Public procurement update: Social Value requirements set to change in 2019 for government procurements

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The Cabinet Office has announced proposals for changes to ‘social value’ requirements for central government procurements to come into force by summer 2019.

In a speech at the Business Services Association Annual Chairman’s Dinner on 19 November 2018, Cabinet Office Minister, David Lidlington CBE MP, emphasised the importance of using government procurement to ‘prioritise social value’ in new ways and outlined the government’s proposed approach to social value.

By summer 2019, central government departments will be required to take into account social value, with priorities to include:

  • helping access for small businesses;
  • helping access for businesses owned by under-represented groups;
  • increased representation of disabled people in the workforce; and
  • reducing environmental impact.

The proposals are designed to strengthen the Public Services (Social Value) Act 2012 (‘Social Value Act’) by requiring central government departments to expressly evaluate social and economic benefits as part of the procurement process rather than simply considering them as part of the tender process as under the current rules. The guidance will only initially apply to central government departments.

WM Comment

The details of the proposed changes are yet to be finalised. The overarching objective for the government in procurements will remain securing ‘the best commercial outcome’. However, the new model promises a more guided approach to achieving social value through government procurement by considering key social outcomes such as promoting access for small businesses. This may lead to smaller lots and more government contracts containing social value requirements.

Private contractors bidding for government contracts may want to keep a watching brief over the proposals as they develop. Social value requirements are often a challenging area for contractors and any further government guidance may assist contractors in putting their bids together.

For local authorities, further guidance on interpreting and measuring social value may also assist them in their procurements although the new requirements will not directly apply to local authorities initially.

Social value outcomes must remain relevant and proportionate to the contract in order to comply with EU requirements. Existing guidance suggests that this can be achieved by requiring outcomes which are in line with wider organisational strategy, although depending on the particular strategy document these outcomes can often be quite broad in scope. Further guidance from the government on measuring social value outcomes and key priorities is therefore to be welcomed and we expect to see social value and the small business agenda continuing to be a focus in 2019.

Next steps

We expect the proposals to be introduced for central government departments by summer 2019.

Contractors involved in government procurements may wish to review their current social value policies against the framework of policy priorities to help to guide and strengthen their tender responses and also to identify gaps and opportunities for developing new CSR projects which will work towards achieving these outcomes.

If you require any advice or assistance on the above, please contact any other members of the team, who will be happy to help.