The Social Value Percentage – why a tiered approach will give the best result

One of the issues of great debate since the Social Value Act came into place has been the ‘Social Value Percentage’ – how much weighting to give social value in a tender situation. The Greater Manchester Social Value Network (GMSVN) has drawn upon our collective learning and cannot advocate a blanket approach or one single percentage figure for social value in all contracts. For us, one percentage definitely doesn’t fit all.

GMSVN exists to support learning, sharing experiences, allowing debate and building an evidence base for policy-making. GM is seen as a leader in social value; we have an award-winning city-region Social Value Policy, Salford’s 10% Better campaign, Manchester City Council’s Social Value toolkit, Oldham’s Social Value Charter and the Wigan Deal, for example.

But this success has not been achieved without overcoming a huge number of hurdles. Collectively, we have done and re-done, written and re-written; constantly testing, evaluating and learning from our experiences of what is really working well.

Since 2014, GM has applied social value beyond the confines of the Social Value Act. Analysis across goods, works and service contracts shows:

Goods: specifications are concise, the product is clear and price is highly weighted. Social value scoring should be more about the ‘added value’ that can be brought by the best ‘local, social and ethical’ provider.

Works: with works contracts there is much to be gained from ‘added (social) value’; local opportunities for employment, skills and work experience, local supply chains, and investment in local civil society, for example. Environmental measures often have high industry standards and can be part of the core specification.

Services: with services contracts, the position is more complicated. Many outcomes which could be ‘social value’ in goods or works contracts could also be the focus of the services and therefore be contained in the core specification. In some cases, so much that there is little left over to be ‘added social value’, and we have found several examples of confusion and double counting between the core specification scored under quality, and the additional social value score in a tender situation.

We also know that from a commissioner’s point of view, the higher the social value percentage in a tender, the less control that a commissioner probably has over the actual social value offer. Despite a comprehensive GM-wide Social Value Procurement Policy, which guides providers into 6 key objectives, the ‘offer’ from providers is extremely variable. In fact, the social value that is obtained from contracts depends greatly on what the market is prepared to offer. Therefore, the higher the social value percentage in the contract, the more that the result is dependant upon what providers are prepared to give and not necessarily on what would actually be valuable.

Key proponents of the Social Value Act have always advocated including social value in the core specification for any contract. Mark Cook of Anthony Collins Solicitors writes

Contracting authorities that ensure social value requirements relate to the subject matter of the contract will benefit from being able to assess those requirements as part of the tender evaluation.’ [1]

Our evidence shows that:

  • The overall quality score in a tender situation is higher than any social value percentage, so having social value in the core specification means that this is more likely to influence the final decision, and more likely to be managed and delivered effectively
  • If social value is in the core specification, a commissioner / procurer gets to better define what social value is ‘relevant and proportionate’ to the contract in hand (rather than being dependent on what the contractor is prepared to offer)
  • With social value in the core specification, there’s a great chance of obtaining value for money or a return on investment

Taking in all this learning and debate, GMSVN therefore would propose that good commissioning might involve dialogue with the market in advance of any tender action, to determine what social value might be ‘relevant and proportionate’ and therefore suitable for inclusion in the core specification.

AND based on market testing and the opportunity to include social value in the core specification for different contract types, it would then involve a tiered approach to the ‘additional’ social value percentage. An illustration of this might be:

  • Goods contracts: 10 – 20%
  • Works Contracts: 10 – 15%
  • Services contracts: 5 – 10%

In practice, the core specification of a construction (works) contract could/should contain social value elements such as commitment to providing jobs, apprenticeships, paying Living Wage, etc.  Therefore, the weighting of the ‘additional’ social value element might not need to be as high as the 20-30% that many organisations are starting to apply. Instead, the ‘social value’ score might only need to cover the additional activities that providers are ‘prepared’ to give, which are above and beyond the clear commitments that commissioners want to see as a minimum.  By that logic, if the core specification is designed appropriately, the additional Social Value weighting can be lower.

Anne Lythgoe

Greater Manchester Social Value Network, July 2018

[1] https://buysocialdirectory.org.uk/sites/default/files/social_value_and_public_procurement_-_a_legal_guide_-_january_2014.pdf

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