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Nathan Goode

The NHS's Social Value in procurement mandate: Six things suppliers need to know

NHS England is required to give a 10% minimum weighting to Social Value in all procurements as of 1st April 2022 and has released net zero and Social Value guidance for NHS procurement teams. Nathan Goode, our Chief Strategy Officer, outlines the six things suppliers need to know to win work with the NHS.

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The main aim of procurement undertaken by NHS organisations is to deliver essential goods and services and improve patient outcomes, whilst increasing value from every pound spent.

Embedding mandatory Social Value into the supply chain is seen as absolutely key to achieving this, and the NHS's guidance has been created to help those responsible for procurement to unlock health and environmental related Social Value.

Care has been taken to ensure that unnecessary burdens should not be placed on commercial teams or suppliers. Taking the time to understand what this means when bidding for work, and why it is necessary, will reap rewards in the long run.

Here are the six things suppliers to the NHS should know about the guidance:

1. Fighting climate change must be included in all procurement

Engaging with the drive to reduce carbon emissions and reverse the damage caused to the environment is a necessity.

As a supplier, you will need to be able to demonstrate firm plans, results and commitment to reducing waste, lowering emissions, and helping the environment - whether that’s by getting involved in a tree planting scheme or investing responsibly, for example.

In short, suppliers need to ‘act local but think global’.

2. All procurement undertaken will contribute to NHS Net Zero and Social Value Goals

The NHS has committed to reaching net zero by 2045. It has also identified the fact that more than 60% of its carbon emissions occur within the supply chain.

By reducing your own emissions, you will help NHS organisations to reduce theirs. Monitoring and reporting emissions reductions will unquestionably form a key element of any bid for new contracts with NHS England.

Social Value, the term used to describe the positive improvement an organisation delivers to society, dates back to the Public Services (Social Value) Act 2012, which requires all public authorities to incorporate economic, social, and environmental well-being in connection with public services contracts. This was further endorsed by the central government’s Procurement Policy Note (PPN0 6/20) which takes into account the additional social benefits that can be achieved in the delivery of its contracts.

The NHS has adopted the five key outcomes from this Procurement Policy Note to form its own Social Value goals, which are:

  • Fighting climate change
  • COVID-19 recovery
  • Tackling economic inequality
  • Equal opportunity
  • Wellbeing

As a supplier, your work to help the community in which you operate to achieve these five goals will also create a stronger, more loyal, and resilient workforce and ultimately, a more robust and successful business.

3. Net zero and Social Value weighting at or above the 10% minimum

It is at the discretion of the individual NHS organisations to decide whether to ask for the minimum 10% weighting on net zero and Social Value or to require more. Realistically, it will depend on what goods or services are needed.

The guidance uses logistics, cleaning, and food and catering contracts as examples. Clearly for logistics, the main area of focus will be on low carbon and zero emissions factors, whereas cleaning contracts are more likely to feature a higher weighting on exemplary employment practices such as fair wages and anti-slavery work. Food and catering, meanwhile, would be expected to focus on the sourcing of local ingredients, reducing waste and/or efforts to tackle food poverty.

4. Net zero and Social Value responses BEYOND existing activities (additional value is required)

Those responsible for NHS procurement will not be able to include existing activities in new procurement contracts, so will rely on suppliers to provide additional Social Value contributions over the delivery of the contract.

5. Suppliers to provide clear metrics that will form the contractual requirements at award stage

Suppliers will be expected to provide clear, deliverable metrics in the tender that can be met should the contract be awarded.

Help is at hand for suppliers in the form of the Social Value TOM System™, which suppliers can use to measure impact and make informed decisions on how to deliver Social Value.

Social Value is all about changing lives for the better and the TOM System enables an organisation to attribute proxy financial values to Social Value activities, quantifying impact in pounds and pence.

The TOM System is an industry-wide, universally trusted, robust methodology that will enable you to evaluate and report the Social Value you can, and do, generate.

We have also worked with NHS Improvement (NHSE&I) to develop an NHS Social Value Calculator, which ensures that any assessment of Social Value is tangible and easy to assess.

6. Procurers must ensure a level playing field for SMEs and VCSEs

The guidance avoids weighting towards larger corporates and big business. It ensures the requirement for net zero and Social Value submissions proactively removes obstacles for SMEs in the tender process.

Moreover, it explicitly asks procurers to consider any potential barriers, and to set the Social Value requirement proportionately. Beyond this, it also demands that procurers make any Social Value requirement clear for any smaller suppliers with less resource to complete the tender process.

What next?

NHS England has clearly stated its awareness that not all suppliers are at the same stage in their commitment to achieving net zero and generating Social Value and that, whilst many will be pleased with the 10% mandatory Social Value weighting, others will find it challenging.

As a result, NHS England has committed to working closely with regulators, suppliers and industry bodies to help align the drive to net zero over time.

A two-year grace period has been applied for SMEs and VCSEs on the key milestones leading up to the 2030 deadline, where suppliers will only be able to qualify for NHS contracts if they can demonstrate progress through published reports and continued carbon emissions reporting through the supplier framework.

With the guidance and the grace period, there is no reason for suppliers not to get onboard the Social Value movement and join the world in achieving net zero.

The team at Social Value Portal has worked closely with NHS England and NHS Improvement over the past few months to provide support as they approached the 1 April deadline and we are continuing to work with them as Social Value becomes embedded in their procurement process.

Learn how Social Value Portal has supported our member NHS London Procurement Partnership

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About Social Value Portal

Since 2017 Social Value Portal has been at the forefront of the Social Value movement. As creators of the endorsed Social Value TOM SystemTM, hosts of the annual Social Value Conference and founding members of the independent National Social Value Taskforce – they set industry standards and lead the business agenda.

Their unique mix of consultancy, cloud platform and programmes offer organisations the complete solution to accurately measure, manage and report Social Value – and create lasting impact.

In 2022, SVP achieved B Corp status, scoring above average in all assessed. The company’s aim is to promote better business and community wellbeing through the integration of Social Value into day-to-day business activity across all sectors.

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