This week we wanted to address the elephant in the room. That Jacob Rees-Mogg article in The Telegraph. In a turnaround for the history books, Rees-Mogg – the new minister for government efficiency – wants to switch up PPN06/20… Not even a year and a half after it came into effect.
Let us start by saying that we’re still awaiting official word on the government’s reasoning and what these changes will look like. But for now, here are our initial thoughts on the matter.
What are the changes?
Back in January 2021, a 10% minimum weighting was assigned to social value across all government procurement. It’s this aspect of the model that’s come under fire. And quite rightly, it’s created a lot of noise in the social value space.
For many organisations, this year has been about embedding social value to stay competitive. It’s not been an easy ride. And reversing the change altogether is going to be frustrating. Plus, plenty of organisations have spent decades trying to strike a balance between good business and improving lives. This weighting was a welcomed change that demonstrated a tangible commitment by the government to do better. And now it’s being forgotten?
There’s even more confusion if you look at The Green Book guidance from 2020:
“The appraisal of social value, also known as public value, is based on the principles and ideas of welfare economics and concerns overall social welfare efficiency, not simply economic market efficiency.”
These proposed changes are in complete opposition to the government’s own guidance and levelling up agenda. There’s no consistency between these and individual decision-making in parliament. Not to mention the timing. We’re still reeling from the pandemic. And the cost of living is wreaking havoc on people’s lives. Yet now’s the time to make social and environmental progress a lesser priority?
Like many, we’re struggling to make sense of the news. It sounds like it’s coming from a government that’s preoccupied with costs, rather than the far-reaching impacts of their decisions.
Does this unfairly impact SMEs?
The upcoming changes are intended to reweight government contracts. They’re supposedly going to give smaller organisations a fairer shot. But we take umbrage with this.
First of all, the 10% weighting was introduced for this exact reason – to level the playing field. The guidance itself explained: “Social value will be evaluated based on qualitative responses from bidders, and not on volumes. This means that larger suppliers are not able to win on scale alone.”
Plus, smaller organisations have deeper community roots and relationships than their larger counterparts. Providing them an advantage when it comes to making a tangible impact. But they need the right support and tools to turn this social value into winning bids.
It’s not the weighting itself that’s a problem. It’s how the wider model is being implemented that’s causing an imbalance.
Winning tenders has become about crafting the best-sounding bids and greatest SROI figures. Regardless of whether organisations can support their claims or follow them through. Once a contract is awarded, the social value is often forgotten. And this encourages large organisations to make unrealistic, larger-than-life promises. There’s no accountability. This is why smaller bidders are missing out. They lack the same manpower, resources, and expensive calculators. So instead of removing the weighting entirely, it’s the processes and practices that need work.
What’s needed is more robust, benchmarked guidance on how to bid for government contracts. To make it less of a competition on who can reach the highest figure. As well as support evidencing social value and reporting it throughout a project’s duration. This could level the playing field and allow the minimum weighting to stay.
Where has the model fallen short?
In some ways, the new model has been successful. It’s made a lot of organisations rethink their impact and has lifted social value up the agenda.
But as with any new piece of legislation, there’s been teething problems. Like we mentioned above, a focus on SROI calculation can automatically exclude smaller businesses. And implementation of the model has been largely inconsistent across the public sector.
Criteria has been vague at best and standardised practice is lacking. A lot of procurement teams in the public sector still don’t fully understand social value. Many seem to have also forgotten the very purpose of it: helping people. The speed of the competitive bidding environment has left little room for community engagement. Bidding organisations aren’t consulting with their communities to identify local needs.
Couple this with a lack of data capture post-award and no focus on tangible, trackable outcomes, and it’s become less about real people and progress and more about inputting the highest numbers.
What’s next?
PPN06/20 only came into effect in January 2021. Organisations need more time to settle into the guidance and start making a real difference. Ditching the challenge altogether seems very counterproductive. And based on untrue assumptions. A focus on price wouldn’t give SMEs a fairer shot. But a more equal and transparent procurement process that makes social value easier for businesses of all sizes? That would do it.
What we currently have is a solid start. And with greater consistency, it could be even better. But it needs to stop being a box-ticking exercise. Suppliers should be providing in-depth qualitative responses. Ones that outline how exactly they’re going to deliver the social value they’re promising. And the social value of winning bids should be contractual. Suppliers should be accountable for their commitments through robust, ongoing social value reporting.
In general, social value in procurement needs to become more outcome-focused. It should hone in on the tangible, real-world impact it has on lives and communities. Qualitative social value measurement is a great way to track this throughout procurement and beyond.
There also needs to be more nuance. There’s no one-size-fits-all approach to social value. Social value for a small tech start-up is going to look very different to a large construction firm. And this should be reflected in the guidance and procurement process. Otherwise, we’re going to continue excluding SMEs and other bidders who don’t fit into the typical mould.
In conclusion
For all we know, the government’s intentions could be good. Like we said, this has all stemmed from a journalistic article with no official quotes. And, fundamentally, we all want the same thing – a thriving planet and local communities.
The weighting marked a positive change in the right direction. It demonstrated the government’s commitment to prioritising social and environmental change alongside profits. Rather than going backwards, it deserves more time. Then it can be reviewed and evolved as we move forward, without needing to eradicate all the hard work of the past year.
That’s just our perspective. We’d love to hear your thoughts too. Find us at @CaptureImpact on twitter and let us know what you think!
With Impact, tackling the social value side of procurement is simple. Able to feed into your existing procurement tools, we make it simple to visualise, measure, and compare bidders’ suitability in terms of social value. To find out more, schedule a demo or get in touch with the team on 0161 532 4752.