How Contracting Authorities Can Use Preliminary Market Engagement to Enhance Social Value

PPN 002 and Social Value Model Explainer series: For Contracting Authorities

In public procurement, social value is all about making sure that communities benefit as much as possible from every pound of public money spent. 

So it follows that, for any spending project, the optimal social value outcome will depend on factors like:

• What the project’s core deliverables and purpose are
• How potential suppliers propose to fulfil them – and what their organisational strengths and weaknesses are
• What the needs and preferences of the local communities affected by the project are

But in the early days of social value’s development, it was not uncommon to see one-size-fits-all requirements tacked onto tenders. This immature phase reflected a tick-box approach that paid little attention to potential suppliers’ capacity to deliver social value goals efficiently or to a high quality. 

Thankfully things have moved on. And with the Procurement Act 2023, PPN 002, and the new Social Value Model, they’re taking another leap forward – with new requirements around Preliminary Market Engagement that promise greater supply chain diversity and innovation, reduced costs, and – ultimately – more social value realised. 

NB This article predates the publication of PPN 026 in August 2026 which will supercede PPN 002 from January 2027.

What Is Preliminary Market Engagement?

The Cabinet Office defines it as follows:

“Preliminary market engagement is a particularly important tool for the achievement of value for money. It allows contracting authorities, for example, to recognise divergence between suppliers which enables the identification of suitable areas for negotiation, dialogue or testing/demonstration as part of a competitive flexible procedure.” 

“Contracting authorities should, where relevant, also use preliminary market engagement to increase the understanding of how requirements ought to be set in such a way as to reduce whole lifecycle costs rather than focus on the initial purchase price of the contract.”

It can take a variety of more-or-less formal forms, including (but not limited to):

• Supplier days
• Questionnaires
• In-person or online workshops
• Product demonstrations
• Site visits
• One-on-one meetings
• Invitations to get in touch
• Sharing a social value policy

In all instances, the goal of Preliminary Market Engagement is to open up communication between the buyer and potential suppliers – so that:

• Contracting authorities can tailor their tenders to what the market is able to provide efficiently and cost-effectively
• Suppliers understand clearly what is being asked of them and help to shape the process

What Did the Procurement Act 2023 Change?

Preliminary Market Engagement has always taken place. It was provided for previously under the Public Contracts Regulations 2015 (regulations 40 and 41), but Sections 16 and 17 of the Procurement Act 2023 put it onto a more solid footing:

• Although contracting authorities are not obliged to carry out Preliminary Market Engagement:
  • If they do, they must publish a Preliminary Market Engagement Notice (UK2) in advance of any Tender Notice (UK4)
  • If they don’t, the subsequent Tender Notice must explain why
  • The full series of required notices for Open and Competitive Flexible processes is shown below

Source: Find A Tender

• This applies to above-threshold procurements only. Preliminary Market Engagement may be carried out for smaller purchases, but a UK2 notices are not mandatory
• Contracting authorities can carry out joint Preliminary Market Engagement, with a “lead authority” taking responsibility for notice publication
• Further guidance on Preliminary Market Engagement encourages private utilities to publish Preliminary Market Engagement Notices, but doesn’t require them
• Decisions about what kind of engagement activities to undertake must take into account the barriers to participation faced by SMEs and VCSEs, as part of wider “fair treatment” provisions
• Before publishing a Preliminary Market Engagement Notice, the contracting authority must carry out a conflict of interest assessment, so as to take all reasonable steps to identify and mitigate any actual or potential conflicts of interest

The new Social Value Model calls upon contracting authorities to carry out Preliminary Market Engagement around social value requirements:

• To assess the market’s social value maturity
• To test the selected Missions, Policy Outcomes, Model Award Criteria and get a better sense of the drivers of cost, quality and efficiency
• To keep suppliers informed and engaged, to ensure equality of access and a diverse range of bidders

How Does Preliminary Market Engagement Improve Outcomes?

More Preliminary Market Engagement is good for social value, because it will lead to better understanding between buyers and suppliers, a wider understanding of what social value can be, procurement processes that are more accessible to diverse bidders and open to new solutions, and better value for money. 

It promotes these goals by:

• Helping to identify unmet needs
• Raising buyer awareness of new technologies and processes 
• Facilitating SME and VCSE participation in public procurement
• Identifying and mitigating risks
• Fostering cross-sectoral collaboration and knowledge sharing
• Making it clear where a social value weighting in excess of the minimum 10% is justified by market maturity – or where immaturity and lack of provision may sanction a lower weighting

As the Guide to the Social Value Model says:

“The only permissible exception to this minimum 10% of the overall score rule is where preliminary market engagement demonstrates that the approach would significantly reduce competition due to a lack of market maturity in delivering social value”

How Can I Find Out About Preliminary Market Engagement Activities?

Preliminary Market Engagement Notices are published on Find A Tender, the government’s central digital platform for procurement, which has been undergoing significant enhancements on account of the Procurement Act 2023. 

The “Search” function includes “UK2: Preliminary Market Engagement Notice” as a Notice Type. Results can be filtered by a wide range of criteria and searches can be saved for future reference. 

Each Notice includes a range of valuable information about the upcoming activities and the contract, including:

• A description of the goods or services being sought
• The planned contract value and duration
• Whether it will be split into smaller lots
• The location where it will be delivered
• The procurement process to be used
• Award criteria
• Deadlines for consultations
• Details on how to get involved

This is a goldmine for potential suppliers, helping you to pick and choose the best procurements to engage with. Add Find A Tender to your bookmarks now, if it’s not there already! 

As the new system introduced by the Procurement Act, the National Procurement Policy Statement, PPN 002 and the new Social Value Model – and planned further changes – take effect, the Thrive team is looking forward to Preliminary Market Engagement playing a growing role. We’re excited to see how greater collaboration between buyers and suppliers will broaden and enhance social value creation in the months and years ahead!