Businesses selling to government will have to prove their social impact as part of procurement shake-up

Profile picture for user ddpreez By Derek du Preez March 11, 2019
The Cabinet Office has launched a 12 week consultation on how ‘social impact’ could be included as part of the contract award process.

Farming Defra rural payments farm
Companies that are bidding for government contracts will, in the future, have to show that they can also help improve society - or, in other words, prove their “social impact”.

The Cabinet Office has launched a 12 week public consultation on the proposals, during which time it will seek feedback from suppliers, public bodies and members of the public. However, assuming all goes ahead, companies that tackle social issues, such as modern slavery and climate change, could potentially hold an advantage when bidding for business.

Some UK SMEs in the tech sector, including UKCloud, have been calling for a greater focus from the government on social value as part of the procurement process for some time.

This was a key measure outlined in the Government’s Civil Society Strategy, published by DCMS.

Speaking at the Social Value Summit in London this week, David Lidlington, Chancellor of the Duchy of Lancaster, said:

“Every year, the government spends £49billion with external organisations and it is morally right that we make sure none of that money goes to any organisations who profit from the evil practices of modern slavery.

“Similarly, it is right that we demand that the organisations we work with meet the high standards we need to protect our environment and employ workforces which represent our diverse society, including people with disabilities and those from ethnic minorities.

“By making sure that these social values are reflected not just across the government, but through all the companies we work with, we will take a major step towards our goal of creating an economy that works for everyone.”

The consultation comes off the back of the Cabinet Office recently announcing that suppliers who cannot demonstrate that they pay their supply chains on time, will be barred.

The detail

The consultation itself notes that the Public Services Act 2012 already places a requirement on relevant contracting authorities to consider, in respect of procurement for services, how the economic, environmental and social well-being of the relevant area may be improved by what is being procured. However, it adds:

“The approach proposed in this consultation paper will go further in requiring central government departments to take account of social impact as part of the award criteria, where the social impact is linked to the subject-matter of the contract and proportionate to what is being procured.

“This reflects the government’s approach to public service delivery: that public services should be delivered with values at their heart.”

The Cabinet Office states that the new way of drawing up government contracts represents one of the “biggest changes in public procurement in recent years”. It adds that it will open up opportunities to social enterprises and other organisations who are best-placed to deliver social outcomes and promote good work by businesses.

Areas which will now be looked at when contracts are being drawn up by the government will include:

  • the use of firms of all sizes, including those owned by under-represented groups
  • the safety of supply chains - to reduce the risk of modern slavery and cyber security issues
  • encouraging firms to employ people from diverse backgrounds, including those with disabilities and from ethnic minorities
  • focusing on environmental sustainability to reduce the impacts of climate change
  • encouraging firms to prioritise staff training to boost their employees’ long-term employability

My take

I’m all for this. Not only will this shift the focus on procurement away from procuring the cheapest offer available, but it could also help drive a necessary cultural shift within businesses that benefits not only employees, but they businesses they work with and the broader society.