Attaining “Social Value” in Highways Procurement
I have been the Surveying Account Manager for Yotta for the past 18 months having originally joined the company over 4 years ago as a Highways Surveyor. In my time at the company, my role has developed from delivery of our Asset Inventory video surveys to the day to day contract and account management of our survey clients.
As my role has evolved, I have become more and more exposed to formal procurement (I’ve compliled and submitted a lot of tenders!), and the means by which local authorities or trunk road agencies procure our services. I have also come to better understand the drivers that ultimately influence decision-makers in their procurement choices, cold hard cash commonly being the key driver as you may well expect.
If we ignore the money factor for the moment however, one of the most recent drivers in highways procurement has been the “Social Value Act” which came into force in January 2013. To paraphrase the act itself, the term ‘social value’ refers to procurement approaches which maximise the additional benefits that can be created through the delivery, procurement or commissioning of goods and services, above and beyond those directly related to those goods and services.
The Social Value Act therefore requires public bodies and those involved in externally sourcing contracts to consider, at the pre-procurement stage:
- a) how what is to be procured may improve the social, environmental and economic well-being of a relevant area;
- b) how the authority might secure any such improvement.
Bored yet…? Well, on the face of it the principals contained in the Act may seem better placed in a university student’s essay but it is definitely worth exploring. When the concept is stripped back and simplified, the reality is that procurement decisions in our industry, be it of condition surveys, software, or consultancy services, should be driven by far more than quoted price. Seems sensible enough. After all, in everyday life we make decisions on the products we buy, the food we eat, the cars we drive, and the holidays we enjoy on the basis of a multitude of factors. Price, while important, is by no means the only driver.
It’s almost odd therefore that the obsession within the highways industry for getting the cheapest price has been so prevalent in recent times, an obsession that, whilst leading to a general reduction in charge out rates, has often been to the detriment of overall service quality. It is even more confusing and counter-intuitive to think that now, despite government austerity and the general squeezing of public finances, cheapest price is actually becoming less important in procurement decisions.
Indeed, in recent year’s Local Authorities have become increasingly committed to enhancing social value by including stricter social, environmental and economic requirements in the procedures by which they procure third party services. The ultimate goal is to move away from the simplistic idea that procured contracts should be awarded on the basis of ‘lowest price,’ a concept that has been superseded by the practice of awarding contracts to the ‘most economically advantageous tender.’
So what does “Social Value” mean in reality and how can it be obtained in practice? Well, through procurement, local authorities can look to add value through the winning bidder:
- Providing ‘local’ and targeted employment;
- Offering employment opportunities to all sectors of the community through non-discriminatory policies and promoting opportunities to disadvantaged and vulnerable groups;
- Promoting engagement between staff and the community;
- Improving the environment in and around operations;
- Promoting broader opportunities for workplace learning;
- Supporting local initiatives for the development and education of young people in the areas being served;
- Enhancing ‘local’ economic sustainability by using local SMEs, accommodation and public transport;
- Ensuring community engagement and consultation.
So how does this social value approach continue to work in times of austerity, where local and regional budgets are continuing to feel the pinch? Surely, when highways budgets are so tight, it would be better to procure the cheapest services possible as long as the minimum service requirements are met?
Well, alongside the Social Value Act, other key policy drivers such as the Department for Transport’s Incentive Fund, the HMEP guidance documentation surrounding asset management, and more broadly the Central Government push for efficiency and cost-effectiveness in local authority operations, have begun to encourage local authorities to take a longer term strategic approach to highways expenditure.
A key component of this approach is to ensure Council Members look beyond short term public satisfaction levels and procure services that will bring true efficiencies and steady improvements in the overall condition of their local highway network across a 5, 10 or 20 year period.
Only time will tell whether or not taking a longer term-strategic approach to highways management and maintenance will bring about the future socio-economic benefits desired.
What is certain; is that in the present local authorities have a clear choice to make in how they wish to procure services, and the direction taken will strongly influence the approaches Yotta and similar companies take in the way they look to offer real financial, and “Social Value” in the provision of survey, software and consultancy services.