Trend: 'Social Value' Emerges as Procurement Criterion
Government bodies in the UK are increasingly using “social value” as a key procurement criterion, favoring suppliers who deliver community impact beyond low prices. Hartlepool Borough Council's procurement approach highlights this trend. This suggests a potential shift in how government partnerships may be evaluated in other regions, including India.
- The UK's Public Services (Social Value) Act originated in 2012, compelling public sector bodies to consider the social, economic, and environmental benefits of their procurement decisions beyond the lowest price. This was partly prompted by a controversial case where a major train manufacturing contract was awarded overseas instead of to a UK-based company, highlighting the missed opportunity for local economic gains. - As of 2021, a mandatory minimum 10% weighting for social value is applied to all major central government procurements in the UK. Some local authorities, like Manchester City Council, have gone further, applying a 30% weighting to social value in their procurement decisions. - The UK government has developed a "Social Value Model" to standardize the approach, focusing on five key themes: COVID-19 recovery, tackling economic inequality, fighting climate change, promoting equal opportunity, and improving wellbeing. This model influences an estimated £49 billion in public spending annually. - Tangible returns on social value have been measured. For instance, the housing association Circle Housing calculated a social return on investment of £5.40 for every £1 invested in an employment and skills program, which was funded by suppliers as part of their contractual obligations. - India has a parallel policy framework with the Public Procurement Policy for Micro and Small Enterprises (2012), which mandates that 25% of procurement by central agencies must come from these enterprises. This includes a 3% sub-target for women-led businesses. - The Government e-Marketplace (GeM) in India is a key digital platform for this initiative, having facilitated ₹4.19 lakh crore in orders and onboarded over 970,000 Micro, Small, and Medium Enterprises (MSMEs). The platform includes specific programs like "Womaniya" to support women entrepreneurs. - Corporate initiatives are also shaping India's social procurement landscape. For example, SAP India has launched a social procurement initiative to integrate some of the country's more than two million social enterprises into corporate supply chains, aligning with government programs like GeM and the Open Network for Digital Commerce (ONDC). - The push for social procurement in India is further strengthened by regulations on Corporate Social Responsibility (CSR) and a growing emphasis on Environmental, Social, and Governance (ESG) standards, which are prompting companies to build the capacity of social enterprises for integration into their supply chains.
