Social Value Act has influenced the private sector too

Bruce Melizan
posted by Bruce Melizan
27 April 2015

The Social Value Act has been hotly debated since the publication of Lord Young’s report, with varying perspectives on how successful the public sector has been in implementing its principles.

What is indisputable, however, is the impact the Act has had on how the procurement of outsourced services is being approached – not just in the public sector, I would argue, but in the private sector too.

As well as holding a number of major civil government contracts with local authorities, central government departments, universities and healthcare organisations, Interserve also works with some of the UK’s largest private sector businesses – and we are seeing the debate around social value starting to resonate with commercial organisations as well.

Private sector outsourcing contracts are no longer won and retained on cost alone; there is a wider ‘value equation’ private sector clients consider when procuring services, ranging from the financials of the contract to added value considerations such as environmental sustainability, social impact and skills.

Skills development, in particular, is one area where this is felt most keenly. As businesses across a host of industry sectors strive to overcome a far-reaching UK skills shortage, what support services providers already do to drive skills and employment is becoming an increasingly important part of the outsourcing value equation. This can be in the form of apprenticeships, NVQs or through specific skills initiatives tailored to a particular contract – but whatever form it takes, it is moving the value equation beyond purely cost to consider wider socio-economic impacts.

A more holistic approach to procurement offers the support services industry a chance to truly demonstrate the added value it can bring to its customers in key areas beyond cost-cutting. But it’s important both client and supplier understand exactly what is expected from the relationship from the word go, and put in place an accountable, transparent contract model that takes these obligations into account.

Support services providers need to understand why a client is undertaking an outsourcing process, agree what services the supplier is expected to offer, and clearly define how the delivery of services that are perceived to be ‘added value’ will be measured. With a clear and mutually agreed brief set out from the outset, support services providers will be able to deliver real value across a multitude of disciplines and services.

Ultimately, the fact the outsourcing ‘value equation’ has evolved to consider more than just cost is a good thing for clients and suppliers, and I welcome the influence the Social Value Act has had in driving this trend. What we need now is an open, honest and pragmatic discussion between clients and suppliers to work out how support services providers can best meet the varying needs of their clients and bring true social value to outsourced contracts.

Bruce Melizan is executive director of Interserve

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