Impact 101: Social Value & Procurement
At Impactful, we’ve been taking a keen interest in the developments around Social Value taking place in the UK. Social Value, as a concept, is not new. Defined as ‘the quantification of the relative importance that people place on the changes they experience in their lives’ by Social Value International, Social Value and its measurement methodology social return on investment (SROI), has been a leading impact measurement framework & tool in the impact ecosystem for many years.
What has changed this year is the UK Government’s Procurement Policy Note 06/20, published in September 2020, with changes coming into effect as of 1 January 2021, launching a new model to deliver social value through the government’s commercial activities. This new model requires social value to be ‘explicitly evaluated’ in all central government procurement rather than just ‘considered’ which was previously required under the Public Services (Social Value) Act 2012.
This mandatory evaluation will apply to all construction, capital investment and infrastructure projects over £10 million with a minimum weighting of 10% of the total score given to the social value, to ensure that it carries a heavy enough score to be a differentiating factor in bid evaluation.
What does all this mean? In simple terms, when the Government buys from the private sector, it will be explicitly asking for the social value created by companies bidding for that work, and will use that in making a decision of which supplier to go with, alongside quality of products & services and price. The Government has recognised that they can use their purchasing power as another leverage point for achieving social and environmental policy outcomes in society. In particular the five key themes are:
- Covid-19 recovery
- Tackling economic inequality
- Fighting climate change
- Equal opportunity
- Wellbeing
There are huge implications and opportunities for the private sector and the third sector as these changes come into effect, so we wanted to explore what it all means with three businesses innovating in the procurement and social value space.
We spoke to Cimple, Supply Change and S2 Associates for their perspectives on how these changes to the Government procurement process will affect business in the years to come and how they’re taking advantage of the business and impact opportunities it presents.
Cimple: Simplifying the procurement process
What is Cimple and what is the problem it’s trying to solve?
With the Government spending around £280bn each year in procurement alone, and despite efforts to simplify it, the process remains inefficient. Existing procurement platforms are outdated, expensive and too complex for the average user. Due to this, procurement is regularly cited as the blocker for value for both buyers and suppliers.
In an effort to improve the relationship between buyers and suppliers, Cimple is a free to access marketplace that brings buyers and suppliers together through leading user experience, enabling increased value for both parties.
Where does Social Value come in?
Cimple is one of the few procurement solutions out there to have digitally enabled social value assessments built into the purchasing process, making it easy to evaluate the social value being created by a buyer or supplier. Cimple was born out of delivering better value to the public sector and the taxpayer. With the UK Government representing a fifth of GDP it is crucial for the Government to lead the drive towards creating more social value across both public and private sectors.
What do you think is the opportunity and challenges for buyers and suppliers when it comes to implementing SV?
The opportunity for public sector buyers, and buyers in general, is they now have the ability to increase their social and environmental impact using Government policy objectives as minimum requirements for change.
The challenge for buyers will come in the application and assessment of the themes, outcomes and measurements, a key part of the Policy Procurement Note, making them consistent, a large part of what we have enabled (and why we have built) Cimple.
For suppliers, a focus on social value will support increasing levels of spending going to small and medium sized enterprises (SMEs) and voluntary, community and social enterprises (VCSEs), where it is focussed on improving outcomes as a bi-product. There’s a huge opportunity for suppliers not already investing in their impact to prioritise positive outcomes for people and the planet, in order to increase their chances of winning public sector contracts.
The knock on effect on outcomes in society and for the environment could be huge if many more suppliers are incentivised to take their impact seriously. The challenge for suppliers will then be how you measure the impact of delivery after being awarded a contract, something that we will be enabling through Cimple very soon. We have some exciting changes coming to the platform in June, but if you can’t wait till then, register here for access to the latest release of our website.
Supply Change: The power of procurement for social change
What is Supply Change?
Supply Change exists to give social enterprises better access and visibility to public and private sector supply chains. Since it was founded in 2018, Supply Change has been a trusted source for buyers to find and buy from social enterprises and has helped multiple buyers procure with social and environmental value at their centre.
Why does procurement matter?
Every pound spent is a vote cast for the type of society we want to live in, whether that be as an individual or organisation. As already mentioned, across sectors the size of spend is massive — £280bn per annum for the public sector alone, and in the construction sector alone it’s £110bn. Redirecting this spend from larger, private organisations that often don’t prioritise social value, is hugely transformative. The procurement decisions taken by the organisation towards the top of the supply chain can have a huge impact on a multitude of businesses and communities in the UK and all over the world.
What’s the impact of procuring from Social Enterprises?
What we are seeing now are government and business leaders prioritising social value. The potential impact of procurement is huge; the money is already being spent but can do so much more good if directed towards social enterprises suppliers.
If we take just one of our suppliers, Recycling Lives, as an example — in 2018/19, they created savings for the taxpayer and communities worth in excess of £11m. By rehabilitating offenders, £7.4m was saved for central government and 96% of their employee intake have been rehabilitated, reducing the need for prison places. A further £73,000 was saved for local government by supporting homeless men and reducing demand for welfare payments. Even more, they redistributed one million meals to hundreds of charitable groups and thousands of individuals helping them save £3.5m on their food costs. This is what one supplier can do, in one financial year.
What does it take to change suppliers?
An organisation needs to be confident that if they switch to a new supplier that the supplier is able to deliver the same level of service as they are used to or better. All suppliers on the Supply Change platform have passed Supply Change checks to ensure they are contract-ready and deliver both quality and impact. With these checks, buyers can feel confident that they can easily switch to our trusted Supply Change Suppliers, and hit the ground running. Supply Change and Orbit Group have just launched their Dynamic Purchasing System. An innovative platform that connects buyers with social enterprise suppliers to deliver commercial value and social impact. Find out what it can do for your organisation here.
S2 Associates: Creating social value in the built environment sector
What is S2 Associates trying to do?
S2 was co-founded by Sarah & Sarah, who’ve crossed paths for 15 years while working in large organisations in different parts of the Built Environment sector.
We joined together to form S2 Associates which is on a mission to help the industry we love, make more of the social impact opportunities available, when you are quite literally; building communities.
Having a dual social impact purpose enables us to help the construction sector understand the social challenges they have the solutions for, and to work with community organisations to maximise the offering from the private sector.
What is the impact of the new SV PPN legislation on the construction industry?
The industry is buzzing currently with Social Value ‘noise’. New government legislation (PPN06/20) sitting behind the Social Value Model and Construction Playbook, means the business case for it has never been stronger. All parts of the sector now have to make it part of their operations. We want to see it being done meaningfully and without ‘social washing’.
What are the key opportunities and challenges for the construction industry in how they respond to the new legislation?
We reject the notion that Social Value is something you do to minimise the negative impact of your core business, or as a way of ‘giving back’.
Our purpose is to ensure more Built Environment businesses see the benefit of co-design and co-creation, turning the tide away from Social Value being done to a community, and toward Social Value being done with a community. It is an opportunity for the sector to include local community organisations and engagement specialists in real knowledge exchange partnerships.
Construction output in the UK is more than £110 billion per year: the potential for social value creation alongside it is massive. It is an opportunity for the sector to move from a cheapest price based system to one that measures real value for money. Another win, with this approach, is that it will create new roles and disciplines in construction for people who would not traditionally see themselves working in the sector.
The challenge for any Social Value measurement is measuring what really matters to people, and this means defining the right outcomes and implementing the processes around them from as early on as possible.
We’re only at the very beginning of fully seeing the implications and impact of these changes to government procurement and as echoed by all three of these brilliant organisations, there are huge opportunities for business and for social and environmental impact. The organisations that embrace the changes authentically and intentionally could find themselves winning more work and creating a better society for all in the process.
Additional resources
Guide to using the Social Value Model
PPN 11/20: What does it mean for social enterprises?
What does the New Social Value Framework Mean for Social Enterprises?
Where you can find out more about S2 Associates, Supply Change and Cimple:
This blog was a collaboration between Impactful, S2 Associates, Supply Change and Cimple with contributions from Rima Patel, Sarah Lambshead, Aoise Keogan-Nooshabadi, Isabel Daniel, Charlie Wright and Samuel Brett.
At Impactful we make creating more positive impact easier for your business, including how you create more social value. To find out how you can take simple steps to increasing your impact, check out our Impactful Business Playbook or book a free 30 min consultation with us to get started today.
