The government currently spends £49bn with outside organisations each year for services such as probation © Getty Images/iStockphoto
The government currently spends £49bn with outside organisations each year for services such as probation © Getty Images/iStockphoto

Bidders for public contracts must show how they improve society

11 March 2019

Businesses who want to secure future government contracts will be urged to show they can also help improve society by tackling issues such as modern slavery and climate change, the government has announced.

Speaking at the Social Value Summit at King’s College London, minister for implementation in the Cabinet Office (CO) Oliver Dowden announced that government contracts will now be awarded to ensure social value is considered, including sustainability and workforce diversity.

Dowden said that too often social value has been treated as a tick box exercise, rather than a purposeful consideration when awarding contracts for the £49bn currently spent with outside organisations each year.

As part of considering the social impact of suppliers when awarding contracts, the government will also be looking to increase the number of SMEs that win contracts.

Earlier this month, the Department for Business, Energy & Industrial Strategy (DBEIS) announced its SME Action Plan, which repeats a target that £1 in every £3 spent should go to SMEs by 2022. DBEIS said it would spend an extra £35m with small businesses.

Dowden said bidders would be encouraged to employ people from diverse backgrounds, including those with disabilities and from ethnic minorities.

Supply chain safety will be considered, including modern slavery risks and cyber security, as well as environmental sustainability credentials and firms that prioritise staff training to boost long-term employability.

The CO has said that while creating a “significant cultural shift for both the public sector and industry”, the shake-up of government procurement will come at no additional cost or complexity.

Dowden also announced that there would be a public consultation held over the next 12 weeks to seek industry input on what metrics should be taken into account by central government when evaluating social value.

Last month the government unveiled its outsourcing playbook, providing guidance to departments to ensure they work with a diverse and healthy marketplace of companies, including small businesses and charities.

Frederik Dahlmann, associate professor of strategy and sustainability at Warwick Business School, said: “The contribution that companies make to society are not restricted to profits and taxes.

“Businesses have a role to play in addressing inequalities, environmental degradation, health and welfare.

“Ensuring that public sector contracts are linked to companies achieving these goals is an important stepping stone towards creating value more broadly. Cost and quality remain important, but companies bidding for public contracts should be able to demonstrate that they tackle important social and environmental problems directly.

“This is a welcome step towards the aims of the United Nations’ Agenda 2030 and its Sustainable Development Goals.

“These issues are not just important for public sector contracts, they are shaping up to becoming the norm for all companies.”

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