Social Value, the latest addition to public procurement in construction

This month sees the start of a new law in UK public procurement. The Public Services (Social Value) Act 2012 was passed in March 2012 and started to take effect in January 2013. This law applies to public bodies in England, and some in Wales.  In summary it makes possible for all authorities to follow the best practice that has already been implemented by a few in using their procurement processes to better promote the well-being of their local communities.

One example of how this might work is given by Social Enterprises UK as follows:

“A housing Arms Length Management Organisation (ALMO) contracts a private sector company to undertake repair work on their properties. As part of the contract the private company states that they will provide greater social value by promoting careers in construction and trades to local schools, and they commit to employing young people and the long term unemployed. The social value comes through local jobs for local people and raising the aspirations of local pupils.”

The local authority must, as before, only accept the most economic advantageous tender. What this Act confirms is that the previous practice of ‘social considerations’ can be part of the public procurement process provided that any social considerations are (1) included in the list of various selection criteria in the call for tenders; (2) not used to exclude any bidding organisation from being scored, even if the social value element of their score is zero; and (3) can have their performance measured in an objective manner; and (4) do not disadvantage any bidder from an organisations anywhere in the EU.

The four requirements above are sometimes known as ‘local performance criteria’. This means that a tender must be open to any competent enterprise based anywhere in the EU to apply and have their tender considered fairly, but that it is possible to specify that, wherever they may be based, the local impact of the service is X. One common example is that the provision is based in a local office. Another example, more likely now, is that the provider must engage with a local Young Offenders Institution.

Further reading:

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