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Why do Tenders Contain so much Social Value?

Written by Select Author


Oct 05, 2023

Big changes are happening in how the UK government buys goods and services. Instead of just looking at the cost, public sector organisations are increasingly focusing on how their purchases can help society and the environment. This is commonly referred to as "social value."

The UK is leading the way by making sure Government contracts do more than just buy things – they're trying to solve problems like unemployment, make local communities stronger, encourage new ideas, improve public services, and follow global goals for a better world.

So, what is social value? And how do I use it to win public sector contracts?

When did social value become important in tenders?

The recognition and importance of social value in public procurement have been gradually gaining traction over the past decade.

While the exact moment or event that sparked this shift is difficult to pinpoint, in 2021 the UK Government released PPN 06/20 which provided public sector organisations with a model to take account of the additional social benefits that can be achieved in the delivery of its contracts, using policy outcomes aligned with the Government’s priorities.

The PPN 06/20 Social Value Model set out a framework of social value commitments, and their order of prioritisation, to which contracting authorities and buyers should align their social value offerings. This update cemented social value not merely as ‘nice to have’, but as essential.

The National Themes and Outcomes Framework

One of the key frameworks in the United Kingdom is the concept of National Themes, Outcomes, and Measures (TOMS). These elements play a pivotal role in shaping how social value is defined, evaluated, and integrated into procurement exercises, benefiting both the Government and suppliers who aim to create a meaningful societal impact.

The TOMS provide a structured approach to assessing and maximising the social value generated through procurement activities. Under this framework, specific themes—such as employment, skills development, environmental sustainability, and community wellbeing—are identified as key areas where social value can be created.

Each theme is then associated with a set of desired outcomes that reflect the positive changes the Government aims to achieve within that area.

To ensure accountability and consistency, the framework includes measures that quantify and assess the success of these outcomes. Measures serve as quantifiable indicators, allowing the Government to track progress, evaluate the impact of projects, and compare the social value generated across different initiatives.

This structured approach ensures that social value is not just a vague concept, but a tangible and measurable outcome of procurement activities.

For suppliers, the framework provides a roadmap for creating proposals that align with the Government's social value goals and demonstrate a commitment to making a positive difference in the designated areas.

A key thing to remember, however, when making your commitments is that you may be held to deliver upon all of your commitments. Whilst each opportunity will differ, it is fairly common that you will be expected to uphold all commitments made within your social value response. As such, when using the TOMS framework you should always keep the values in mind when deciding your offering to ensure 3 key things:

  1. It is feasible for you to deliver on all commitments made

  2. It is proportionate to the contract value

  3. You aren’t committing to delivering value (hence diverting spend) away from the interests of your buyer and end user

What does social value in public procurement do?

Social value in public procurement is all about going beyond the basic transactional exchange and ensuring that the benefits of Government spending extend further into society. It involves considering the wider positive impacts that a procurement decision can have on people's lives, the environment, and the overall well-being of a community.

When Government contracts take into account factors like job creation, environmental sustainability, and community development, they contribute to the betterment of local communities through:

  • Job creation: By awarding contracts to companies that commit to hiring local residents, social value initiatives can directly impact employment rates within a community. This not only provides much-needed job opportunities but also stimulates economic activity, as employed individuals contribute to local spending.

  • Skill development: Social value initiatives often involve investing in skills training and development programs for disadvantaged individuals. This equips community members with valuable skills that can improve their employability, enhancing the overall workforce and potentially reducing unemployment rate.

  • Community wellbeing: Public services that prioritise social value contribute to a higher quality of life for the public. For example, contracts that support community programs, healthcare services, or recreational facilities lead to improved physical and mental wellbeing among local residents.

  • Reduced inequality: Social value initiatives can help address socioeconomic inequalities by focusing on marginalised and disadvantaged groups. By ensuring that these groups benefit from procurement decisions, the Government can work towards a fairer distribution of resources within a community.

Why is social value important in tenders?

Boosting local economies

Keeping money local involves directing spending towards businesses and suppliers within the same region or community, typically within 10 miles of the contracted location. This strategy has a direct and tangible impact on local economies, as it prevents resources from flowing out of the area and encourages the growth of local businesses.

When the Government prioritises local businesses in procurement decisions, it contributes to economic growth as, when local businesses receive public sector contracts, they generate revenue and create jobs within the community. This, in turn, stimulates economic growth and contributes to the overall prosperity of the region.

Similarly, supporting local businesses often means supporting sustainable practices. Local businesses are more likely to be invested in the wellbeing of their community and may engage in environmentally friendly initiatives, aligning not only with broader sustainability goals but also supporting the Government’s Net Zero by 2050 target.

Promoting local independence, local investment provides communities with greater resilience against economic shocks and external pressures. By fostering a diverse range of local businesses, communities become less dependent on external sources for their needs. This, in turn, contributes to greater job growth and increased opportunities, contributing to preserving unique character community identity.

Driving innovation through social value

Integrating social value into public procurement not only supports communities but also drives innovation in industries. When procurement decisions incorporate social and environmental goals, suppliers are incentivised to think creatively and develop innovative solutions that align with these objectives and retain their competitive edge.

By prioritising social value in procurement decisions, suppliers are encouraged to find innovative ways to provide green energy-efficient solutions. For instance, a contract for renewable energy sources like solar or wind power not only supports clean energy goals but also challenges suppliers to develop cutting-edge technologies for harnessing and distributing energy more efficiently.

Similarly, in the construction industry, a focus on social value prompts suppliers to go beyond basic infrastructure requirements. For example, a contract for building a community centre might require suppliers to incorporate sustainable building materials, energy-efficient designs, and eco-friendly waste management practices, thereby driving innovation in sustainable construction methods.

Procurement contracts that emphasise social value can also encourage the development of technology solutions that address societal challenges. For instance, a contract aimed at improving public transportation might lead to the creation of innovative mobility apps that enhance accessibility, reduce congestion, and minimise the environmental impact of commuting.

Putting it simply, embracing social value prompts suppliers to think about the entire lifecycle of products and services. By considering the overall impact and outcomes of a procurement exercise, suppliers and buyers must evaluate the sustainable outcomes of their contract and how they could foster a circular economy that minimises waste and promotes sustainable consumption.

Enhancing quality of life

By encouraging suppliers to contribute not only to the basic requirements of contracts but also to broader societal well-being, public services are elevated to a new standard. This enhancement extends beyond mere transactional exchanges, ensuring that the public receives services that are not only efficient but also holistic in their approach.

Social value-oriented contracts require suppliers to tailor their services to the unique needs of the community. To best identify and respond to the buyer’s/end user’s unique needs, take the time to research this before starting the bid writing process, looking at the buyer’s Social Value and Sustainability policies as well as any local news/initiatives associated with the buyer.

With a focus on social value, suppliers are prompted to engage with the community to understand its needs and preferences. This engagement often leads to innovative service design that reflects the community's aspirations, thus increasing satisfaction and engagement among the public.

Promoting inclusivity, social value encourages suppliers to create programs that benefit marginalised populations. For example, a contract for a community centre might stipulate that a percentage of programs are designed to support youth, the elderly, or disadvantaged individuals.

To evidence commitment to delivering this, suppliers will be required to deliver evidence of any action they will take to support this during the contract lifetime, as well as provide evidence to show existing alignment to the buyer’s interests.

Long term savings

While it's true that social value initiatives may involve initial costs, the long-term benefits they offer can lead to significant cost savings over time. By considering the broader societal and environmental impacts of procurement decisions, the Government can make investments that pay off in multiple ways, ultimately resulting in more efficient resource allocation and reduced financial burdens.

Social value initiatives that focus on skill development, job creation, and supporting disadvantaged individuals can lead to reduced unemployment rates. This, in turn, lowers social costs related to unemployment benefits and support programs, providing long-term economic relief to the community.

Meanwhile, contracts that enhance public services through social value often contribute to improved community health and wellbeing. By preventing health issues, promoting healthier lifestyles, and reducing the burden on healthcare systems, these initiatives lead to long-term cost savings in NHS healthcare expenditure (also delivering greater value for money to the taxpayer).

Alternatively, by encouraging suppliers to adopt eco-friendly practices, resource-efficient technologies, and waste reduction strategies, governments can mitigate future expenses associated with environmental cleanup and restoration.

Regardless of the desired outcome, social value initiatives often include preventive measures that address potential issues before they escalate. This makes communities more resilient to economic shocks, reducing the need for emergency funding and assistance during difficult times.

Transparent and accountable governance

The integration of social value into public procurement not only drives positive societal outcomes but also contributes to transparent and accountable governance. By expanding the scope of procurement considerations beyond mere economic factors, governments demonstrate a commitment to ethical decision-making and responsible resource allocation.

For example, social value prompts decision-makers to consider a broader range of factors, including social, economic, and environmental impacts. This holistic approach ensures that procurement decisions are well-informed and consider the potential consequences for all stakeholders involved.

In addition, social value fosters a more ethical procurement process. Suppliers and contractors are selected not only based on cost but also on their commitment to social responsibility, promoting fair labour practices, and contributing positively to the community.

The inclusion of social value criteria in procurement decisions increases transparency by making the decision-making process more visible and understandable. This transparency fosters public trust and accountability, as the taxpayer can assess how public monies are being utilised for the greater good.

Overall, social value-oriented procurement decisions align with the values and aspirations of both Government authorities and the public. This alignment reinforces the ethical foundation of governance, ensuring that public spending resonates with societal values and long-term goals.

Public engagement

The infusion of social value into public procurement doesn't just reshape governance and services; it also opens doors for public empowerment and participatory democracy. By involving the public in procurement decisions, the Government creates a collaborative platform that champions shared responsibility and collective progress.

Public engagement initiatives provide a space for individuals to voice their concerns, aspirations, and ideas. This collaborative exchange of perspectives fosters a stronger sense of community ownership and civic pride. Moreover, it ensures that procurement choices align with the genuine needs of the people they are meant to benefit.

As the taxpayer engages in the dialogue surrounding the social value, a dynamic feedback loop emerges. The Government gains valuable insights into community priorities, allowing them to make more informed and context-sensitive decisions.

This transparent and inclusive approach to governance builds trust between authorities and the public, enhancing accountability and reinforcing the notion that public servants are stewards of the collective welfare.

Where can I find socially conscious tenders?

You can find socially conscious tenders on the Pagabo Framework. At its core, the Pagabo Framework is more than just a procurement mechanism; it's a platform for innovation, collaboration, and social responsibility. This framework, known for streamlining the procurement process, is now extending its reach to embrace social consciousness.

It's about realising that the impact of procurement choices goes far beyond the contracts awarded—it's about creating a lasting legacy of positive change.

One of the standout features of the Pagabo Framework's social consciousness is its commitment to empowering local communities. By focusing on local suppliers and contractors, the framework boosts economic growth in regions, prevents economic leakage, and fosters a sense of community pride. The result? Procurement decisions that don't just bring about physical changes but also instil a sense of ownership and positive transformation within communities.

Top tips to maximise your social value score

To excel in public procurement exercises and secure contracts, suppliers increasingly need to strategically maximise their social value scores. Here are some top tips to help you stand out and demonstrate your commitment to creating a meaningful impact:

  1. Understand the criteria: Thoroughly review the social value criteria specified in the Invitation to Tender (ITT), Request for Proposal (RFP) and specification. Understand the goals, outcomes, and metrics that the buying authority is seeking before you start writing, and research to identify ways in which you could add value. This knowledge will guide your approach and ensure alignment with the desired impact areas

  2. Tailor your approach: Customise your bid to reflect the specific needs and context of the project and the community it serves. Address how your solution directly contributes to local challenges, making it clear that you're invested in creating positive change

  3. Collaborate with stakeholders: Engage with local stakeholders, community groups, and potential beneficiaries. By involving them in your proposal's development, you show a genuine commitment to understanding their needs and ensuring your solution is community-centric

  4. Demonstrate innovation: Highlight how your solution goes beyond conventional approaches to address challenges creatively. Showcase how your proposal introduces new ideas, technologies, or processes that can lead to sustainable and innovative outcomes

  5. Quantify impact: Provide concrete and measurable metrics to demonstrate the social value your proposal will generate. Use data to showcase how your solution will create jobs, improve well-being, reduce carbon emissions, or enhance other relevant indicators

  6. Show long term benefits: Emphasise how your impact will extend beyond the contract's duration. Highlight the potential for lasting positive changes in the community, whether through skills development, economic growth, or other enduring benefits

  7. Community engagement: Describe how you plan to involve residents/end users and stakeholders in the project's execution. Demonstrating a commitment to community engagement underscores your dedication to participatory decision making

  8. Partnerships: If applicable, showcase any partnerships you have with local organisations, nonprofits, or other entities that amplify your solution’s positive impact and expand its reach

  9. Environmental considerations: Highlight any environmentally friendly practices, resource-efficient technologies, or sustainability initiatives that align with both social and environmental goals

  10. Track record: Showcase your experience and successful track record in delivering similar projects with significant social value. Share case studies, testimonials, and outcomes from past initiatives to build credibility

  11. Transparency: Be open about your intentions, methodologies, and expected outcomes. Transparency builds trust and reassures evaluators that your proposed impact is credible and achievable

  12. Measurements and reporting: Outline how you plan to measure and report the social value generated during and after the project. Demonstrating a commitment to accountability enhances the credibility of your bid

By combining a strategic approach with a genuine commitment to creating positive change, you can maximize your social value score in public procurement exercises.

Remember that social value is not just a buzzword – it's an opportunity to showcase your dedication to responsible business practices and the betterment of the communities you serve.

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