Socially Valuable Procurement: Beyond the Social Value Act

Blog entry
Date: 
15.03.2013
Author: 
Simon Jebreel

I’ve just come back from an energising briefing event on the Social Value Act, which Hazel Blears MP invited us to on the back of our Social Business Partnership (SBP) venture, which she has supported.

For the uninitiated, the new and interesting Social Value Act requires all public agencies to take into account social value when awarding contracts over a certain (EU defined) threshold. The link to us is that SBP is a membership body for corporates who want to embed social value into their procurement, and we help them to do this by brokering social enterprises into their supply chains.

While the Act has only just come into force, the discussion had a good amount of practical content and Hazel presented some case studies (including SBP’s work with Johnson & Johnson and British Gas).

Peter Holbrook, who chaired the event, summed the discussion up well with “never before has there been such violent agreement”. So what were we agreeing so violently about, and how does this impact SBP and the wider marketplace?

Causes for optimism:

  • As we’ve experienced before with SBP, this issue is very much ‘of the moment’. There is real energy across sectors around the importance of creating social value, and people are waking up to the centrality of supply chains in this.
  • Heather Hancock, Managing Partner for Talent & Brand at Deloitte, pointed out that the current crop of graduates who are driving a focus on the values of employers are not the start of a new trend – in fact, the generation that is now being promoted to middle and senior management also prioritises strong values.
  • Focussing on social value in procurement has the potential to have a transformative effect on ‘business as usual’, hopefully shifting the DNA of businesses and public bodies. As Hazel said “this cannot be about CSR, it has to go beyond that”.

But as Hazel also pointed out, an Act in itself is useless without implementation. This is where the significant challenges come:

  • Procurement people usually don’t ‘get’ this or are too busy to invest the time in this. Socially-focussed suppliers must still lead with price and quality.
  • More fundamentally, the social value created by a contract often won’t accrue to the procurer – as Sarah Hayward, Leader of Camden Council, pointed out, if a supplier to the council takes people off the welfare bill by creating employment it’s all very nice but the council doesn’t hold the welfare budget or enjoy the savings. So it’s important for social enterprises and other responsible businesses to communicate even the marginal benefits to the procurer, and for policy makers to look at further delegation to align the incentives.
  • Estelle Branchlianoff of Veolia highlighted need for universal measurement standards and tools for social value . Without this, organisations won’t be able to compare bids or understand what they are looking at. But trying to crack measurement of social value has used as much energy as almost anything else in the social sector over the past five years, and it’s very, very hard.
  • Then there’s the challenge of the middle layers. Even if the senior management of an organisation buy into social value, and so would those on the front line, it is the middle management where even the best intent can get bogged down.
  • Similarly, organisations at the top of a supply chain may want to create social value, but it’s hard to control what happens just a few rungs down (think horsemeat).
  • And, even when there is consensus around procuring for social value, doing a deal between a large company and a social enterprise is hard. Deloitte has been working with Clarity, which employs disabled people to make soap, but hasn’t yet implemented a contract to buy their soaps into their washrooms. As Heather described, Deloitte have had to “reach into” the social enterprise to build their capacity and resilience to service such a large contract to the right standard.

So, lots of food for thought. But also strong vindication for the Social Business Partnership: companies want to do better with their supply chains – need to do better with their supply chains – but also need support to navigate the many associated challenges. The Social Value Act puts getting to grips with this front and centre for any large corporate selling into the public sector. SBP is a tailor-made way to engage.

This conversation is going to continue – if you want to get involved, or want to hear more about our work with British Gas and Johnson & Johnson, email me at s.jebreel@socialbusinesspartnership.com

If you would like to comment on the scaling report, please email: feedback@shaftesburypartnership.org.
 

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