Construction companies that bid for public sector contracts will have noted the increased focus on ‘Social Value’ deliverables within recent tender processes.
Already we have seen Northern Ireland Housing Executive (NIHE) include social clauses within their procurement and likewise recent awards of contracts worth £1bn over the next 10 years, to four local contractors, have included obligations for the successful organisations to establish a social enterprise in the area in which they operate.
Locally, social value has also gained traction in the political arena and over the past number of months it has become prominent on the agenda of politicians and the wider community.
Following the introduction of Social Value Legislation in other regions in the UK there is a desire, indeed demand, in many quarters to bring forward local legislation in the form of a Social Value Act. The Minister for Finance has recently added his weight to the debate, commenting on how he would like to see such an Act on the statute books of Northern Ireland.
The Social Public Services (Social Value) Act 2012 came into force in England and Wales on 31 January 2013. It requires those who commission public services, including construction contracts, to think about how they can also secure wider social, economic and environmental benefits. Commissioners are therefore required to consider whether the services they are going to buy, or the way in which they are going to buy them, could secure such benefits for their area or their stakeholders.
Scotland has introduced the Procurement Reform (Scotland) Act 2014 and whilst it is perhaps too early to judge the impact, there are some notable trends emerging particularly with the Public Social Partnership Models.
Typically, in the past, contractors have sought to add Social Value through hiring construction apprentices, using environmentally friendly products and processes or perhaps carrying out community consultation or organising community events.
The local debate has evolved however to consider how public contracts may contribute a social benefit beyond the lifespan of a given contract. Social enterprises are widely recognised as having a major role to play in achieving a sustainable social benefit. Since they typically use their profits to fund their social mission and to reinvest in the local communities in which they operate, social enterprises already tick many of the ‘added value’ boxes.
In the UK there are a number of examples of social enterprises, such as CCI Scotland, which have strategically developed their service offering to become subcontractors to larger construction firms, and partners in the procurement bids.
For local construction companies the shape of future procurement is becoming increasingly clear. Those companies that can create models and partnerships that deliver tangible sustainable social benefit are likely to be at an advantage under future procurement arrangements. For many, it will seem another ‘hoop’ to jump through to secure public sector contracts. For those that seek out local specialists such as Social Enterprise NI and advisors that understand the evolving procurement regime, the prize is the potential to be more successful on Public tenders, without necessarily sacrificing margins.