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Procurement Act – A focus on Social Value 

All public sector organisations, and their suppliers, are required to consider social value in their operations and look beyond the financial costs to improve the economic, social and environmental wellbeing of individuals and communities.  

In this article we explore the importance of social value, the fundamental role it has to play within procurement and the social value implications of the Procurement Act 2023.  

Social Value 

Social value refers to the economic, social, and environmental benefits that procurement decisions can deliver to communities. In a procurement context, this goes beyond price and quality considerations, ensuring that public spending creates positive impacts, such as job creation, environmental sustainability, and improved community well-being. Social value has gained prominence in UK procurement, particularly since the introduction of the Social Value Act 2012, which mandated public sector organisations to consider social, economic, and environmental benefits when awarding contracts. 

Current Requirements  

The Social Value Act 2012 currently requires public sector organisations to consider social value in their procurement processes, however the application of which has been inconsistent due to the lack of clear guidance and enforcement mechanisms. Additionally, the Public Contracts Regulations 2015 set out general procurement rules but did not explicitly mandate social value as key part of award criteria. In response, the UK government has sought to strengthen social value considerations through the Procurement Act 2023, which introduces a more structured approach to embedding social value across public contracts. 

Social Value Implication of the Procurement Act? 

The Procurement Act aims to improve transparency, accessibility, and accountability in public procurement. One of the key objectives is to enhance the role of social value, ensuring that public contracts generate broader benefits for society. While the Act does not provide prescriptive social value requirements, it introduces measures to encourage contracting authorities to prioritise public benefit and evaluate suppliers based on their social impact.  

Key Social Value Components 

Maximising Public Benefit 

The Act introduces a legal requirement for contracting authorities to consider how their procurement activities can maximise public benefit. Public sector organisations must now assess the wider social, environmental, and economic impact of contracts rather than focusing solely on cost and efficiency. 

A Shift from MEAT to MAT 

The Act replaces the “Most Economically Advantageous Tender” (MEAT) approach with the “Most Advantageous Tender” (MAT) approach, allowing broader evaluation criteria beyond price and technical ability. This shift provides greater flexibility for including social value factors in procurement decisions. 

Increased Transparency and Reporting 

The Act mandates enhanced transparency in procurement processes, requiring public bodies to publish key performance indicators (KPIs) for contracts over £5 million. This ensures greater accountability in delivering social value commitments and provides a mechanism for tracking and reporting on suppliers' impact. 

What does this mean for you? 

For social value to be effectively embedded and a core consideration within procurement practices, organisations need: 

Leadership Commitment: Senior management should champion social value initiatives. 

Clearer Metrics and Measurement Frameworks: Providing useable, transparent and credible methods to evaluate and report on social value outcomes. 

Supplier Engagement: Encouraging SMEs and voluntary sector organisations to participate, driving inclusion and representation as part of public procurement. 

Training and Awareness: Upskilling procurement professionals on best practices for integrating social value to ensure this does not focus on compliance and provides a greater ability to deliver change in communities across the UK. 

Collaboration: Sharing knowledge and strategies between clients, suppliers and a wide range of public sector stakeholders to develop, align and deliver upon social value goals. 

The Procurement Act 2023 marks a significant step in embedding social value within public sector procurement. While challenges may remain in measurement and enforcement, the Act provides a framework for using public spending as a tool for real positive social and economic impact.  

By adopting best practices and fostering collaboration, organisations can ensure that procurement delivers lasting benefits to communities across the UK. 

Take a look at our other Procurement Reform guides in our dedicated Knowledge Hub. 

https://www.cpconstruction.org.uk/knowledge-hub/procurement-reform/