Public Services (Social Value) Act 2012

Under the Act, councils must consider how what is proposed to be procured might improve the economic, social and environmental well-being of the relevant area and how, in conducting the process of procurement, the council may act with a view to securing that improvement (“Social Value”).

When must the Act be considered?

The Council must consider how what is proposed to be procured might improve the economic, social and environmental well-being of the relevant area before starting the process of procurement (that is at the “pre-procurement stage”). At the pre-procurement stage, services are designed and specifications are developed and inclusion of social value considerations at this stage can shape the procurement approach and the design of the service.

What must the Council consider?

The Council must consider only those matters that are relevant to what is proposed to be procured and it must be proportionate in all the circumstances.

As part of the pre-procurement stage the Council must consider whether to undertake consultation. The Act only requires the Council to consider whether to consult; there is no duty actually to consult. It recommends that the consultation should be digital by default but this may not always be appropriate (for example where the Council is procuring a service for older adults and service users are to be consulted).

What is the relevant area?

The Act states that the local authority must consider how what is to be proposed might improve the economic, social and environmental well-being of the relevant area. This is the area in which the authority (or authorities) primarily exercise their functions. The authority would have to look at the whole geographical area even if the contract is only directly relevant to part of the local authority’s area. If the authority is procuring a framework agreement on behalf of other local authorities that authority which is procuring must consider that wider geographical area.

When does the Act not apply?

The Act does not apply to any service procurements that are below the EU threshold (currently £172,514). The Act also does not apply to works and supply contracts. Further, where there is an urgent need to arrange the procurement and this makes it impracticable to comply with the Act before the procurement process starts, the Council may disregard the requirements to the extent that it is not practicable to comply with them. However, this exception cannot be relied upon where there has been undue delay on the part of the Council in commencing the procurement process.

Other statutory requirements and the Act

Section 17 of the Local Government Act 1988 placed a duty upon local authorities, when exercising their functions in relation to letting contracts, to do so without reference to non-commercial considerations. The Act makes it clear that the restriction of s17 does not prevent a public authority considering a non-commercial matter to the extent that the authority considers it necessary or expedient to comply with the Social Value duty.

Under the duty of Best Value local authorities should consider overall value, including economic, environmental and social value when reviewing service provision. It should be noted that the Best Value duty has not been repealed by the Act. Therefore whilst looking at Social Value, the Best Value duty remains throughout and Councils are still bound to comply with it.