Procurement and Social Value

Delivering social value through procurement is now a key aspect of public sector service delivery. Working with CLH organisations can help local authorities and housing associations meet their obligations and aspirations, particularly in terms of economic, social and environmental well-being.

The Public Contracts Regulations 2015

The Public Contracts Regulations 2015 apply to the procurement of goods, services and works by “contracting authorities” – which includes councils, central Government departments, housing associations and others.  Where a contract is valued above a specified threshold, it must normally be procured in compliance with the Regulations, which means (in brief):

  • advertising the contract opportunity across the European marketplace, through the Official Journal of the European Union (OJEU)
  • following one of a range of procedures in the ensuing competitive process to determine who is awarded the contract
  • notifying the market (again via OJEU) of the award decision made by the contracting authority
  • In addition to EU requirements, the Regulations also implement domestic obligations in relation to advertising opportunities valued above £25,000 (even where these are below the European mandated thresholds)
  • Councils will normally also apply their own internal contract procedure rules or standing orders, which form part of their constitution.  Housing associations regularly do likewise.  These often apply additional requirements, in particular in relation to contracts that are below the relevant EU thresholds for the purposes of the Regulations, but which are still considered to be significant enough from the Council’s perspective to require additional competition or market testing

The Public Services (Social Value) Act 2012

The quietly revolutionary Social Value Act 2012 came into force on 31st January 2013.  Very simply, it requires a contracting authority whenever it is about to procure services, to consider:

  • how what it proposes to buy might improve the economic, social and environmental well-being of the area where that public body exercises its functions; and
  • how, in conducting the procurement process, it might act with a view to securing that improvement
  • Not just local authorities and housing associations, but also NHS bodies, Government departments and any other body in England that has to comply with the EU procurement rules (and some in Wales) are subject to this requirement
  • The Social Value Act replicates tests set out in the leading EU case on policy-driven procurement. When it considers how it might secure improvement in well-being through the procurement process, the contracting authority must consider only matters that are relevant to what is proposed to be procured and, in doing so, must consider the extent to which it is proportionate in all the circumstances to take those matters into account
  • This duty is noteworthy because it places a public law duty on all such bodies to consider the economic, social and environmental well-being of the area that they serve, before undertaking a procurement of services
  • The Social Value Act also provides that the contracting authority must consider whether to undertake any consultation about improving the economic, social and environmental well-being of the area it serves or indeed how it secures that improvement through the procurement exercise.  For councils, if they consult on best value arrangements (in accordance with the Best Value statutory guidance) they could use the same exercise to discharge their duty under the Social Value Act

Defining best value and social value: ask the people

  • Councils need to find ways of talking with individuals and communities if they are to be able to achieve more with the limited resources that they now have.  This is the law.  But it is not just a question of providing services to or commissioning services for the areas that they serve.  Facilitating social action and cohesion may actually mean having real conversations about what can and what can’t be done. 
  • If this legislation becomes not just a spur to council officers interacting in better ways with the public, but councillors are also enabled to engage with their voters on the detail of what local services really do have to look like, less may actually deliver much more than ever before. Facilitating and enabling community-led housing fits comfortably with this agenda

Local authorities generally house their contract procedure rules / standing orders in their constitutions, and so this is a good place to start when seeking to review and/or understand how a Council applies the procurement rules.  Many (but by no means all) also have a social value in procurement policy, which they apply as do many housing associations. See links below for examples. 

Relevant Resources

HACT has produced a Social Value and Procurement Toolkit

Bolton at Home Social Value

Bath and North East Somerset Council Social Value


Last updated in March 2018