While Social Value is recognised as a meaningful mechanism to ensure that Government contracting delivers benefit to local communities and important agendas, there is a disadvantage. The focus the UK Government has placed on Social Value has discouraged international companies bidding to win these contracts. While, that may not sound like a disadvantage, with the globalisation of industry over the past decades, often global companies hold the capabilities and resource to deliver the best outcomes for the best value, however cannot demonstrate Social Value impact easily.
An end of summer read (a Lexology article) highlighted this reality to me. With novice level knowledge of economic theory of free trade, combined with more proficiency in defence procurement both international and domestic, I started to unpack the elements of Social Value policy which may make it difficult to attract international companies and then untangle potential ways this could be resolved. The following is a brainstorm looking at how achievable is it for an international company, offering no in-country production, to meet with Social Value model award criteria, to a level that would be considered successful in being awarded government contracts:
Theme 1: Covid 19 Recovery
Policy Outcome: Help local communities to manage and recover from the impact of Covid-19.
Theme 2: Tackling Economic Inequality
Policy Outcome: Create new business, new jobs and new skills
Theme 2: Tackling Economic Inequality
Policy Outcome: Increase supply chain resilience and capacity
Theme 3: Fighting climate change
Policy Outcome: Effective stewardship of the environment
Theme 4: Equal Opportunity
Policy Outcome: Reduce the disability employment gap
Theme 4: Equal Opportunity
Policy Outcome: Tackle workforce inequality
Theme 5: Wellbeing
Policy Outcome: Improve health and wellbeing
Theme 5: Wellbeing
Policy Outcome: Improve community integration
After that brainstorming analysis, only 25% of the model award criteria can be achieved by an international company with no UK footprint. If this is the case, the government will soon be realising suboptimal outcomes in their procurements where only domestic suppliers take part in the tender, limiting innovation and value for money, as a result of Social Value in procurements.
The heart of Social Value is to ensure that taxpayers’ money is being spent not just on goods and services but also to reap a Social Value to provide good for stakeholders and society. Could it be that interpreting or thinking about Social Value in terms of absolutes, forces government bodies to award contracts to domestic producers? An alternative could be that international companies generating minimal domestic produce can still offer Social Value by the provision of investing (not monetary) time and effort within the contract for Social Value goodness – offered from overseas?
The takeaway for me is the additional work and cost to responding to procurement notices that global companies will inevitably have to endure in order to comply. What do you think global companies can do to overcome this? What can the UK Government do to support?
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Content by Georgina Wilson Ayilara
Capture Team Lead, Boeing Defence UK Limited