'Public contracts should generate 20% social value'

14 July 2017

Reforming government procurement to take far greater account of social value could unlock £14bn for local communities, according to a report.

Scape Group’s Better Procurement report urged the government to ensure public sector contracts worth £10m or more generated at least 20% of their worth in social value to the community.

According to the report, £72bn was spent on public sector contracts worth more than £10m in 2016-17.

A fifth of social value from these contracts would amount to a potential £14.4bn for regional supply chains.

Social value includes benefits from creating apprenticeships, employing local labour and opening up construction sites to schools and colleges.

“Each year the government spends over £268bn on procurement. As a nation, we must seek not only to minimise waste, but to maximise the economic opportunity in every pound spent,” said Mark Robinson, Scape chief executive. 

The study recommended creating a clearer definition of social value as well as the minimum 20% social value commitment.

And it recommended giving public sector suppliers a “By Appointment to HM Government” title to create a “mark of quality” for SMEs to aspire to.

Scape also called for a government-led best practice guide for public sector buyers which sets out in clear and simple language what organisations need to consider when structuring procurement.

The guide would also list what SMEs need to know to compete effectively for bids. “Information is currently too disparate, expertise [is] too expensive, and organisations lack examples of procurement best practice,” said the report.

Scape also urged further streamlining and standardisation of procurement processes and tendering requirements to make public sector procurement as simple and straightforward as possible.

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