Last edited 21 Oct 2016

Social Value Act

The Public Services (Social Value) Act 2012 became law in the spring of 2012. It resulted form a private members bill, the aim of which was to '…strengthen the social enterprise business sector and make the concept of 'social value' more relevant and important in the placement and provision of public services'.

It applies to all public services contracts (or framework agreements), and also to those public services contracts which include the purchase or hire of goods or the carrying out of works. NB There is general government support for public bodies considering social value in the award of all contracts, whether they fall within the requirements of the Act or not.

The Act applies in England and Wales, although it excludes some devolved functions in Wales. The requirements of the Act may be disregarded under certain circumstances where there is an urgent need to procure '... to the extent that it is not practical to comply with them'.

The Act requires that procuring authorities get best value from public spending by ensuring that services are procured in a way that benefits the community. Examples of social values that could be a part of a contract might include a commitment by a tenderer to employ the long-term unemployed or people with disabilities, or using local groups to provide services where the income generated by the group is likely to stay in the local community.

The procuring authority must consider:

  • how what is proposed to be procured might improve the economic, social and environmental well-being of the relevant area
  • how, in conducting the process of procurement, it might act with a view to securing that improvement

The Act includes the provisos that:

  • The authority considers only matters that are relevant to what is being procured.
  • The consideration of matters must be proportionate.
  • The principles of value for money and equal access are preserved.

The Act does not replace existing procurement law. The requirements of the Act are thought to be allowed for within EU procurement law, as long as the social values criteria:

  • Reflect the policy of the procuring authority.
  • Can be measured against performance.
  • Are reflected in the contract.
  • Do not discriminate against EU bidders from outside the UK.

The process of taking social values into consideration might include:

  • The procuring authority developing a general social values policy.
  • When procuring specific contracts, identifying relevant, non-discriminatory matters of social value that are proportionate and appropriate.
  • Preparing verifiable, testable, weighted selection criteria along with any special conditions that might be included in contract terms.
  • Including social value criteria in OJEU contract notices and other notices, as well as tender documents.
  • Requiring tenderers to demonstrate how social value will be created and delivered.
  • Monitoring the delivery of social values.

It seems likely that the introduction of the Act will improve the prospects of social enterprises tendering for public contracts and will increase the importance of corporate social responsibility in the private sector.

There are concerns about the Act, and whether it is simply another layer of red tape which will end up being a paper exercise that actually makes it harder for small businesses to tender for public contracts. There is also concern about the lack of guidance supporting the Act, which is itself very short, and how terms such as ‘social value’ should actually be defined.

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