Summary

The opportunity to respond to the Government’s consultation process on embedding social values in procurement is coming to an end on 10th June 2019. We discuss the proposed draft evaluation criteria, issues in interpreting what the guidance means in practice and the potential pitfalls of compliance

The Cabinet Office is currently mid-consultation on its latest proposals to increase social value outcomes in public procurements. The Consultation documents can be found here and responses are requested before 10th June 2019.

The main substance of the proposal is that it will be required for any central government department, their executive agencies and non-departmental public bodies to consider taking account of social value and impact as part of the award criteria in the procurement process, where the social impact is linked to the subject-matter of the contract and proportionate to what is being procured.

“Social value” is described as the “wider financial and non-financial aspects of projects including the wellbeing of individuals, communities, social capital and the impact on the environment”.

This is intended to go further than the existing obligation under the Public Services (Social Value) Act 2012 as the Act does not oblige public bodies to include specific evaluation criteria on these matters. Rather it obliges public bodies to consider, in respect of procurement for services, how the economic, environmental and social well-being of the relevant area may be improved by what is being procured and also how, in conducting the procurement, they might secure that improvement.

Annex A to the Consultation provides a schedule of suggested evaluation criteria, sub-criteria and questions to test each criterion. The high level criteria are: Diverse Supply Chains; Skills and Employment; Environmental Sustainability; Inclusion, Staff Mental Health and Wellbeing; and Safe and Secure Supply Chains. The proposal is that such evaluation criteria should be given at least 10% of the weighting within the total award criteria.

The Annex also provides guidance for how such criteria can be evaluated and on-going metrics in order to monitor outcomes.

Comments are requested on i) the proposed Criteria and Metrics; ii) the proposal of a minimum of 10% scoring weighting; iii) whether responders consider that the criteria may be a barrier to SME’s or VCSEs; and iv) how the Cabinet Office can ensure that existing procurement policy initiatives can take precedence.

There are a number of queries raised by the Consultation document itself, namely clarity as to when these matters would be considered to be “linked to the subject matter of the contract and proportionate to what is being procured”. Arguably the matters are relevant to the management of any organisation operating in modern Britain and therefore what might be more useful is examples where the criteria would not be considered to be relevant or proportionate.

How far will the requirement “to consider” actually go and in practice does it represent any requirement to comply at all? It is also not clear whether the public body may decide that only some of these social value criteria are relevant i.e. whether they can pick and choose. If the body does exclude some but use others, will it need to keep an audit trail of its justification for doing so? Is the minimum 10% weight only required if all of the suggested criteria are adopted or can this be reduced if only some are adopted. For example, it may be disproportionate to give 10% of the total weighting to only one of the suggested criteria.

The key issue with the proposals (which the consultation clearly recognises with the third and fourth questions), is that the criteria seem to assume that SME’s and VCSEs will be part of the supply chain but not primary bidding entities, delivering themselves. Yet the contracts most likely to be relevant to the areas of social value are perhaps those areas where SME, charitable or voluntary organisations may also be more likely to tender directly as prime contractors. These organisations often do not have the resources to produce, implement and monitor detailed policies on the areas selected (e.g. on cyber security risks) and have a limited supply chain. They would therefore be at a disadvantage in a competition with a large corporate, adept at putting slick bidding materials together.

In our view, the key in making successful use of these criteria will be for the Contracting Authority to thoroughly understand the pool of potential tenderers for the contract (perhaps even testing the appropriateness of such criteria under market testing prior to OJEU) to ensure that the criteria do not inadvertently discriminate against those bidders in the very sectors they are intended to assist. That is, unless the public body does not wish to send a deliberate message to such entities that they would be better in the supply chain rather than as direct contractors to government.