Social value and value for money?

Strategic Sourcing: new approaches to deliver successSocial Value & Value For Money

Julian Blake, Head Charity & Social Enterprise and Education Group

Bates Wells Braithwaite London LLP

J.blake@bwbllp.com

020 7551 7746 (Direct)

www.bwbllp.com

Malcolm Williamson, Director of Enterprise

Inspire2Enterprise CIC

malcolmw@inspire2enterprise.org

01707 398029 (Direct)

www.inspire2enterprise.org

4th February 2014

Status of Social Value in commissioning

• BWB - charity/social enterprise specialists; universities - public authorities (for procurement)/charitable social enterprises.

• New emphasis on SV: UK Public Services (Social Value) Act 2012; EU Public Procurement Directive 2014, to be implemented in UK in 2014

• But SV already (underused) within UK Best Value regime and current Public Procurement Regulations

• Public authorities may commission on the basis of price; but appropriately only for undifferentiated goods

• May commission for optimum balance of price, quality and SV -“most economically advantageous tender”

• Must consider (under the 2012 Act); how a procurement “might improve economic, social and environmental well-being” [of relevant area]

Potential meaning of Social Value

• Dismissed as meaningless; not subject to straightforward measurement (like price/ quality); meaning may be recognised

• Added social deliverables may be provided within service; see EU 2010 publication “Buying Social: A Guide to Taking Account of Social Considerations in Public Procurement” e.g. employment opportunities; social inclusion; equal accessibility; ethical trade; environmental best practice.

• Purpose driven (efficient/cost-effective) suppliers may deliver further benefit e.g. by hypothecating retained profit to similar purposes, rather than to shareholder distribution;

• Such suppliers may offer open book/shared profit arrangements, rather than seek to maximise own profit.

• Commissioners may compile lists of SV objectives; consider the potential each procurement has in relation to each objective; request SV in specifications; invite creative SV offers

• Longer term cost saving may be factored into purchasing, with payments linked to impact results; or the value of impacts (including to other public services), may be given weight.

Practical meaning of Social Value

• Promotion of SV is stimulus to smart thinking by commissioners/suppliers and proactive use of procurement; in environment where process can tend to obscure purpose.

• Direct application to public services (e.g. education delivery), where public benefit and SV are central; also applicable to general service procurement.

• Linked to impact measurement/assessment methodologies; considered in - Measuring Social Impact in Social Enterprise: The state of thought and practice in the UK” – Baker Tilly/CAN Invest/Big Society Capital 27/2/13, published by E3M - www.socialbusinessint.com

• Similar to approaches to: programme impact assessment; social investment; payment by results contracts; and social impact bonds, as promoted by Government.

• EU Social Business Initiative promotes SV (including through procurement reform) to reinvigorate social economy; similar ideas part of Government’s “Big Society” ideas.

Application to Universities

• A university is public benefit organisation with procurement power that may leverage SV benefits.

• This may extend to collaboration, particularly as community organisation, with SV delivery to other educational institutions and wider public benefit.

• SV meaningful with application/planning/consultation; what does the university and/or its students and/or its community need? how may applying SV assist in meeting such need?

• Examples: employment opportunities for students; research opportunities; collaborative linkage to university-based enterprises/social enterprises; collaborative profit share; sustainability in university estate.

Application to Universities continued

• SV opens perspective on: social enterprise; benefits that can be delivered by social enterprises (as universities are); and opportunities/benefits from alignment of public benefit purposes (see MW’s following comments on SE).

• Application to SV can also require more of private sector suppliers by obliging them to compete on SV as well as price and quality.

Further Information

• BWB’s “The Social Value Act Quick Guide” with Unity Trust Bank published by Pioneers Post - www.publications@pioneerspost.com

• BWB’s “Bold Commissioning & Procurement for Best and Social Value” workshops/ seminars in association with: University of Northampton; E3M member social enterprises; and I2E – J.Blake@bwbllp.com

• An example: “Knowsley Metropolitan Borough Council Procurement Strategy 2012-14” – www.knowsley.gov.uk/pdf/procurement-strategy-2012-2014.pdf

The UK Social Enterprise Sector

What is a Social Enterprise?

A business that trades for a social and/or environmental purpose

Has a clear ‘social mission’ – exists to make a social difference

Aims to generate income through trading, not via grants/donations

Reinvests its profits to support the continuing social mission

Creates a social impact (and social value) by way of its activities

Operates democratically, is accountable and transparent

The UK Social Enterprise Sector

Key Statistics*:

68,000 social enterprises in UK employing c800,000 people

Sector contributes c£24bn to the UK economy

38% work in 20% of the most deprived UK communities (12% SMEs)

56% developed a new product/service (43% SMEs)

82% reinvest profits back into the communities where they earned

Procurement policies cited as greatest barrier to sustainability

*Social Enterprise UK: State of Social Enterprise Survey 2013

Social Value & Value For Money

Is Social Enterprise the answer?

A supplier channel that demonstrably “makes a difference”

Contract delivery value with equal focus on social impact and benefit

Creates training/employment for the excluded/disadvantaged/NEETs

The challenges of contract timescales, delivery complexity and scale

Part of a broader supply chain collaborating with private contractors

Supports Government strategy (SV Act, public sector “spin-outs”)

Social Value & Value For Money

A collaborative procurement process:

Supporting procurers to embed social value creation into contracts

Establishing contract social impact outcome and value criteria

Identifying potential SEs/consortia suppliers for specific contracts

Working with SEs throughout UK & Ireland to get ‘fit to tender/deliver’

Supporting SEs in bid proposals that meet contract needs/add value

Reporting measurement of social impact outcomes and values

Social Value & Value For Money

Example: The University of Northampton Innovation Centre

Working with the procurement team to scope contract tender

Guidance/support to all contract bidders in embedding social value

Working with successful contractor to maximise social impact/value

Researching SE clients /market to identify potential supply chain

Supporting the SE bid/proposal process and impact outcome values

Identifying student experience/employability opportunities

Social Value & Value For Money

Social innovation is the answer…

Social enterprise is just one way of delivering social innovation

New solutions that meet a social need (e.g. reduce re-offending)

Opportunities for LEP EU funds (match): 20% social inclusion/impact

Also student involvement, high impact research and PR

Key question: “how can we do ‘good stuff’ when we….?”

Social innovation