Social Value and Public Procurement – A Legal Guide

For others, it was business as usual as this was already something they had embedded into their procurement practices.

Whether you are new to seeking social value through contracts, or feel this is something you are already achieving, it’s important to know how to get it right:  how to seek the best possible value for money (in its widest possible sense) from every penny of public money spent, while still acting within the law and minimising the risks of legal challenge by failing to act transparently or fairly.

We have compiled a comprehensive legal guide to interaction between social value considerations in public contracts and the EU legal framework for public procurement.  This guide is ideal for those who are uncertain of how social value fits with contracting authorities’ duties relating to cross-border appeal and local authorities’ duties of Best Value.

The guide can be found in the public domain here.

It covers:

• The existing EU legal framework – the key legislation, the case law, and the importance of linking your social or environmental requirements to the subject matter of the contract if you want to choose your contractor based on how well they will achieve these requirements;
• Some key changes coming up in the drive to modernise public procurement law – the new EU public sector procurement Directive that is in force imminently;
• The existing UK legislation and guidance – not least the Social Value Act but also the public sector equality duty, and how equalities and social value interrelate (similarly the importance of the Best Value duty for local authorities).  We also highlight some key differences in approach in Scotland, Wales and Northern Ireland;
• A detailed breakdown of the European and domestic case law that has led us to where we are today.

While the guide is standalone in nature, it also acts as a legal appendix to Richard Macfarlane’s report for the Joseph Rowntree Foundation, ‘Tackling Poverty through Public Procurement’.  Tackling Poverty through Public Procurement will be published and launched on 28 April.  Second, though, is the recognition that public money needs to be spent wisely, and every penny counts.  This guide represents a desire not to require every client we work with to reinvent the wheel, or to pay for the benefit of some basic principles when they could be seeking real innovation and, most importantly, real results for communities.  This has the added side effect of making our work in social value both more varied and more valuable.

What’s the Social Value Act all about?

The quietly revolutionary Social Value Act 2012 came into force on 31 January 2013.  Very simply, it requires every contracting authority whenever it is about to procure services, to consider:

1. how what it proposes to buy might improve the economic, social and environmental well-being of the area where that public body exercises its functions; and
2. how, in conducting the procurement process, it might act with a view to securing that improvement.

Not just councils but housing associations, NHS bodies, Government departments and any other body that has to comply with the EU procurement rules are subject to this requirement.

The Social Value Act replicates tests set out in the leading EU case on policy-driven procurement.* When it considers how it might secure improvement in well-being through the procurement process, the contracting authority must consider only matters that are relevant to what is proposed to be procured and, in doing so, must consider the extent to which it is proportionate in all the circumstances to take those matters into account.

This duty is noteworthy because it places a public law duty on all such bodies to consider the economic, social and environmental well-being of the area that they serve, before undertaking a procurement of services.

The Social Value Act also provides that the contracting authority must consider whether to undertake any consultation about improving the economic, social and environmental well-being of the area it serves or indeed how it secures that improvement through the procurement exercise.  For councils, if they consult on best value arrangements (in accordance with the Best Value statutory guidance) they could use the same exercise to discharge their duty under the Social Value Act.

Defining best value and social value: ask the people

Councils need to find ways of talking with individuals and communities if they are to be able to achieve more with the limited resources that they now have.  This is the law.  But it is not just a question of providing services to or commissioning services for the areas that they serve. Facilitating social action and cohesion may actually mean having real conversations about what can and what can’t be done.  If this legislation becomes not just a spur to council officers interacting in better ways with the public, but councillors are also enabled to engage with their voters on the detail of what local services really do have to look like, less may actually deliver much more than ever before.

If you would like to discuss any of the issues set out in this briefing and the new Social Value legal guide, please get in touch with Mark Cook (mark.cook@anthonycollins.com) or Gayle Monk (gayle.monk@anthonycollins.com) on 0121 212 7472.

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