In 2020 the government of the United Kingdom launched Procurement Policy Note (PPN) 06/20, designed to ensure that social value considerations are incorporated into UK Government contracts. The Note launches a new model to deliver a standardised approach to assessing and incorporating social value in public procurement.
👉 What exactly does PPN 06/20 require? Who is affected? And what does PPN 06/20 mean for the environment and future government tenders?
What is Procurement Policy Note (PPN) 06/20?
Firstly, it’s important to understand what exactly a Procurement Policy Note (PPN) is.
A procurement policy note sets out information and guidance for public sector bodies who are looking to procure goods or services. They are designed to give transparency to the procurement process and ensure that tendering practices are ethical. The notes are approved by the UK Government and it is mandatory for central government departments to implement them when tendering for goods or services.
Procurement Policy Note 06/20 was introduced in September 2020 by the UK Government, and as per the contents of the Note itself, it “launches a new model to deliver social value through government's commercial activities.
Central government organisations should use this model to take account of the additional social benefits that can be achieved in the delivery of its contracts...”
What exactly has changed with the introduction of PPN 06/20?
The existing Public Services (Social Value) Act 2012, introduced by the UK Government in 2012, requires that public sector bodies ‘consider’ whether the proposed procurement will improve the economic, social and environmental well-being of the relevant area affected by the contract.
However, under the Public Services (Social Value) Act 2012, how much weight was actually afforded to this consideration was left to the discretion of the government body, who only had to consider the ‘social value’ where it was proportionate, taking all considerations into account. In practice this meant that social value considerations were often disregarded in favour of other priorities, in particular where there was a short deadline for the procurement.
Procurement Policy Note 06/20 changed this by making social value a mandatory consideration - it must now be ‘explicitly evaluated’ instead of simply ‘considered’. In fact, a minimum weighting of 10% must be afforded to social value considerations in all government body tenders.
Who is affected?
Procurement Policy Note 06/20 is mandatory as of the 1st of January, 2021. The policy note is applicable to all public sector procurements covered by the Public Contracts Regulations 2015 and applies to the following “in-scope organisations”:
Central Government Departments
Non Departmental Government Bodies
In practice this means that the majority of public bodies in the UK, including government departments, local authorities, the National Health Service (NHS), and police authorities are subject to the policy note.
Non-governmental entities may also be subject to the policy if they operate in the water, postal service or transport sectors and perform a regulated utility activity. For example, private sector water utility companies, electricity providers and distribution operators may be included in this category.
What procurement contracts are covered?
Procurement Policy Note 06/20 affects tenders that fall under the remit of the Public Contracts Regulations 2015. It covers all contracts where money is exchanged in return for goods, works or services. However, it should be noted that there is a minimum threshold for the value of the regulated contract, what this threshold is varies depending on the type of goods or services supplied.
The thresholds are updated by the UK Cabinet Office every 2 years.
The Social Value Model
Procurement Policy Note 06/20 is most notable because it launched a new model to deliver social value through all commercial governmental activities.
So what exactly is the ‘Social Value Model’ it created?
The Social Value model is a framework of over 50 metrics that all organisations hoping to enter a bid for a public contract should track to map their activities - both during the procurement process and for ongoing project monitoring. The prioritisation of the different metrics varies according to the sector, industry and contract.
For organisations hoping to sell their goods or services to government bodies, understanding these metrics and implementing a system to track and evaluate progress against them will be key to winning future government tenders.
The Social Value Model is laid out in full by the UK Government in Procurement Policy Note 06/20, but at basic level it identifies 5 core priorities:
Tackling economic inequality
Fighting climate change
Driving equal opportunity
This includes activities that, in the delivery of the contract:
Create employment, offer retraining opportunities and other return to work opportunities for people who found themselves unemployed as a result of the pandemic.
Support both communities and individuals in their post Covid-19 recovery, with a particular focus on those who were the most adversely affected or those who are shielding.
Support businesses in their management of the impact of Covid-19, for example where new processes are required to deliver services.
Support the physical and mental health of those affected by Covid-19.
Improve workplace conditions that support the Covid-19 recovery, for example remote working policies.
Tackling economic inequality
Examples of activities that fall under this priority include:
The creation of new businesses, new jobs and skills with a particular focus on supporting those who come from deprived areas or those who face employment challenges.
The improvement of supply chain resilience and capacity. For example, through the adoption of innovative technologies that lower costs or deliver higher quality goods or services.
Driving equal opportunity
This priority strives to:
Reduce the disability employment gap through better representation of disabled people in the contract’s workforce.
Support disabled people in developing new skills relevant to the contract.
Tackle workplace inequality, with a focus on those from disadvantaged or minority groups, by supporting them to progress and develop new skills relevant to the contact.
Identify and manage the risks of modern slavery in the performance of activities included in the contract or supply chain.
Delivery objectives of this priority include:
Activities that support the health and wellbeing of the contract workforce.
Activities that improve community integration.
Fighting climate change
This covers activities that demonstrate effective stewardship of the environment, for example:
Contracts that deliver additional environmental benefits, for example working towards net zero greenhouse gas emissions.
Activities and contracts that influence employees, staff, customers and the community to take actions that benefit the environment.
For each policy priority the Social Value Model sets out evaluation questions, response guidance, award criteria, and reporting metrics. Public authorities and relevant bodies who are subject to Procurement Policy Note 06/20 must consider these elements from the outset as they are now an integral part of the tendering process. It’s therefore crucial that organisations submitting a tender also fully understand the Social Value Model and its requirements.
Why does Social Value matter?
Social value has a lasting impact on individuals, communities, and the environment. Not only this, but the Government also has a responsibility when spending taxpayer money to ensure that it is maximising benefits of its goods and services contracts. In fact, missed opportunities to deliver social value may even result in further public spending down the line.
By including social value as a core consideration in public procurement practices it will gradually become a normalised ask for suppliers resulting in innovation to the supply landscape and perhaps even a larger cultural shift towards sustainability.
What do organisations need to do when submitting a tender?
Organisations submitting a tender must provide qualitative responses to the relevant sections of the Social Value Model and can select the priorities that are most relevant to the contract. More detailed guidance can be found online via the UK Government website.
It should also be noted that the assessment is qualitative not quantitative. This means that the body awarding the contract will not focus solely on the quantity of the offering but also how the goods or services will be delivered and what they will encompass.
Bidding organisations must outline how they meet the different Social Value Model’s criteria and should indicate how they’ll deliver the requirements going forward.
Responses are assessed and scored in-line with the outlined award criteria. The Social Value Model accounts for a minimum 10% weighting in the overall assessment of the project.
What does PPN 06/20 mean for future procurements?
Social value is a vital component of the procurement process and something that all organisations should be aware of when preparing to submit a tender for relevant in-scope public contracts.
Since 2012, there has been a statutory requirement to consider how the contract will improve the economic, environment and social well-being of the communities and areas it impacts. But it wasn’t until the introduction of Procurement Policy Note 06/20 that this became an explicit requirement.
Procurement Policy Note 06/20 is a crucial improvement on the Public Services (Social Value) Act 2012 and a big step forward in standardising the approach towards Social Value considerations in procurement processes. It also provides an opportunity for social enterprises to win more government contracts, and ensures that social value and environmental considerations are on the conscience of both public and private sector organisations.
In coming years we can expect to see a bigger emphasis being placed on the social value element of contracts; it’s no longer enough for organisations submitting a tender to simply treat it as a tick-box exercise.
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