How to integrate social clauses into public contracts
Generating social value through procurement is often seen as a tick-box exercise – something that is nice to do if you can. But isn’t this the wrong way of looking at the challenge of how to deliver social outcomes?
If wider community benefits are viewed as a luxury or ‘add on’ to normal service delivery then many procurement people will continue to see this triple bottom line as too costly, time consuming and risky to implement.
Public sector organisations must get better at putting social value at the heart of the services being procured, integrating deeper outcomes into their daily service delivery so there is no separation between the two.
Reports and legislation reiterating the importance of social value in public service delivery are all around us. Most recently the Public Services (Social Value) Act places requirements on contracting authorities to consider how their procurement policy might improve the economic, social and environmental well-being of their area.
This is not new thinking and there are many good examples out there already. In 2010 the European Commission published Buying Social: a guide to taking account of social considerations in public procurement. This document defines ‘buying social’ as promoting employment opportunities, social and labour rights, social inclusion, ethical trade issues, corporate social responsibility (CSR) and promoting SMEs.
In 2011 the European Commission published its CSR strategy for the next four years. This guidance states that enterprises should have processes in place to integrate social, environmental, economic, ethical, human rights and consumer concerns into their core strategy and business operations.
Amid this guidance and legislation, why aren’t more organisations knitting social outcomes into their daily business operation?
To be fair, many are but the majority are not. The reason being “risk”. Too many public procurement professionals view the risk of buying, in a socially responsible way, is too high. Some feel that complex procurement regulations make the integration of wider community benefits into contracts too difficult. Others think it will cost too much and lowest price must be their aim above all else. Many buyers don’t see social outcomes as their responsibility and they don’t think they have time for it. Some feel that suppliers won’t respond and others think they don’t have enough expertise to get it right.
I want this blog to address these challenges and provide a road map for procurement professionals, showing them how to integrate social clauses into public contracts.
For Fusion21, creating social outcomes has always been central to our operation. We procure goods and services for public sector organisations and our aim is get the best terms for our clients. But that isn’t just about securing the lowest price and the highest quality service. Clients know that every pound they spend through our frameworks helps to create jobs for local people and supports small businesses in nearby areas. So far we have created nearly 1,000 jobs in the communities of our clients.
But a paradigm shift is needed if more organisations are going to adopt a socially responsible approach to buying. Currently, procurement strategy isn’t seen as a priority at senior level; it’s regarded as a means to an end and a process for people on the ground to deliver.
We need leadership at the top of authorities to change this. At the end of the day; to deliver different outcomes then something different must happen. We must challenge inertia becuase “once people are satisfied they know how to do things well, they have very little incentive to change or adopt new methods.” (Robertson & Langlois 1994).
Another problem is that one size doesn’t fit all. “Intelligent procurement is about determining how to get the most out of each and every type of spend. Cabinet and executive officers must look at the potential to link with local priorities and existing social programmes around issues such unemployment, re-offending and anti-social behaviour. They also must create visibility of future contracts in order to gauge potential and give local supply chains sufficient time to prepare and respond..
Public service commissioners must develop specifications to include social requirements. The importance of this social aspect should be consistent throughout the tender process and requirements must be measurable to enable comparisons in performance. Bear in mind that there is no need for bespoke requirements for every tender; authorities should consider adopting existing successful models.
For service providers, the first step must be to identify which of their services has the greatest capacity to generate social outcomes. Creating an action plan is a useful way of addressing key social issues and linking future procurement with them. Remember to let stakeholders know about the activity you’re doing to tackle key social issues.
Working with others throughout this process will ensure you don’t duplicate effort. Team up with partner organisations to develop more impactful interventions and social benefits.
When it comes to suppliers, procurers must engage early on to help the supply chain prepare for this new way of working and see it as an opportunity. Give suppliers access to your social plans so they can develop their offer based on what’s important to you. Ensure the procurement process is open to SMEs, social enterprises and voluntary sector suppliers – this will help to boost the social value you deliver
Third sector suppliers and service providers must demonstrate how they have achieved clear benefits and economic returns for their community, that can’t be achieved elsewhere. They must also raise their own profile as a viable supplier of services – amongst commissioners and other suppliers and be prepared to collaborate with others to compete for larger contracts.
These are all important steps but remember, procurement isn’t a silver bullet. Including social value clauses at tender stage is a means to an end and not the end itself. To achieve this end goal a few key things need to be in place. Leadership, joined up policies and the development of local and regional strategies is essential. Collaboration, amongst commissioners, service providers and throughout the supply chain is also vital. There are many barriers to making socially responsible procurement widespread. Only a collective, consistent and target driven approach will allow it to win through.