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Questions from our community

This is where our experts address questions asked by members of the From Procurement to Partnership Community. We’ll add responses to questions frequently. You can send us your question, and also find answers to other Frequently Asked Questions here.

It sounds like “social value” may simply be a method and language for creating a set of objectives that justify the spending of more tax payers money (it seems very public sector orientated rather than, for example, putting a “social value” on helping businesses be successful)? Surely everything has social value in the end, and not just the public sector? And who decides what is good social value? Isn’t this where the market should come in?

  • The Public Sector has been slow to understand and adopt the concept of Social Value and generally would not see it as a factor for increased service cost.
  • A starting-point in public service commissioning was procurement assessments literally being based on lowest price. Obviously quality is a balancing factor. Social Value is another, conventionally less obvious, balancing factor.
  • In the 2014/15 procurement reforms the European Commission was explicitly importing social policy determinants into the basic competition law framework.
  • That was particularly appropriate in relation to public service “markets” which do not in reality function as pure competitive markets. For example, because social care needs are not met by market operation.
  • In macro-economics this relates to the developing post, or modern, capitalist focus on social welfare not being best measured by monetary value (GDP, price), but by the more complex and less-easily computable actual social benefits, or public value, delivered.
  • This is Professor Mariana Mazzucato’s thesis for a new, or adapted, approach to economics in “The Value of Everything”. Economic planning, by reference to collective human welfare, should be led by primary socail objectives – addressing the climate change and social care crises.
  • The universal state education example is hers: we have a measure of the per pupil and total financial cost. We do not have a measure for the total public value benefit. Though we know it and could start to devise ways in which we could quantify it.
  • Alongside this she cites the false equation of value with price by suggesting the President of Goldman Sachs was not correct to say GD executives are the most productive people in the world. They are, rather, the best paid people in the world.
  • Social Value is also what charities and social enterprises and other purpose-driven organisations are inherently dedicated to and can serve as a model for a wider sense that social pupose, social outcomes and social impact are primarily desirable socio-economic objectives.
  • In public services purpose-driven collaboration and long-term partnership planning is (at least) a credible alternative model to the pre-dominant theory of profit-driven, competitive markets.
  • For businesses, certainly in public services, meeting social value need means delivering what is required .
  • In general terms the same may be true. There are good business prospects in meeting actual social need well. There is business efficiency in treating employees well and offering them productive participation. Environmenatl responsibility is a necessary concern for all business.
  • I agree, every business has a purpose and a social value, but prevailing economic norms do not focus on those factors, at least directly. In 2008 the Bank’s overreached in financial markets and failed in their purpose and social value of maintaining stable financial ecosystem.
  • Good social value is complex, requiring stakeholder consultation, a willingness to challenge assumptions and serious analysis and judgement.
  • Monetisation is too easy a proxy for that value. I agree in perfectly functioning markets demand would be defined by true need and market dynamics would respond to that.
  • And that perhaps, is the main point. Social Value is part of a perception change which observes the impersonal market dynamic as an imperfect servant of real public value need.
  • Outside public services this may be more of a matter for political debate. Although this debate does seem to be shifting. For example, a few years ago an American President saying “tickle-down economics does not work”, as Biden did recently, would have been unthinkable.
  • Within public services, I would say, there is no doubt that purpose-driven providers, value-based assessments and collaboration are necessary correctives to the prevailing market-based processes.

If past experience of delivering social value is to be considered within a procurement, would this not have to be part of the selection criteria, and would that not risk excluding some SME’s and newer VCS organisations that haven’t had a chance to build that experience?

  • In public services, Social Value, or Public Value, is the inherent purpose of the procurement, according to an optimum quality/price assessment.
  • Meeting Social Value Imperative criteria might, accordingly, be a pre-qualification matter.
  • That would include a capability assessment, for purpose-driven delivery, to which past operational experience would be material.
  • Equal treatment for a newer organisation would allow a capability assessment more focussed on the credibility and assurance of the purpose-driven strategic planning.
  • Equal treatment for a smaller organisation would allow a capability assessment accounting for the scale at which it operates, on a purpose-driven basis.
  • At the specification stage, purpose-driven experience and/or capability (with similar equal treatment) would be material to the substantive assessment.
  • As a corrective to exaggerated Social Value promises, past performance may be material evidence of their credibility.
  • For newer organisations the credibility assessment will necessarily need to be on the strategic planning. Excellent strategic planning may appropriately outscore mediocre planning, evidenced by mediocre past performance.

How are people articulating a partnership vision within the council, with partners and community members?

It is striking that in many round table discussions, from commissioner, social provider, funder, or community, or combinations of perspectives, there is ready agreement that “partnership”, “collaboration”, “relational, rather than transactional engagements”, “place-based development”, and “social value” should be driving principles in public service commissioning.

And in many such environments it is acknowledged that public procurement, which relates to service contracts, is not the same as commissioning, which encompasses a wider range of methodologies, including subsidy, preferential investment, impact investment, community facilitation, engagement and asset-transfer and the development of integrated community partnerships.

This also all fits into the macro-economic debates about “socialising”, “refining”, “maturing”, or “replacing” the pre-dominant market competition theory of which public procurement regulation is part.

So, there are many articulations, in various stages of development, all reaching for ideas that rebalance prevailing mobilising concepts of: profit, competition and private value, with (at least) equally valid mobilising concepts of: purpose, collaboration and public value.

The mature social enterprise sector that has developed over the past 30 years, supported by the developing social finance sector and the proliferation of purpose-driven, or socially responsive community business are all features of this movement. As are the resurgence and extension of co-operative and participative principles and the complementary consolidation of the role and appreciation of the traditional charity sector within communities.

For the commissioner this means there are willing purpose-driven potential partners across all these sectors. The E3M project is dedicated to the better mutual understanding of these sectors and the greater realisation of the potential for such community partnerships.

Should grants, subsidies and asset transfers be subject to the same rules regarding transparency and equal opportunities as contracts?

Grants and other subsidies, such as preferential loans, or asset-transfers are commissioning methodologies that may be used separately from contract, or in combination with them, for example in a community development project. They are all subject to the general public law principles of reasonableness, which equate to codified procurement principles of objectivity.

Optimal public service provision is not directly the purpose of the EU-based procurement regime. Rather, indirectly, that regime assumes the legal assurance that public authorities will not distort competitive markets, in granting contracts, to be essential in economic terms. The State Aid/Subsidy Control concept applies the same legal assurance to public-sector grants and other subsidies. The general EU Treaty principles of “equal treatment, non-discrimination, transparency, and proportionality” underpin both regimes.

The UK Government’s post-Brexit reforms seem unlikely to change that. So, general UK public law and specific regulation embed objectivity principles.

Importantly, they also provide purposive and permissive flexibility, to allow for those principles to be applied professionally in the best ways to optimise public service provision.

How do you measure social value?

Prior to and since “Social Value” was boosted into common currency in the UK by the Public Services (Social Value) Act 2012, there has been a plethora of initiatives seeking to give “Social Value” definition and tangibility, many with a starting assumption that “measurability” is the critical subject.

However, especially in public services, the starting point should be the recognition that Social Value stands for the great value in the provision of a service that is not necessarily reducible to formal or precise measurement. But the real value can still be understood. Mariana Mazzucato Professor in the Economics of Innovation and Public Value at UCL, uses the illuminating example of universal state education. The cost can be measured, but the socio-economic value is exponential.

The same is true, for example, of genuinely preventative public service social interventions, where multiple future costs of future public service interactions are saved, the lives of individuals are enhanced into greater personal well-being and community socialisation and society benefits from greater economic productiveness.

Such matters can be made subject to “Social Return on Investment calculations” and to proxy-financial credit methodologies, such as the Social Value Portal’s “Themes, Outcomes and Measures”. But the key is a commissioning strategy that treats Social Value/Public Value as the essential purpose and a professional application to the complexity of endeavouring to realise the specific target benefits, outcomes and impacts.

Measurement methodologies need to be serious and credible, but they do not need to replicate price-based methodology, which itself only approximates to true socio-economic value.

Are there outcomes-based contracting arrangements that incentivise collaborative responses like those featured in our case studies?

Certainly. The ideas of partnership, collaboration and multi-sectoral integration are all based on common purpose as the essential starting point, essential guiding principle and only measure of success.

The purpose is to achieve optimal public service provision, combining all available resources. That may be described as securing maximum “social value”, or “public value”. It may also be described as maximising beneficial social impact.

In any properly-focused outcomes-based contract, the target outcomes are derived from the driving purpose and the social value, public value and impact that may be achieved. Commissioner, social providers and other community stakeholders are naturally purpose-aligned and from that common focus, collaborative methodology can co-ordinate perspectives and analyses to determine the over-arching target social/public value and impact and the tangible, target outcomes that best represent them.

Many people use the term partnership referring to a contract, rather than a true partnership with shared risks and opportunities. Do you have a good example of a true partnership and how social enterprise(s) responded to holding some of the risk?

An example of true partnership is the delivery of the public bus service on the island of Jersey by the charitable social enterprise HCT Group. An orthodox tender (in competition with UK and French commercial operators) was won with a partnership proposition. In addition to the public benefit purpose alignment and the commitment to comprehensive route coverage and higher service quality, the pricing offer was based on open-book pricing, including a reasonable surplus, as opposed to the normal closed-book profit maximising price. Profit above the reasonable surplus was to be shared.

The service was significantly improved, as was demonstrated by increased bus use, to the extent that the island consequentially needed to import less fuel for private vehicles. And the service profit levels reached the point where the profit-sharing provisions were activated.

Could an Innovation Partnership be applied to put SIB (Social Impact Bond) partners together?

Certainly. A SIB is preferably understood as a partnership between commissioner, social provider and funder, working in an innovative way, to achieve a common public benefit purpose. A SIB may be initiated by any of the three core partners.

If initiated by a commissioner it is a more complicated commissioning exercise than procuring a service contract. That might mean adopting the Innovation Partnership procedure, as provided for in the Public Procurement Regulations directly, or as a flexible Light Touch Regime, following the Innovation Partnership approach.

If initiated by the provider, or the funder, it might lead to a joint venture innovation partnership, outside procurement regulation; or facilitated through recognition of uniqueness, utilising Negotiated Procedure principles and possibly precautionary market-testing procedures (VEET or PIN); or through a commissioner taking the general idea and initiating an Innovation Partnership, or LTR Innovation Partnership process.

In terms of the Toolkit case studies, would you say it is an innovative partnership that has been established rather than the use of the innovation partnership procedure described in the Regulation, or was the Innovation Partnership procedure used? Are some of the issues linked to terminology? Is there flexibility to create your own procedure?

A community innovative partnership starts as a commissioning, rather than a procurement, concept. The Local Authority’s role is adjusted from that of a directive market-purchaser and manager of budgets, to a provider and convener of resources and a co-ordinator and facilitator of public value outcomes; a lead stakeholder. Proper professional objectivity may be applied to the range of potential stakeholder relationships, consolidating them into a developmental innovative ecosystem.

The purpose of the EU-based, current Public Procurement law is not directly optimising public services, but fair market competition. The two come together as an imprecise assumption that public service needs will be best met by free market provision. Sometimes they may be; often, they are not. However, there is a lack of formalised public law clarity about the professional commissioner’s procedural means of promoting more creative, purpose-directed, sector-integrating partnership.

Reasonable objectivity principles apply generally, but are specifically codified in relation to service contracts, under the Procurement Regulations. The Plymouth Alliance Contract was put in place on general commissioning and procurement principles, without direct application of the statutory provision for “Innovation Partnerships”.

The EU Procurement reforms of 2012-14, which resulted in the UK’s continuing Public Contracts Regulations 2015, focussed explicitly on the procurement procedures being recognised to be social policy instruments, as well as core EU single market pro-competition rules. The “Innovation Partnership” procedure was introduced as part of that initiative. So, within procurement regulation, there is a clear model for the creation of collaborative partnership in public services, which was only implicit before. This procedure was followed by Oldham Borough Council in establishing the social prescribing network, “Oldham Cares” (which is award-winning for innovation).

It is quite right that the Procurement Light Touch Regime also generally applies to social services, which means the prescriptive procedure may, effectively, be reduced to reasonable public advertisement and allowing the flexibility for a creative procurement process, complying only with the fundamental general principles of: equal treatment; non-discrimination; transparency and proportionality. This was the approach of Leicestershire County Council in establishing its Children’s Services Innovation Partnership, which is a 10-year developmental, collaborative partnership with Barnardo’s. This is also award winning for innovation and the first-year independent evaluation report praised the project’s approach to “risk and uncertainty”, in pioneering the procedure. In contract, a significant number of other Local Authorities have been interested, but concluded that the procedure cannot be used, on the limiting, self-perpetuating basis, that other authorities have not used it.

Unfortunately, the Government’s “Transforming Procurement” Green Paper takes the low take-up of formal Innovation Partnership as a reason not to continue with that procedural option, or the focus on the need for distinctiveness in social service procurement, represented by the Light Touch Regime. The emphasis on procedural flexibility is in itself positive, but there is a risk that current progress in innovative commissioning in public services may be disrupted, by Innovation Partnership and the Light Touch Regime being absorbed into generally applicable procedures.

What next?

Tools, Resources and Model Documents

Example documentation, contracts, processes and agreements you can access – or use as a checklist as you progress your partnerships. These practical models and outlines include a set of social value imperatives.

Case studies of purpose-aligned partnerships

Examples of successful public service community partnerships delivering a variety of public services. See them here.

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