New Procurement Policy Note on evaluating social valueWednesday, 7th October 2020
Organisations bidding for public sector contracts should note the publication last week of PPN 06/20 which sets out new requirements on certain public sector organisations to take into account social value when assessing tenders. It represents a firming up of the Government’s policy drive to use public procurement as a vehicle through which to foster social and economic development, doubtless in part due to the challenges facing many sectors during the coronavirus pandemic.
Key change to note
The Public Services (Social Value) Act 2012 simply required contracting authorities to “consider” social value elements when setting award criteria and assessing tenders for public sector contracts.
The new PPN brings in a requirement from 24 September 2020 to explicitly evaluate social value wherever it is reasonable and proportionate to do so in the context of the particular procurement. It is not necessary to do so, however, if this would place an unreasonable burden on the contracting authority’s procurement team, or upon suppliers. To that extent then, there is a grey area in the scope and application of the new requirement.
Contracts for £10m+ in the Construction, Capital Investment and Infrastructure sectors should continue to use PPN 09/16 (which is to be updated).
New “Social Value Model”
Annexed to the PPN is a new “Social Value Model” which should be used in all procurement from January 2021. This Model is the end product of an ongoing project to harness best practice from local and central government as well as the private sector, and has been updated in the light of Covid 19. This will come as no surprise to central government or NHS bodies who have incorporated social value in to the specification of many procurement exercises. In Wales procurement teams will also be aware of the Well Being of Future Generations (Wales) Act 2015.
The Model standardises the way social value is to assessed, with some flexibility for procurement teams to select the weighting given to it (subject to a minimum weighting of 10%). Further guidance is to be issued on the Model, and e-Training is available for procurement teams. The Model takes the key themes of Covid 19 Recovery, Tackling Economic Inequality, Equal Opportunity, Fighting Climate Change, and Wellbeing, and attaches certain desirable goals within those themes that a public contract might be evaluated upon.
A good example of how this approach can be utilised is the refurbishment of the headquarters of Public Health Wales. This was inextricably linked to social value and public health. 94% of its office furniture was recycled or refurbished and 41 tons of waste that would have gone to landfill was saved.
The PPN is non-statutory government policy and guidance and is not a part of the Public Contracts Regulations 2015; as such a failure to follow it does not amount to a technical breach of those regulations upon which a supplier could base a procurement challenge.
However, in-scope authorities should follow best practice and government policy, not least as it may lead to improved contractual outcomes and better services. Suppliers who feel their social value offering is not being properly credited could complain to the Public Procurement Review Service, potentially leading to sanctions and embarrassment for the Authority involved.
Procurement teams should use the time between now and January 2021 to familiarise themselves with the new Social Value Model and consider how they will factor this into their criteria setting processes and development of evaluation methodologies. It might be worth establishing internal consensus and guidance around which types of contract you anticipate will fall within scope of this PPN, and where you consider that it will not be relevant or proportionate to apply it. It is likely this decision will have to be take in relation to each particular contract.
As with every decision, be sure to document how you decide to approach the question of taking social value into account in the Regulation 84 report for each procurement on a case by case basis.
Further guidance is due to be published so do watch this space for our update on that.
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Mills & Reeve