In January this year the Social Value
Act was officially enacted. The Act aims to change the way that public
money is spent ensuring value for money in public service delivery. This means that all services commissioned by public
authorities must now demonstrate social value with this being incorporated into
the design of the service. At a time when government spending is being
cut back but the demand for public services is rising, this is obviously an
important objective for Government.
Chris White MP who introduced the Act
in 2010 stated “The aim of the Act is to support
community groups, voluntary organisations and social enterprises to win more
public sector contracts and to change commissioning structures so that a wider
definition of value rather than just financial cost is considered.”
The Act requires authorities to
consider:
- how what is proposed to be procured might improve the economic, social and environmental well-being of the relevant area, and
- how, in conducting the process of procurement, it might act with a view to securing that improvement
So what does this mean for
construction? The Act means that the way public procurement is undertaken
will change. More specifically, the Act applies to the pre-procurement
stage of contracts for services because that is where social value can be
considered to have the greatest effect, meaning
that for the first time the public sector must consider social value ahead of
procurement.
The
social value act applies to public services, and is not necessarily enforced on
public works. However it is undeniable that this will have a knock on effect.
Not only in the desire of those choosing the successful bid to show they are
using socially valuable construction companies. But we can also see this desire
quickly becoming legitimised as criteria for tender.
If
we look to Wales we can see that since 2011 they have been pushing community benefits
to public procurers through their guidance document, in the aim of establishing
maximum value for the Welsh pound. This
takes the spirit of the act and goes a step closer to us in applying it to
public works.
With
the act placing directives on those that employ us, community benefits increasingly
appearing as requirement for tender, and governments issuing guidance on how to
deliver, should this be something we are turning our minds to? Regardless of
what strictly speaking applies to us in the construction sector, if we as
conscious individuals can see a shift in the culture of our larger environment,
should we be paying more attention to it? Is this an opportunity to predict how
this topic might affect us in the future?
If
we believe this as true, there are two ways this may affect us for the better: Getting
to grips with these changes now can easily and effectively gain us a competitive
advantage. But it also benefits us by ensuring we are prepared for what may be
enforced on us in the future. In realistic terms if
you can demonstrate securing both best price and meeting the wider social,
economic and environmental needs of the community, it may not only place you higher up the ranks on tender lists,
but with this criteria being a growing requirement on tender documents, it will
ensure you are able to compete in the first place.
Given that the Act came in without much
publicity, many are perhaps still getting to grips with the technicalities of
it all. Government have provided an ‘action note’ however this does
not specifically set out a number of points including how the results of
these impacts and feedback from accompanying consultation should shape any
procurement which is undertaken. It does however provide examples of how
social value may be considered at various stages of the procurement process.
With the construction industry just
getting back on its feet after the latest economic downturn, implementing and
achieving these wider reaching aims alongside price and quality may seem a
rather large task. Engaging with the Act early on and getting to grips
with the fundamentals however will help secure a better position in the market
when it comes to the bidding process.
If you'd like to learn more about the Act and what it means for you, join our free webinar on 30th October.
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