissioning public services, and that can only be good for the sector, says Julian Blake.
The Public Services (Social Value) Act 2012 came into force on 31 January 2013 making it a legal obligation for local authorities and other public bodies to consider the social good that could come from a procurement exercise before they embark upon it. It is not enough to think only of price and quality.
The Act requires public bodies to judge whether the services they procure will improve the economic, social and environmental well-being of their area. There is a strong argument that this was good practice for such bodies before the Act came into force. However, it is still positive news for charities and social enterprises bidding for contracts. They already have social values at the core of what they do and the Act may increase the prospect of weight being attributed to that in the evaluation process. Although consideration must now be given to social value, charities and social enterprises won’t be given any special treatment. The onus remains on them to highlight the social benefits they can offer, in competition with other bidders.
The provision of public services by independent suppliers is big business and now worth £82bn a year. This figure is predicted to rise to £140bn by 2014; meaning that more than half of the annual £236bn public service budget will be spent on independent providers. This new Act marks an important step towards commissioners becoming accountable for the services they procure and clearly endorses the principle of social enterprise.
In 2010 the European Commission published Buying social: a guide to taking account of the social considerations in public procurement. This encouraged use of procurement to promote: “employment opportunities, decent work, social inclusion, accessibility designed for all, ethical trade and general compliance with social standards”. Public authorities have always had the power to do this, but it is rarely seriously exercised.
The Social Value Act adds to the power, an obligation: "before starting a procurement process to consider how what is proposed to be procured might improve the economic, social and environmental wellbeing of the relevant area; and how, in conducting the process the Authority might act with view to securing that improvement".
Clearly “social value” is not as easy to measure as price or quality, but its meaning can be understood instinctively and developed into tangibility. There are principles to build on for drafting social value into procurement specifications and for articulating social value in bids. There is a value to surplus (profit) being applied to public benefit, instead of going to private profit. Meanwhile, social impact methodology can provide more directly measurable social value.
There may be added value from a disadvantaged workforce delivering a service and promotion of the categories identified in Buying social. A community transport organisation might offer integration with other services, as well as direct route coverage, or enhanced environmental benefits.
Overall, this Act is good news for social enterprises and charities and good news for society. This is because it refocuses attention on the integrated public benefit purpose of commissioning, when much public procurement has become overly driven by process. The new obligation "to consider" social value is meaningful and is a forceful prompt to commissioners to be more purpose driven and creative in achieving the best value service provision.
The key for social enterprises and charities is to engage with the bidding process early to make sure the commissioners fully understand the nature of their work and the social value that they can bring to a contract. All companies will be reliant on the commissioners themselves to do their jobs properly but this is a great opportunity for social enterprises and charities, which have always placed social value at the centre of their operations, to demonstrate precisely why they exist.
Julian Blake is a partner at Bates Wells & Braithwaite
