Why social value is still key to winning
Investing in social value can significantly enhance a company's chances of winning public sector contracts. Let's consider a scenario to illustrate this point.
Imagine a situation where a public sector contract is advertised with a value of £5 million. The evaluation criteria are weighted as follows:
Social value: 10%
Quality: 60%
The winning bidder scores 75 overall and bids a price of £4.8 million. This price wins and they score:
Price: 30/30
Social value: 5/10
Quality: 40/60
Total score: 75
The nearest competitor scores 72 overall, scoring 5 on social value and 40 on quality. Their bid price of £5.3 million scored them 27 out of 30.
Price: 27/30
Social value: 5/10
Quality: 40/60
Total score: 72
If the winning bidder had scored 9/10 on social value, they could have won by bidding £5.33m rather than £4.8m. That's over half a million more margin over the contract and comfortably more than enough to invest in ESG to deliver that higher score.
If the losing bidder had improved their score to 9/10, then they would have won the bid without lowering their price or increasing the quality of their bid.
In other words, social value can win and lose you a bid – even win at a higher price!
Understanding the shift under the new legislation
The traditional MACs focused on specific criteria such as cost, quality, and technical capability. However, the new Missions approach aligns procurement with broader government objectives, such as promoting economic growth, enhancing energy efficiency, and fostering social inclusion.
This shift encourages contracting authorities to engage with suppliers early in the procurement process, allowing them to shape requirements in their favour and deliver outcomes that align with the government's strategic goals.
Impact on bidders
The emphasis on social value is not entirely new but has been given fresh impetus by the Procurement Act. According to experts, proposals must include specific, measurable, and time-bound commitments to deliver the selected social value outcomes. This means that bidders must be more detailed in their method statements and project plans than before. Additionally, the increased focus on diversity encourages participation from a broader range of suppliers, including SMEs and VCSEs.
Engaging early with not-for-profit, charity, and community groups will greatly enhance the social value delivered by procurement projects. Bidders that develop an overarching corporate social value strategy will have commitments that sound more compelling and are more able to be used as evidence to support their commitment and capability in this area.
Community engagement by bidders is essential to refining their offer to meet the needs of the specific 'target cohort' they aim to support. This approach helps ensure that the bid is not only compliant but genuinely impactful.
If you've not done so already, spend time understanding the social value model and developing strategies to deliver social value in their proposals.
The shift from MACs to Missions under the Procurement Act represents a meaningful change in the way procurement is conducted in the UK. By aligning procurement with broader government objectives, this shift encourages innovation, promotes competition, and ensures that procurement delivers real value. For bidders and buyers, this means investing in understanding the new Missions criteria, developing strategies to deliver social value, earlier community engagement, and ensuring that procurement processes are designed to evaluate proposals based on their contribution to the Missions criteria.