Local Authorities Wary of Costs When Considering Social Value

Report from BDO provides a practical guide to maximising benefit from implementing the Public Services (Social Value) Act 2012

Research by BDO LLP has identified that almost half (48%) of local councils are reluctant to encourage the delivery of social value through procurement, as they believe that reducing costs is more important.

The BDO report, carried out by the firm’s specialist public sector practice, highlights that councils may well be missing a trick by not fully  leveraging their significant expenditure on goods and services by encouraging suppliers to deliver wider social benefits in the community. This is despite local authorities accepting that they would be pushing on an open door in this regard, with only a minority (7%) believing that their suppliers would resist the concept of delivering social value.

The BDO report, entitled ‘Social Supply: A guide to improving social value through better purchasing’, also found that whilst 75% of Local Authorities are already engaging with their suppliers to increase social value in line with the recent Public Services (Social Value) Act 2012 (‘The Act’), 83% of councils do not measure the benefits of any social value initiatives they use in their existing procurement processes.

Combining BDO’s experience of supporting procurement in local government with a survey of over 95 local authorities and conducted in association with the Municipal Journal (MJ) the report reveals that implementing the Act will require a strategic approach and relies on establishing collaborative relationships with suppliers. 

Andy Mahon, BDO Partner and head of the local government team, comments “In our research we found many examples of the public and private sector demanding more from suppliers through engaging up front and building social value considerations into contracts. The new legislation provides an opportunity for councils to work more closely with suppliers and think more broadly about the potential benefits that contracts can deliver within local communities. We know from our daily conversations that suppliers are chomping at the bit to engage in this way”.

BDO’s report aims to provide local authorities with guidance on complying with the Act whilst maximising the benefits for their local communities through:

• Presentation of research on the current state of social value in procurement in Local Government;
• Examples of best practice drawn from research and BDO’s direct experience;
• Practical guidance on harnessing supplier potential to deliver social value through a 4-stage Social Supply process.

Andy Mahon continues “Untapped opportunities for councils to achieve ‘more for less’ are few and far between in the current economic environment. This legislation should act as a catalyst for changing the way the supply chain is managed rather than simply being viewed as another regulatory hurdle. At a time when significant changes are taking place in the way that councils approach commissioning and purchasing services, BDO’s report demonstrates that there is real potential to work with suppliers to ensure every contract is delivering the widest benefit to the local community and not just the short sighted view of value for money.”

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