Social value has become a critical feature in public sector contracts. It’s no longer optional. Procurement legislation has made it mandatory in all government contracts whether they’re high or low-value.
According to the Procurement Act, it carries a minimum of 10% weighting in all public contracts. However, it’s not unusual for some contracting authorities to increase that percentage to 15% or even 20%.
This brings us to an important question that SMEs must ask themselves when submitting bids for public sector tenders: How can I leverage social value to secure government contracts?
We’re going to answer that question and look at how SMEs can give back to local communities while focusing on the other critical details in their government procurement strategy.
Optimise Embedded Social Value Requirements
According to the Social Value Act 2012, public bodies must think about how their procurement requirements also enhance communities’ economic, social, and environmental well-being. According to procurement legislation, these must be included in public contracts and framework agreements so SMEs know what they need to focus on in their bids.
Public sector buyers must also clearly state their evaluation criteria so suppliers know exactly what to provide to capitalise on procurement opportunities.
SMEs can optimise social value requirements by researching the community or communities targeted by local authorities. The deeper the familiarity with the community and the knowledge gleaned from the community members, the better SMEs can tailor their social initiatives to the embedded requirements in public procurement contracts.
SMEs can also leverage their knowledge and understanding of the community to provide social benefits that go beyond the minimum requirements set out by the contracting authority. Public sector buyers favour suppliers that can prove how they intend to expand their social projects and how the additional (tangible) benefits will affect the community.
Triple Bottom Line
Suppliers would do well to adopt John Elkington’s Triple Bottom Line approach to social benefits. It’s pretty simple.
For example:
- Profit/prosperity: Equal treatment for minorities and ethnic groups
- People: Health and safety in the workplace
- Planet: Sustainable energy
This is also in line with the UN Sustainable Development Goals that promote:
- Investment
- Transformation
- Regeneration
Public procurement suppliers must incorporate these principles in their tender documents, making it clear that they can meet technical specifications, comply with procurement rules, and support social projects according to the criteria established by local and central government departments.
Rooting Business Operations In Sustainable Procurement
Sustainable procurement processes are also very important in SME tenders. Sustainable processes consider operational business practices at each link in the supply chain. They are long-term practices that benefit suppliers and the local government with important knock-on effects that benefit communities.
For example:
Public sector suppliers can implement sustainable procurement processes to reduce their carbon footprint, which in turn reduces waste and water and air pollution. Cleaner air, reduced waste, and more responsible waste disposal methods result in more efficient business operations and, importantly, benefit the well-being of local communities.
Standardisation
Sustainable procurement policies are standardised by BS 8903, which provides clear guidelines for best practices when buying and supplying goods, services, and works in the public sector.
According to BS 8903, sustainable procurement strategies have four aims:
1) Minimising the demand for resources
2) Minimising negative impacts
3) Respecting ethical standards
4) Promoting diversity and equality
They cover things like conditions of employment and inclusive employment practices (equal treatment) for minority and disadvantaged groups, risk analysis, environmental management, and relationship building.
The above example applies, especially when it comes to minimising negative impacts on communities.
Why Should Suppliers Prioritise Sustainable Procurement?
Improving their chances of winning public contracts and having a positive effect on local communities aren’t the only benefits sustainable procurement has for SMEs.
Long-term savings
Going sustainable might not deliver immediate benefits, but it’s a long-term practice and will result in lower energy consumption, enhanced operational efficiency, and streamlined processes that will save costs down the line.
Long-term benefits can trickle down to communities, especially if suppliers direct some of the savings to social projects.
For example:
They could put solar panels on the clinic’s roof to reduce utilities bills – and have an even greater positive impact on the environment.
Brand reputation
More and more consumers want to see companies and brands embrace sustainable procurement procedures. Brands that are seen to be making a genuine difference are favoured. Their reputation will be boosted, increasing demand for their services.
Regulatory compliance
Following sustainable public procurement procedures naturally ensures compliance with environmental and social regulations.
This particularly important for SMEs in government procurement because they might not to be able to afford the penalties and fees for failure to comply with procurement rules.
Global markets
Sustainable public procurement is a global phenomenon. Suppliers that have embraced the practices and have successfully improved the welfare of community members stand a reasonable chance of attracting the attention of global buyers.
Employee loyalty
Employees who work for suppliers with a reputation for sustainable procurement policies prefer to stay where they are because some of the reputation rubs off on them.
What’s more, experts in the industry are keen to work for reputable brands, largely for the associated prestige.
The Procurement Act, Social Value & Sustainability
The Procurement Act puts a lot of focus on social value in public sector procurement processes. It emphasises value, as value for money is a greater determining factor in contracts than mere pricing.
Public contracts go to the most economically advantageous tender – MEAT – which extends to sustainable procurement and additional value suppliers can provide to contracting authorities. Additional cost savings and efficiency are always appreciated by government departments.
The Procurement Act is also committed to ploughing £1 out of every £3 into making more low-value contracts available for SMEs. Since SMEs make up 99.9% of all businesses in the UK, that is a considerable investment, yet the government stands to reap significant rewards as more and more SMEs enter the public sector market and contribute to the country’s economic growth on a greater scale.
In addition, more SMEs in public procurement generate more social initiatives and increase sustainable practices, which reduce the overall demand for national resources. Every party in the government procurement process wins.
Where to Find Low-Value Contracts That Provide SMEs With Opportunities To Compete In Public-Sector Procurement
The government is making public contracts more accessible for SMEs who can deliver sustainability and social projects determined by the public authority. But where can SMEs find them? Let’s look at two options.
Low-Value Contract Opportunities on Tender Portals
They can be found on the government’s Contract Finder. However, public contracts below certain thresholds (around £12,000 and lower) don’t have to be published on the Contracts Finder platform. Instead, contracting authorities can publish a contract notice on independent procurement portals.
Single or central public procurement portals are great for publishing low-value contract opportunities because suppliers need only register once and their details are stored permanently.
This helps buyers find the most suitable suppliers for public contracts, while suppliers can define their criteria and only bid on the contracts that are relevant to their services.
Low-Value Purchase System
Low-value contracts can also go through the Low-Value Purchase System, which is designed to provide SMEs with opportunities to bid on uncomplicated contracts. In addition to SMEs, the system benefits Voluntary, Community, and Social Enterprise (VCSE) suppliers.
Public procurement suppliers can join the framework agreement at any point. This helps those who come across the contract notice later than other suppliers.
It’s a convenient system because public authorities can award contracts without going through the entire (protracted) tendering process. Suppliers can avoid complex procurements that include long, demanding bid documents. Instead, public authorities can assess value and award contracts directly or hold a mini-competition, which is far simpler than other procurement processes.
Supply2Gov Publishes Alerts For SMEs
SMEs can leverage all the information above to capitalise on all the ways the Procurement Act facilitates access to the public sector market. Supply2Gov (S2G) provides the means for SMEs to optimise the public sector opportunities available.
S2G provides access to local and central government contracts. All SMEs have to do is register for free and set up email alerts according to their criteria; for example, the postcode for free local government area alerts or keywords for regional and central government contracts throughout the UK.