Social Value Procurement Policy

Published: April 2022

Contents

Our commitment and ambition

Introduction

In 2020 we published ‘Our Commitment to Inclusive Growth’. Reviewing and updating our approach to procurement in support of our inclusive growth ambitions was a key year one deliverable within this strategy.

Specifically, we committed to the:

• Development and implementation of social value in procurement;
• Introduction of progressive procurement measures designed to support the local supply chain;
• Implementation of measures to increase the capacity of the local supply market; and
• Implementation of measures to ensure that our spend can boost the local economy.

This document presents our approach to delivering on these commitments through our commissioning and procurement activities.

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Our ambition

Whilst seeking to achieve the best commercial outcome from our procurement activities, it is our aim to also ensure that the purchase of goods, services and works achieves value for money by making a positive difference to the people and communities in Belfast. We cannot afford not to - a missed opportunity to deliver social value is a cost that must be absorbed elsewhere in public services.

Furthermore, evidence indicates that the more we spend with Belfast-based suppliers, the more our residents will be able to benefit. Our approach is about boosting local competitiveness, not about sheltering local micro and small businesses from competition. This is particularly the case as we seek to deliver those actions set out in the ‘Belfast: Our Recovery’ document, with the aim of contributing towards a sustained recovery from the COVID-19 pandemic.

We have defined social value as:

A commitment to using our influence and procurement power to help deliver the Belfast Agenda; to drive inclusive economic growth, improve the local environment, and support local communities and vulnerable people – while ensuring the best possible value for money when purchasing goods, services and works for the people of Belfast.

Our message to our supply chain is clear – we want to do business with suppliers who have a strong people, environmental and ethical focus within their business.

To maximise the impact of our expenditure, we have established the following social value objectives:

1.  Grow an inclusive and resilient Belfast economy, by engaging local suppliers and thereby encouraging re-spend within the Belfast economy, supporting micro and small businesses [Footnote 1] (who make up circa 90 per cent of all Belfast businesses), social enterprises [Footnote 2] and co-operatives [Footnote 3] (who may employ local people and people who are disadvantaged in the labour market and re-invest within local communities).
2. Increase the number of jobs in Belfast and create local employment opportunities for the long-term unemployed, economically inactive and other underrepresented groups in the labour market.
3.  Raise the living standards and prosperity and enhance the wellbeing of local residents by promoting socially responsible criteria for our suppliers.
4.  Promote environmental sustainability by, for example, implementing environmental improvements (aligned to our draft Resilience Strategy), supporting reductions in waste and carbon emissions, supporting energy efficiency, promoting and procuring the use of materials from renewable and sustainable sources within the council and our supply chain (leading to, for example, reductions in disposable and single-use plastic items).
5. Support fair and ethical trading in the supply chain (such as compliance Human Rights legislation and Modern Slavery Act), whilst expecting our suppliers, service providers and contractors to demonstrate a similar commitment.

We will deliver on this vision and our broader objectives by putting in place changes that realise the following:

• We will encourage and reward our suppliers to operate and provide goods and services in such a way that offers maximum social, environmental and economic benefit to Belfast residents and communities.
• We will encourage the use of reserved contracts to support social enterprises and co-operatives.
• We will encourage and reward suppliers to become employers who do not use zero hours contracts.
•  We will encourage and reward suppliers who pay employees the Real Living Wage (RLW). [Footnote 4]
• We will aspire to lead the way by introducing social value scoring and weighting – it is not routinely scored (and subsequently no weighting applied) by other local councils in Northern Ireland.
• We are committed to the prompt payment of suppliers - we will ensure that our supply chain promptly.
• We will use our influence and leadership to achieve social value – this goes beyond our procurement framework and includes:
  • Economic development support for social enterprises and co-operatives.
  •  Social value being considered at the design stage of all physical projects.
  • The development of our Inclusive Growth City Charter; and
  • Working across the City and wider Belfast Region to encourage adoption of our  social value approach.

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The impact of our changes

Since 2013, Belfast City Council has integrated social value commitments within relevant council contracts to, amongst other things, provide ring-fenced employment and work placement opportunities and promote accessibility to micro and small businesses. Achieving social value is, therefore, not new to us. However, we are committed to doing more and in the coming months will start to make progress toward the delivery of our ambition.

Our proposed changes will result the adoption of a broader and more progressive approach to procurement than our ‘as is’ approach and will enable us to widen the spectrum of influence to have more impact. The table compares 'As is' approach to procurement with our Proposed approach to procurement.

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Legislative constraints

Our ambitions are somewhat constrained by the legislative environment in which we operate. These constraints include the current absence of a Social Value Act in Northern Ireland and Article 19 of the Local Government (Northern Ireland) Order 1992. The latter places restrictions on the council’s freedom to consider various matters when procuring works or goods by declaring certain items ‘non-commercial considerations’ which cannot be considered as part of a procurement process.

It is within this legislative context that we have developed our approach. We will continue to support the Northern Ireland Executive with its plans to develop and implement a Social Value Act and work with the Department for Communities to explore how the current constraints associated with Article 19 can be mitigated.

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Realising our ambition

Social Value Toolkit

We have developed a social value toolkit (the ‘Toolkit’) to deliver on our ambition. This Toolkit has been tailored to our needs – it is based on lessons learnt from elsewhere and best practice, along with local learning from approaches such as the ‘Buy Social’ model. Importantly, it is broader and more progressive than our ‘as is’ approach. We believe that our approach will offer greater potential to deliver social and environmental benefits.

In developing the Toolkit, we have built on the good practices already established in our procurement processes to support and develop our local supply base by ensuring improved awareness of opportunities, advice and guidance and removal of any barriers to tender. An overview of the Toolkit is set out below:

Reserved contracts

We will use reserved contracts, where appropriate, to support social enterprises and co-operatives. To do so, we are instigating changes in our procurement decision-making process to ensure that the potential to reserve a contract is properly considered.

The first stage of our toolkit will take commissioners through a step-by-step process to ensure appropriate and proportionate decisions are made on whether a tender can be delivered via a reserved contract. It will not be enough to simply ‘consider’ the potentially to reserve - if a commissioner determines that a contract cannot be reserved, they will be required to explain and document why this is the case.

We will also:

• Examine on a yearly basis our pipeline of procurement activity to identify potential contracts suitable to be considered as ‘reserved’ – thereby improving our understanding of the barriers.
• Publish our procurement pipeline so that the market can plan for tendering for opportunities.
• Undertake pre-market engagement to determine how competitive/representative the voluntary, community and social enterprise (VCSE) sector is in certain markets.
• Reduce requirements within contract for example remove minimum turnover thresholds.

Organisational Behaviours (selection criteria)

For all tenders over £30,000, we already look for suppliers to demonstrate their current business policies and procedures for example assessing suppliers against aspects such as offences in relation to conspiracy, corruption, bribery, fraud and compliance with Modern Slavery Act.

Moving forward, in addition to the above we will seek suppliers (where appropriate) to provide the following:

• Ethical Procurement and Fair Treatment of the Supply Chain:
  • Prompt payment of suppliers (we will ensure that our suppliers pay their supply chain promptly). This will be added as a condition of contract for all suppliers the council contracts with.
  • Supplier's policies relating to their ethical procurement and fair treatment of their supply chains.
• Environmental Policies and Procedures (supporting the circular economy/procurement):
  • ISO 140001 environmental management systems or equivalent
  • Supplier's policies relating to reducing single use plastics (SUP).
  • Supplier's policies relating to donating/recycling equipment to the VCSE sector.
• HR Policies and Procedures relating to:
  • Equality and diversity in the workplace.
  • The development, health and wellbeing of their employees.
  • From 1 April 2023, for all tenders over £30,000, suppliers must pay the Real Living Wage [Footnote 5] to all its employees
  • From 1  April 2023, for all tenders over £30,000, suppliers must not use zero hours contracts for any of its employees

It is our aspiration that this will encourage and reward supplier behaviours to ensure that their business practices as employers, procurers, or in the delivery of their services, are channelled in the direction of achieving social value and inclusive growth across Belfast.

Social Value Weighting

From June 2022, for all tenders valued over £250,000 we will introduce social value scoring and weighting as part of our procurement process. We will apply a weighting up to a maximum of:

• 15 per cent where cost criteria are less important (that is less than 50 per cent)
• 10 per cent where cost criteria are critical (that is more than 50 per cent)

From April 2023, social value scoring and weighting as part of our procurement process will be applied for all tenders valued over £30,000.

After we have undertaken a number of evaluations during the first year of implementation, we will review these weightings to determine if they should be altered, thereby continually ensuring that social value represents a meaningful element of the evaluation criteria and award outcome.

Minimum scoring threshold

In line with our commitments and ambitions for delivering social value through procurement we want to ensure that a minimum level of social value if offered by the market and awarded through our tender competitions. We are proposing a minimum social value scoring threshold to the social value weightings as follows:

Each social value offer by suppliers will be risk/quality assessed to ensure that it is achievable and meets our expectations. Should a supplier fail to meet these minimum social value scoring thresholds following evaluation then their entire tender bid would be excluded from the tender process.

Social Value Initiatives (award criteria)

The toolkit sets out a range of social value initiatives (award criteria) that are linked to Belfast Agenda outcomes. These are additional interventions or actions that a supplier can deliver over and above the supply of the goods, services or works being tendered. Suppliers will be able to select which of these initiatives they are willing to offer and commit to delivering under a contract.

To enable us to measure and assess the social value offer being made, we will adopt a points-based system, which builds on the Buy Social and National TOMS Framework approaches. Each social value initiative has been given a total based on proportionate points. Each social value point is worth £500 [Footnote 6] of estimated investment in time and resources required by the supplier to deliver the social value initiative.

The tables provide details of:

• The social value initiatives that suppliers will be able to select from in the first instance, under the relevant commitments established in the Belfast Agenda in table 1
• Examples of social value initiatives and the corresponding points in table 2

We recognise the need for flexibility, which is why the social value initiatives proposed and the corresponding points can be easily updated/developed in line with our changing priorities/commitments, procurement legislation (for example possible introduction of a Social Value Act in Northern Ireland). This flexibility will also enable us to reflect the needs of local communities when we undertake larger scale capital investments to ensure that their aspirations are reflected in the social value delivered.

Similar to the social value weighting, after we have undertaken a number of evaluations during the first year of implementation, we will review these initiatives and/or the corresponding points to determine if they should be altered, thereby continually ensuring that social value represents a meaningful element of the evaluation criteria and award outcome.

Table 1 Social value initiatives that suppliers will be able to select

An employment week is the equivalent of one person working for five days either onsite or through a mix of work and training.

Table 2 Social value initiative points-based system

Taking a phased approach to implementation

Our approach will be implemented on a phased basis – allowing us (and our suppliers) time to build our expertise and experience. This is not only important for us as an organisation, but also for our suppliers, as they continue to face the challenges posed by the COVID-19 pandemic.

It is our intention that up to April 2023, we will apply our enhanced organisational requirements to all tenders over £30,000, with the additional social value requirements (that is social value scoring and weighting) applying only to tenders that are over £250,000 (we estimate that this will be applied to over a third of our overall tenders in the first year). From April 2023, all aspects of this policy will apply to tenders over £30,000 (enhanced organisational requirements, and social value scoring and weighting).

We will establish a Review Reference Group that will meet on a quarterly basis. After we have undertaken a number of tender evaluations during the first year of implementation, this reference group will review key aspects of our approach (for example weightings, social value initiatives and/or the corresponding points) to determine what (if anything) should be altered. This will:

• Outline any opportunities for continual improvement.
• Provide an opportunity to revise our approach as we learn from best practice and supplier feedback.

Our phased approach to implementation is depicted in table 3.

Table 3 Phased approach to implementation

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Monitoring and reporting

Appropriate and robust monitoring and reporting will be crucial if the proposed approach is to be successful (or otherwise) in achieving our ambitions for social value. The establishment of the Review Reference Group will support us to do this.

In conjunction with SIB’s Buy Social team, we will develop an online reporting tool, which will allow us to capture all the social value initiatives included in contracts, monitor their delivery and take action against non-delivery and provide regular reporting.

We will ensure that the measurement and monitoring of social value commitments delivered by suppliers are incorporated into the general performance management of the contract. Suppliers will be expected to report on their performance highlighting how they are achieving social value. Depending on the contract type, we will introduce measures such as:

• Social value key performance indicators (KPIs).
• Service performance deductions/service credits in the event social value commitments are not fully delivered. Any subsequent payments by suppliers could be used to fund other council led social initiatives.
• Social value incentives/rewards which could be used to incentivise suppliers to deliver extra social value commitments.
• Retention money to cover social value commitments until fully delivered.

In all cases, we will ensure that suppliers are given a reasonable opportunity to rectify any performance issues.

Monitoring social value commitments in this way and working with suppliers will be useful in producing new ideas and innovation that can be incorporated into future procurement activities.

We will commit to publishing a performance report on an annual basis, highlighting the benefits and impact of our policy and toolkit. This will (amongst other things):

• Outline any opportunities for continual improvement.
• Provide an opportunity to revise our approach as we learn from best practice and supplier feedback.

Key findings will be disseminated in written and verbal formats to all stakeholders with a vested interest in the policy and toolkit.

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Other aspects of our approach

The core aspects of our Toolkit will be supported by changes in how we promote our procurement opportunities, engage with the market and train our staff. These changes are vital – they will ensure that as we progress through implementation, both we and the supplier base have the confidence to engage and deliver.

Transparency and pre-market engagement

We publish and regularly update our procurement pipeline to help suppliers prepare for future tendering opportunities. The information includes the contract title, estimated value and anticipated calendar quarter when the tender will be published.

Each contract and supplier market are different and, therefore, the social value commitments which suppliers may deliver in addition to their goods, works and services will vary. All relevant procurement exercises will, therefore, commence with pre-market engagement, providing potential suppliers with an opportunity to provide their opinion on suitable social value commitments. Whilst we know that there may be differences depending on the nature of the supplier market, it is anticipated that this will result in more innovative social value measures, with suppliers potentially having their own creative proposals to contribute towards the city’s outcomes. In all cases, our aim is to stimulate supplier engagement and encourage high-quality and competitive tender submissions.

Supplier guidance and training

We have developed detailed guidance for potential bidders to council contracts and additional guidance for commissioners who procure and commission goods, works and services. The guidance is intended to influence suppliers so that they are better able to accommodate social value commitments and to identify ways in which they can increase the economic, social and environmental value of their work.

The council will offer suppliers training on tendering. This will also provide an overview of our social value toolkit (discussed above) and how suppliers can use this for the purposes of their tender submissions.

Support to social enterprises

While this policy recognises the role that the council’s expenditure presents to achieve additional economic, environmental and social wellbeing, it also highlights the potential to obtain added social value through the council’s influence and leadership roles. As a result of local government reform, the council obtained enhanced local economic development powers. [Footnote 7] We will use these powers to support the development of the social economy sector in the city.

Social enterprises are trading businesses whose primary objective is to achieve social and/or environmental benefit. By selling goods and services in the open market, social enterprises create employment and reinvest their profits back into their business or the local community. This enables them to improve people’s life chances, provide training and employment opportunities for those furthest from the labour market, support communities and help the environment. The social economy is therefore an important driver for regeneration and neighbourhood renewal in Belfast. The council is aiming to grow Belfast’s social economy sector to create jobs, provide innovative services and products and contribute to the social and environmental wellbeing of the city.

Research indicates that strengthening the ability of social enterprises to compete with multi-nationals and other larger enterprises may result in improved economic growth and resilience, supporting a region’s ability to better withstand business and economic shocks. By supporting social enterprises and co-operatives, we can unlock local economic development as a tool for addressing social and environmental problems, while building local communities. As a result, we are keen to build the capacity of the VCSE sector and provide opportunities for local micro and small businesses to become part of the supply chain for delivering public services.

Key steps in our approach to supporting social enterprises and co-operatives include:

• We developed a Social Enterprise Action Plan 2019-2024 that aims to grow Belfast's social economy sector to improve the lives of Belfast residents through inclusive growth. We will continue to raise awareness of both social enterprises and co-operatives as viable business models and to help create a social enterprising and entrepreneurial culture in Belfast. As part of our action plan, we will provide additional one-to-one support and training sessions to the sector and will provide assistance to access financing and seed funding. We are aiming to support the creation of at least 250 new social enterprise start-ups in the city by 2023 and at least 400 additional jobs within the social enterprise sector by 2024.
• As part of the social value toolkit, we will reward our suppliers who use social enterprises in their supply chains to deliver a council contract. We will ask our suppliers to help increase the capability of social enterprises by providing support in areas such as customer handling, finance, public relations, business and strategic planning, marketing etc.
• There is no central directory of social enterprises in operation across Northern Ireland but as a council, we collect data and monitor the number of social enterprises that register an interest in a tender and/or are on the council’s supplier register. [Footnote 8] We will share this information with Social Enterprise NI and any other interested stakeholders, including other Northern Ireland councils. We will ‘reach out’ to the sector and offer training to social enterprises to help improve their understanding of social value legislation and their tendering and procurement skills. This will ensure they are in a good position to compete for public sector contracts.

Wider support to local businesses

• Where possible, we will invite quotations from local businesses where the contract value falls below the council’s £30,000 threshold. We encourage potential suppliers to add their company's details to our supplier database by completing our company registration form (available on our website).
•  All tenders valued at over £30,000 are listed on the ‘current opportunities’ page of eSourcing NI.
• We will engage with micro and small businesses across the city to provide advice and guidance on how to access public and private procurement opportunities. We will provide flexible specialist one to one mentoring on upskilling, support on live procurement opportunities and building consortiums to ensure they are in a better position to compete for procurement opportunities.
• We will apply criteria that all bidders, irrespective of their size and type, should be capable of meeting. We anticipate that our approach has the effect of levelling the playing field for all types of businesses for example micro and small businesses, voluntary and community sector organisations, social enterprises and co-operatives. We anticipate that such an approach will result in more procurement opportunities be tailored, where appropriate, to the capacities of community businesses, social enterprises and co-operatives.

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Monitoring and reporting of our policy

We will commit to publishing a performance report on an annual basis, highlighting the benefits and impact of this policy and outlining any opportunities for continual improvement. This will provide an opportunity to revise our approach as we learn from best practice and supplier feedback. The following information will be included with the report and submitted to the council’s Strategic Policy and Resources Committee:

• The number of council contracts which include social value commitments;
• Collated performance monitoring information reporting all measures and their contribution towards our stated outcomes;
• The estimated monetary value of all commitments; and
• Case studies of procurement processes where the social value policy has been applied.

In addition, the council will continually monitor and analyse its supplier spend as follows:

• Total council spend;
• Total spend within the Belfast City Council area;
• Total spend with Belfast based micro and small businesses; and
• Total spend with Belfast based social enterprises and co-operatives.

This analysis will enable the council to understand the economic impact of its spend. Using the Local Multiplier 3 (LM3) methodology (which measures how spending generates local economic impact and benefit to communities), we will assess the impact the council has to the local Belfast economy. We will report:

• For every £1 spent by Belfast City Council: the amount that is spent and re-spent in the Belfast economy; and
• For every £1 spent by Belfast City Council: the amount that is spent and re-spent in the Northern Ireland economy.

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Footnotes

[Footnote 1] Defined by the council: Micro business employs less than 10 people. Small business employs 10 or more, but less than 50 people.
[Footnote 2] Defined by the council as "A trading business – selling goods and services – but whose primary objective is to achieve social and/or environmental benefit. Social enterprises are different from those charities and voluntary organisations who do not have financial independence through trading income.
[Footnote 3] Defined by the council as "people-centred enterprises owned, controlled and run by and for their members to realise their common economic, social and cultural needs and aspirations.
[Footnote 4] The Real Living Wage is an independently calculated higher rate of base pay, based on the cost of living, not just the government’s minimum, national living wage. It is considered a benchmark for responsible employers who choose to pay their employees a rate that meets the basic cost of living.
[Footnote 5] As published by the Living Wage Foundation (link opens in new window)
[Footnote 6] The £500 per social value point is a further development of SIB’s Buy Social approach and is based on further research using average weekly earnings data produced by NISRA ASHE 2019 Skill data plus additional HR related costs payable by the supplier.
[Footnote 7] Defined as “a set of activities aimed at improving the economic wellbeing of an area”.
[Footnote 8]   The council is working to develop a database of social enterprises and co-operatives. 

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