All things considered

The Public Services (Social Value) Act 2012 is likely to bring a welcome change for public bodies and SMEs as, once in force, it will require “contracting authorities” to fully consider economic, social and environmental well-being in their procurement strategy - something many public bodies have wanted to do for some time but have felt unable, due to procurement constraints.

Social value can be defined as the benefit to the local community over and above the direct procurement. In the current climate of public spending cuts, social value is about obtaining the most out of scarce resources.

The concept is not entirely new. Many contracting authorities already consider social value as part of best practice, and local authorities are obliged to consider overall value when procuring services, as well as being under a duty to consult.

Once in force (expected in January 2013), the act will apply to any body in England that is a contracting authority for the purposes of the Public Contract Regulations 2006, as amended (the regulations).

The act will apply to all public services contracts, including services that are procured together with goods or works. However, it will not apply directly to the procurement of goods or works on their own.

What does the act say?

Contracting authorities in England will have to consider:

• How the services which are to be procured might improve the economic, social and environmental well-being of the relevant area;
• How it might act to secure that improvement; and
• Whether to undertake any consultation.

In considering how to conduct the process, a contracting authority will only be able to consider matters that are relevant to what is proposed to be procured and the extent to which it
is proportionate to take such matters into account.

Impact on procurement

The regulations already provide opportunities to consider social value relating to the performance of a public contract, as long as they are compatible with EU law and are set out in the contract documents.

The act serves as a reminder of these opportunities. Care should still be taken to ensure any social value considerations are (i) within the constraints of the regulations; and (ii) only consider matters that are relevant and proportionate to the procurement at hand.

Contracting authorities can open up their procurement opportunities to SMEs by making their processes as inclusive as possible - for example, by having minimal requirements for previous experience and/or by reducing financial thresholds, without transferring any undue risk.

Consultation

Before undertaking a services procurement, contracting authorities should identify the collective benefit to the community, including any related cost, and consider whether to go out to consultation to assist it in achieving the right balance. Any consultation could include engaging with the local community and those who use, or are likely to use, services provided by the contracting authority or those who have an interest in the area within which the contracting authority is acting (for example, a resident group) or undertaking market testing. Contracting authorities may also decide to develop their own community benefit strategy.

Having come to a decision to include social factors in a procurement, a well-structured programme should be developed, leaseholder consultation requirements considered and consideration given to monitoring performance management, perhaps by way of KPIs, in relation to aspects such as training, secondment or work experience opportunities. Clear requirements should also be provided and, where relevant, guidance on how the requirements fit together either with each other and/or with the procured service delivery, to ensure that the provider has an informed purpose and can effectively serve their social purpose.

As existing EC Treaty principles will apply to social factors, like any others, they will need to be included in advertisements, and appropriate weighting and evaluation criteria developed.

Laura Bowlt is an associate at Trowers & Hamlins