On April 1 2022, all NHS bodies commissioning goods and services under the supervision of NHS England – plus bodies acting on their behalf – were required to give a mandatory weighting to Social Value considerations in awarding contracts.
With the NHS accounting for around £130 billion of public spending each year, the scale of the Social Value regime in public procurement introduced by PPN06/20 has expanded enormously.
NHS England claims to have more than 80,000 suppliers, the vast majority of whom now face a new set of rules and criteria in winning business.
So what does it all mean? And what can businesses do to keep themselves in consideration? That’s what we’ll explore in this blog.
What Do The Rules Say?
We’ve written about the rules that PPN06/21 brought into force for central government bodies several times before. Take a look at this earlier blog for more detail, but here’s a very quick recap:
- In awarding public contracts, “in-scope organisations” must give at least 10% weighting to Social Value considerations in potential suppliers’ bids
- That 10% can be split between any of five key policy themes: Covid-19 Recovery, Tackling Economic Inequality, Fighting Climate Change, Driving Equal Opportunities, and Wellbeing
- Social Value benefits have to be (i) additional to the core deliverables of a project, (ii) based on measurable outcomes, and (iii) reported on in quantifiable terms
NHS England has decided to incorporate the Social Value regime into its commitment to achieve Net Zero Scope 1 and 2 carbon emissions by 2040, and Scope 3 emissions by 2045.
To that end, all NHS tenders now have to include Fighting Climate Change as one of the Social Value themes.
Procurement is a major focus in this regard: 60% of the NHS’s overall emissions are generated within its supply chain. This is important to bear in mind, because central government bodies (eg departments, executive agencies, NDPBs, etc) aren’t restricted in choosing between the five themes in this way.
What Does The Guidance Say?
NHS England has released guidance for its own commissioners entitled “Applying net zero and social value in the procurement of NHS goods and services” – but it’s well worth prospective suppliers reading it as well.
The guidance explains:
- What top-level goals the NHS is looking to promote through Social Value
- Examples of the kinds of outcomes that could contribute to them
- Relevant questions to include in tender documents relating to those goals
- The sorts of outcomes, activities, and metrics that contractors should be expected to provide
Let’s take a closer look at just one goal under the “Fighting Climate Change” theme in this format:
The NHS has four priority areas under this theme:
- a. Reduce emissions
- b. Reduce air pollution
- c. Promote circular economy principles
- d. Reduce consumption and waste
“Reduce single use plastics, packaging and increase recyclability of products” is an opportunity area that could make a contribution to c. and d.
A sample question for commissioning bodies to include in their tenders might therefore be “Detail how, through the delivery of the contract, you will reduce the amount of single use plastic used for both packaging and products that will be provided.”
Finally, in the bid, the bidder would be expected to include information on:
- A forecasted baseline figure on single-use plastic usage for the delivery of the contract over a defined timescale
- The activities to be undertaken to reduce plastic and the actual amount that is expected to be reduced
It’s important to note that those commitments under 4 are something that the supplier will be expected to report on regularly in precise, quantified detail.
The selection of other themes and areas for improvement will be, in large part, determined by the type of contract:
- Transport and logistics is naturally geared heavily towards climate change, through reducing road miles
- Cleaning contracts may give additional weight to wellbeing and tackling economic inequality, as cleaning staff are typically poorly paid, casual workers
- Catering may focus on local sourcing of produce (tackling economic inequality), regenerative agriculture (fighting climate change), or other goals
Remember, 10% is the minimum. Many commissioning authorities will opt for a higher weighting for Social Value considerations.
What Can Your Company Do Now?
Adopting Social Value is just the first step for NHS procurement. Over the next decade, even more changes are due to come into effect.
For example, in April 2023 NHS suppliers bidding for contracts worth more than £5 million will be subject to PPN06/21. They will have to have published a Carbon Reduction Plan for Scope 1 and 2 emissions or be ineligible to bid.
So it’s sensible to get prepared now:
- If you haven’t already, read the Social Value Model and its supporting guidance. Or, if that looks overwhelming, starts with Thrive’s guide to each of the five themes:
- Identify Social Value in your existing activities and where you might have competitive advantages. Although Social Value benefits have to be additional to project core deliverables, your business may be well-positioned to deliver desired outcomes through existing work. For example, if a project is due to take place in a deprived area where you already work, you may be better able to create new jobs there than other companies
- In particular, review and benchmark your carbon footprint. The Greenhouse Gas Protocol provides a good free tool for businesses looking to do this. We’ve also written previously about quick wins you can achieve to cut your carbon emissions
- If you don’t already have a Social Value strategy in place, now might be a good time to start developing one. By building aligning your commercial strategy with your Social Value ambitions, you can:
- Identify and set out the causes you want to promote across multiple bids
- Highlight the existing sources of value within your organisation and its activities
- Set out a reusable framework for measurement and reporting of results
- Plan how you will measure the impact of your activities and how you’ll capture all the data necessary to demonstrate it.
As well as help in developing your social value strategy, this final point is where Thrive can really help your business. Our Social Value module is a customisable software platform for collecting all your organisation’s data in one place and co-ordinating it with one of the most respected and comprehensive frameworks for Social Value, The Impact Evaluation Standard.
The IES provides more than 100 metrics and indicators (with carefully-calculated proxy values in pounds), sorted by theme and policy objectives and the IES’s metrics are regularly updated and revised by an independent expert Steering Committee.
When it’s time to show what you’ve achieved, our custom dashboards and reports will allow you to highlight what really matters.