In the world of the built environment most of the policies that do harm were conceived with the best of intentions. Social value is now assessed as part of all public tenders and while its aims are eminently laudable, The Idiot asks whether the results may not always be what was intended.
A friend of the idiot recently recounted the tale of tendering for a major public sector consultancy project. The budget was around £100,000 and the friend put a huge amount of effort into the tender, it was just the type of work where they had lots of experience, it was in an area they had worked before and they knew the client well. The tender documents were clear bids would be scored; 30% on price, 70% on quality which was a good start. That 70% for quality was split down into relevant experience, understanding of the issues, approach to the commission and finally, 20% for social value.
The tender documents asked that the social value input to the tender be costed. The idiot’s friend developed a programme to be undertaken alongside the consultancy project including running sessions in local schools, offering placements, recruiting local people for the consultation, working with local suppliers, all valued at around £10K.
However one of the other bidders took an audacious approach suggesting that their social value budget was the same as their tender price – their entire fee should be considered as social value! The client didn’t entirely buy this approach and reduced their estimate substantially but still they got full marks for social value and the idiot’s friend, undoubtedly the best qualified for the job (this may be a biased opinion) was marked down sufficiently to lose the tender.
Social Value is a classic case of urban idiocy, an incredibly well-meaning idea that has been applied thoughtlessly and ended up with unfortunate and unforeseen consequences. No one is going to object to the idea that public spending should seek to meet social goals, particularly on large public contracts. But on the tendering of smaller contracts the reality is that social value is being gamed with results that generate very little social value and damages the small independent companies that it was supposed to help.
The idea behind social value is that things should be measured by more than just their monetary value. Investment, particularly by the public sector, should generate value to communities rather than just provide the quoted service for the cheapest price. A contract to provide school meals, for example, might go to a big provider who runs the contract from a distant office using contract staff, or alternatively to a company who employs local people, sources ingredients from local companies, hires apprentices, engages with parents, promotes healthy diets, minimises its carbon footprint etc… The first contract would probably be cheaper but the second one will generate far greater value in the local community.
The concept was introduced for all public contracts via the Public Services (Social Value) Act in January 2013. The scope of the act was extended in 2018 to require that social value should be considered when awarding most contracts with a minimum weighting of 10%. Guidance has also been issued setting out what issues are to be considered and how this is to be measured. The current headings are:
- COVID Recovery:
- Help local communities to manage and recover from the impact of COVID-19
- Tackling economic inequality:
- Creating new businesses jobs and skills
- Increasing supply chain resilience and capacity
- Fighting Climate Change:
- Effective Stewardship of the environment
- Equal Opportunity:
- Reducing the disability employment gap
- Tackling workforce inequality
- Improving health and wellbeing
- Promoting community integration
Each of these comes with a set of metrics such as the number of training opportunities created, the number of SMEs or employee owned companies supported in the supply chain, the numbers of person hours devoted to voluntary activity and the number of jobs created in the local economy. I can hear you cry, there is nothing idiotic about any of this!
But let us think for a moment about how this would apply not to a multi million pound catering or construction contract but to a consultancy project, even a relatively big one such as my friend’s £100K tender. The primary product that is being sold in such a contract is the time, knowledge and experience of the contractor. The tender will include CVs of relevant staff and undertakings not to swap these with less qualified people. The scope for generating new jobs is therefore minimal and in any case there is hardly time to recruit for a contract that is going to be over in 6-8 months.
What about supporting SMEs or employee owned businesses in the supply chain? This can be difficult when the skill you need is highway engineering or commercial agents because those companies tend to be quite big. Most bizarrely there are no points for the contractor itself being an SME or employee-owned. That doesn’t count, the metric is about subcontractors not the main contractor because the assumption is that the contractor will be a big company.
Of course I hear you say, all companies should do this stuff anyway. They should employ local people, offer apprenticeships, trade with local companies, reduce their carbon footprint, do pro-bono work with local community groups and give staff time off to volunteer. But no, none of this counts either. The guidance notes say that you should only count social value that arises as a result of the contract and be careful not to double count stuff that is happening anyway.
And in any case there is a reason that that £100K job was given that budget. Someone sat down and worked out that this was needed to cover the time required to do the work. When you are buying fish fingers for school means you can do so either in a way that does or does not create social value, the cost being similar either way. When you are delivering a consultancy project which mostly involves selling your people’s time the equation is very different. You end up having to do extra stuff to deliver the social value outputs which either comes off your bottom line or is included in the tender price.
This is not just an interesting debating point. Practices have been forced out of business because they have not cracked the code to gain those social value points. This has even happened to practices that have put social value at the heart of their business. Tendering is not about doing the right thing but writing policies about doing the right thing – they are not interested in whether you have a diverse workforce, they just want to see your equal opportunities policy. There is an art to pressing the right procurement buttons to get the maximum marks. The large practices with their tendering teams and Corporate Social Responsibility programmes can do this. Small companies (which the social value guidelines specifically identify to be supported) end up missing out.
Feature Image: erapatkiatdumrong