New Northern Ireland policy requires scoring of social value in public procurement and the introduction of minimum contractual requirements
08 July 2021
On 5 July 2021, Finance Minister Conor Murphy announced a substantial change in policy in public procurement in Northern Ireland that will, on a phased basis, require scoring of social value in public procurement, and the introduction of minimum contractual requirements, in particular in relation to employment protections.
In summary, the new policy, as set out in PPN 01/21 – Scoring Social Value requires that:
- From 1 September 2021, the following requirements are incorporated into all Government contracts:
- Compliance with relevant employment, equality and health and safety law and human rights standards;
- Adherence to relevant collective agreements; and
- Adoption of ‘fair work’ practices for all workers engaged in the delivery of the contract. ‘Fair work’ contains 7 measurements of: (a) terms of employment; (b) pay and benefits; (c) job design and nature of work; (d) social support and cohesion; (e) health, safety and psychosocial wellbeing; (f) work / life balance; and (g) voice / representation.
- From 1 June 2022, payment of the living wage must be included as a condition of contract for all tenders.
- From 1 June 2022, tenders must allocate a minimum of 10% of the total award criteria to scoring of ‘social value’ (N.I. Departments are however encouraged to score social value in advance of 1 June 2022 if possible).
‘Social value’ in this context refers to the wider financial and non-financial impacts on the wellbeing of individuals, communities and the environment. The PPN sets out four broad ‘themes’ of social value: increasing secure employment and skills; building ethical and resilient supply chains; delivering zero carbon; and promoting wellbeing. These themes draw together the 12 outcomes from the Programme for Government to be delivered through this new policy. It is left to Departments to determine what additional social value impacts are appropriate and deliverable for each contract, with a broad outcomes-based framework in Annex A of the PPN.
The criterion set out in this framework are designed to ensure consistency of approach. However, there remains flexibility for each Department to give different weight to different model criterion; set a minimum score for individual criterion; or require a minimum average score across the criterion. The importance of contractually managing, monitoring and reporting on the delivery of social value is stressed throughout the PPN, and the Department of Finance is tasked with publishing an annual report on the implementation of the scoring social value policy (which report is to include any Department decisions to ‘opt-out’ of the policy, which are anticipated to be extremely rare, and require Ministerial approval).
This 10% minimum weighting will apply to contracts above the threshold at which the procurement regulations apply, however, again where considered appropriate, N.I. Departments can score social value on contracts outside of these thresholds and allocate a higher weighting than 10%. The new policy will be reviewed before June 2023, with the intention that the minimum weighting will be increased to 20% (subject to N.I. Executive approval).
The PPN encourages consideration of how social value will be included in contracts from the earliest possible stage in the procurement, and recommends specifically that Departments consult with both communities that will be affected by the procurement and potential suppliers to identify the best way to promote social value (taking into account expert procurement and legal advice as part of the deliberations).
The PPN specifically notes that how social value can be maximised in long term programmes and sectors which have a high volume of low value procurements requires consideration and planning, for example in relation to hospital projects, social housing sector or infrastructure / building maintenance.
The new policy represents a significant and important step for procurement in Northern Ireland and brings Northern Ireland more in line with procurement policy approach in England and Wales, where a requirement to explicitly evaluate social value (with a minimum 10% weighting) has been in place since January 2021. As the policy itself acknowledges, by reference to the training programmes to be designed and rolled out for Departments, Centres of Procurement Expertise and suppliers by January 2022, this announcement represents the first step, with further significant work needed to fully develop the approach and achieve meaningful incorporation of social value within procurement.
Those tasked with procuring then will first need to carefully consider which social value impacts and outcomes will form the basis of their organisation’s social value approach, and develop their social value policy and potential scoring methodologies available on this basis, before turning to the wider issues the policy raises, such as staff training and engagement with communities / suppliers to identify the most feasible and beneficial way to promote and secure social value in a particular procurement exercise. For contractors and suppliers, attention now should turn to considering how to respond to these new requirements and potential resource implications, before the new policy fully takes effect.
Our Procurement team has a wealth of experience of advising contracting authorities, utilities and suppliers alike in this area. Our team has particular expertise, following the introduction of the similar policy in England and Wales earlier this year, in the specifics of how to compliantly incorporate social value within award criterion and training of staff in this area; as well as assisting suppliers in framing their response to meet these new requirements.
If you have any queries, or for further advice, please contact Kerry Teahan or your usual Carson McDowell point of contact.
*This information is for guidance purposes only and does not constitute, nor should be regarded, as a substitute for taking legal advice that is tailored to your circumstances.