Creating a Competitive Social Value Offer as an SME

If you’re an SME bidding on contracts against large companies, it can feel like a David & Goliath situation, especially when it comes to social value responses. While larger organisations can have a dedicated social value team and the capacity to easily calculate Social Return on Investment (SROI) or impact, this can be more difficult for SMEs to prove. So how can you compete on a level playing field with your social value response?

What is Social Value? 

The Social Value Act (or Public Services (Social Value) Act 2012) is an Act of Parliament in the UK that requires public sector organisations to consider the social, economic and environmental benefits of their procurement decisions. The Act came into force on January 31, 2013.

The Act defines social value as ‘the wider financial and non-financial value created by an organisation through its day-to-day activities in terms of the wellbeing of individuals and communities, social capital created and the environment’.

It requires public sector organisations to consider social value when they are procuring goods, services or works. This means that they must consider how the procurement decision could benefit the local community, the environment or society as a whole.

As a result, social value plays a part in the tendering process and in all tenders, it must equate to at least 10% or more of the score (Policy Procurement note 6/20 sets out that all central government departments and agencies must evaluate social value with a ‘minimum overall weighting of 10%’ for the total procurement. For all other public bodies this is discretionary and can vary). This makes it a very important aspect to get right when submitting your response.

Social Value for SMEs 

With increasing costs and ever tighter margins, delivering social value can be challenging for small businesses. Some buyers may give specific guidance for their social value requirements, while others will want you to develop an approach yourself. For SMEs, a pragmatic approach is best, looking at what you do already and developing a social value plan based around your company strengths. For example:

• Employing local people. It’s important to understand what ‘local’ means for a particular tender. It may mean within a local authority’s area, or within a county or borough. Looking at your staff’s home postcodes will allow you to give an accurate idea of how many staff are employed locally.
• Local recruitment. Taking on new staff is a great way to increase social value, and hiring locally to the contract will increase the impact. Other ways to increase SROI are:
  • Hiring the long-term unemployed through Jobcentre Plus or local authority schemes
  • Hiring people who are further from the employment market, for example people with disabilities, ex-offenders or people experiencing homelessness. Check for local authority schemes to support these or consider advertising roles via targeted recruitment boards like Evenbreak. Making sure you advertise in minority communities is important too; consider advertising through faith groups and at community centres to read a wider audience.
• Training and apprenticeships. Local authorities often have dedicated teams to support you with providing an apprenticeship place. You can maximise the benefit through offering the role to a young person who is not in education, employment or training (NEET). Work experience placements, taking part in career events and school visits are also great offers.
• Using local suppliers. SMEs can use local suppliers for their goods and services to support the local economy and create jobs. Also look at how you can support your suppliers to grow, for example sharing training or giving them support to improve their own social value offer – they can be part of delivering yours.
• Supporting local charities and community groups. While fundraising is the most obvious approach here, it isn’t the only one. Some companies organise a staff volunteering day (paid or unpaid) and join a community project. You may also be able to offer your expertise, for example providing a health & safety audit or inviting them to join your Equality, Diversity & Inclusion training.
• Protecting the environment. Larger companies will have an environmental policy, but they have probably also gone the next step and undertaken a Net Zero baseline assessment and developed a target and policy. There are consultancies who can manage this for you, but if you have a relatively simple business and a staff member with an interest then you can do this yourself. The government’s target is Net Zero by 2050, but some local authorities have set their own targets which are far sooner than this; 2030 is a common target.

It’s also important to keep in mind that being an SME provides social value in and of itself. The government has a target of spending £1 of every £3 with SME businesses, and they should make the bidding process accessible to smaller businesses.

Developing your social value offer will take some time, and we’d recommend that you have a nominated person within your business to take care of this. There is plenty of free advice out there from organisations like Social Value UK – and of course Bidding Ltd are happy to help you with tender responses – get in touch with us to find out more.