Are Local Authorities Ready for The Procurement Act 2023?

February 2025 marks the month The Procurement Act 2023 will come into effect across the UK, meaning a list of changed rules for local authorities when it comes to awarding businesses contracts.

One of the biggest changes is that all contractors who bid for government work will now have to clearly demonstrate their social value contributions, and if they cannot, regardless of best price, they won't be awarded the contract.

Measuring social value

Social value looks at the benefits to people and society - such as well-being, skills and education, localism and environment - beyond cost or profit. Contractors will need to show how they have measured these contributions in their bid.

Meanwhile, local authorities will have to show that they have done their due diligence in checking these measurements before awarding contracts. There could be implications for those local authorities who cannot clearly demonstrate this.

There is some concern that while there is good intention behind the act, which is to see the maximum benefit for communities - it could be lost unless the procurement teams in local authorities take action. There must be full understanding of the social value implications of the new legislation and actively engage with suppliers.

Research undertaken in 2024 by Social Enterprise UK (SEUK) and Social Value 32 estimated the cost of missed opportunities when it comes to social value at £56bn (US$69.8bn).

SEUK's report noted widespread challenges within local authorities in terms of social value policy, leadership, measurement and implementation. Without action, there is a risk this 'value-drain' will continue under the new legislation, devaluing local economies and impacting jobs.

There is also the need for local authorities to be aware of the potential of being caught out by the meaning of social value, which can be difficult to provide a solid metric for.

It can be specific to each authority, where there is no one-size-fits-all approach to it. Social Value Business (SVB) helps local authorities and businesses with understanding and demonstrating social value measurement and is already working with local authorities to limit the possible challenges and issues that local government procurement teams will face later this month.

Social Value Business is working in partnership with Liverpool City Region Combined Authority to create a Guide to Social Value for local authorities.

What is expected of procurement teams?

Richard Dickins is the founder of SVB and Social Value Quality Mark CIC. He says that there is widespread concern when it comes to understanding what is expected of procurement teams in local government: "We welcome the intention of the new Procurement Act, which goes further to use public spending as a force for good," he says.

"The government is seeking to transform the £385bn (US$480bn) spent annually to generate maximum benefit for communities. It wants to level the playing field so that smaller businesses and social enterprises can compete for a share of this spend.

However, we know that too many local authorities still see social value as a 'tick box' exercise. Under the new regime, suppliers will have clear routes to object if they feel a local authority has not awarded a contract fairly. This could lead to decisions being overturned or damages awarded. We are also concerned that without proper understanding, opportunity will be lost."

Social Value Quality Mark

Richard adds that they are working at this time with teams on what measurement of social value looks like and how to evidence this. There is one way in which businesses can measure and demonstrate their commitment to social value is with standards like the Social Value Quality Mark.

Independent accreditation such as this provides assurance that those holding the Mark will have established governance, plans and processes for driving and measuring their social impact. They will be investing in wellbeing, spending locally, donating time to volunteering and tracking their Net Zero progress.

"The SVQM is the UK's national standard in social value," Richard adds.

"It tells local authorities that a supplier is committed to communities and socially responsible business. Procurement teams can take the SVQM as independent verification when assessing a tender.

"They can also use the measurable commitments made as part of the accreditation to track a supplier's progress. If they are still unsure as to whether an organisation's claims are legitimate or if a supplier does not hold the SVQM, they can ask for an independent value audit.”

Trailblazers in this arena

Liverpool City Region Combined Authority (LCRCA) are trailblazers in this arena, largely helped by their specialist Social Value Lead, Lucy Bridge, who has been working on these changes for some time.

"It is up to local authorities to have a clear understanding of this legislation and to understand how that correlates to social value in their area," Lucy says.

"They need to know how to measure the social value within the contractor's bids in line with the legislation. Procurement teams need training and to engage with contractors to provide training and resources for them to understand what is required of them.

"We need to be clear on what we are looking for in terms of how an organisation working in our community can demonstrate social value to meet our procurement criteria. However, important social value elements in Liverpool City Region may be different to the elements in Greater Manchester and vice versa."

Richard adds: "This is where the problems will occur. The official learning and development programme launched by the Cabinet Office to support the transition is comprehensive but cannot possibly take into consideration the different important social value needs of each local authority. How central government legislation relates to the local priorities of each region may be open to interpretation.

"All local authorities should ensure they are familiar with the changes and reach out for social value training and help in good time. There's still time."

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