Okay! Here’s the deal with “social value.”
Every public authority (central government, local authorities, public charities, such as museums) has to run a public tender for any contract for goods or services above £214k, and any works (construction) above £5.31M. This threshold changes every year to stay in alignment with the EU.
These tenders are highly regulated, and must follow all the rules and regulations of the Procurement Act of 2023. If a local authority screws up the process or makes a mistake, they can be sued by the suppliers. Some large construction companies actually have teams of people to bid on tenders their firm doesn’t even want, so that they will have standing to challenge the procurement and hopefully get a payoff. Easy money.
Basically, the procurement regulations considered every “stakeholder”, except of course the tax payer.
https://www.legislation.gov.uk/ukpga/2023/54/contents
In addition to the act, the government sets out a National Procurement Policy that creates further requirements for authorities to have due regard to this and that.
https://assets.publishing.service.gov.uk/media/67ab332fd41dfb0b59cec46a/E03274856_National_Procurement_Policy_Statement_Accessible.pdf
I think I am building up the picture here that whenever a procurement person buys something in the public sector, value for money will be low in the list. They will be panicking over a range of competing requirements and trying not to get their employer sued.
In this delightful melange of competing requirements comes social value. This is where any tender must weight social value at 10%.
https://www.gov.uk/government/publications/ppn-002-taking-account-of-social-value-in-the-award-of-contracts/ppn-002-guide-to-using-the-social-value-model-html
Fulfilling the social value element of tenders is so burdensome, a cottage industry as sprung up offering advice and consultation to help authorities manage.
So what happens in practice? Tenders are set up with criteria and weightings that say: social value is 10% of a bidder’s score, and price 40%, and sustainability 10%, etc.
Bidders might be bidding to keep the lawns mown, or provide catering, or repair facilities etc. Thrown in with all the questions relevant to the service actually being bid on will be what can you do to benefit the community if you win the contract? This is where bidders come up with a range of offers, sometimes completely unrelated to the contract. They might offer apprenticeships, a donation, or other freebies.
The problems with this are:
-10% is enough to swing the scoring away from the best supplier for the relevant service
-the authority pays for this in the end, the bidders just build it into their costs
-the subject matter experts evaluating the bid are experts on the relevant service, not on whatever social value inducement is being offered
In short, it’s an inefficient way to increase social value. Much better to let an authority buy what it actually needs in an efficient, straightforward manner. The money saved by doing this could then be spent by people who know what they are doing who have a joined up plan.
I personally know of people who built up profitable firms by gaming social value.
So….that’s my TED talk!