Social Value in Procurement

Social value in procurement is the idea that public money spent on goods and services can be designed to generate returns beyond the direct transaction. A local authority buying school meals can, through its procurement choices, also support local food producers, create apprenticeships for young people, and reduce carbon emissions from supply chains. The legal frameworks that govern this approach differ between the EU and the UK, but the underlying ambition is shared across European public purchasing.

What is social value in procurement?

In EU law, Directive 2014/24/EU permits contracting authorities to include social considerations at three points in the procurement process: in technical specifications (Article 42), in award criteria (Article 67), and as contract performance conditions (Article 70). Social criteria must always be linked to the subject matter of the contract, meaning a buyer cannot award extra marks for a supplier's general charitable activity if it is unrelated to what is being procured.

Social criteria in award may include the employment of long-term unemployed people in the delivery of the contract, training for workers at risk of redundancy, or the inclusion of disabled workers in the project team. These must be quantifiable and verifiable.

In the UK, the Social Value Act 2012 requires certain contracting authorities to consider how procurement can improve economic, social, and environmental wellbeing. The UK Procurement Act 2023 goes further by embedding social value as a consideration across the entire procurement lifecycle and requiring that it be reported on after contract performance. UK central government procurement policy mandates a minimum 10 percent weighting for social value in relevant contract award criteria.

Social value is distinct from corporate social responsibility in that it is assessed at the level of specific contract delivery, not at the level of the supplier's organisation overall.

Why it matters for bidders

Social value scoring has become a significant competitive differentiator in many European public markets, particularly in the UK. A supplier that understands what a buyer values, and can credibly commit to delivering measurable social outcomes, can justify a higher price through the quality component of the award. Community benefit clauses translate these commitments into contractual obligations.

For social enterprises and organisations in the voluntary, community and social enterprise sector, demonstrating social value is often a core strength rather than an add-on, and it can be decisive in contracts where social value carries a meaningful award weighting.

Example

A Welsh county council procures a facilities management contract worth GBP 4 million over five years. The award criteria include 20 percent weighting for social value, assessed against commitments to local employment (minimum 60 percent of the workforce recruited from within 20 miles of the council boundary), apprenticeship creation (at least two per year), and supplier diversity (at least 30 percent of subcontract spend with businesses based in Wales). A bidder who provides a credible, measurable plan for each commitment outscores a rival on social value despite a slightly higher price, winning overall on the combined score.

Frequently Asked Questions

Can social value criteria be used to favour local suppliers?

Not directly. EU law prohibits the use of award criteria that amount to discrimination based on the geographic location of the supplier. However, criteria that are genuinely linked to local delivery outcomes, such as local employment or community benefit, can lawfully be applied if they are proportionate and connected to the contract. The UK's approach under the Procurement Act 2023 similarly permits place-based social value without constituting unlawful discrimination, provided the criteria are transparently published and consistently applied.

How is social value measured?

There is no single EU-wide measurement standard. The UK government uses the Social Value Model, which provides a menu of outcomes with associated metrics. Other European member states use their own frameworks or allow buyers to define their own metrics. Bidders should request clarity from buyers on exactly how social value commitments will be evaluated and verified during contract performance.

Can small businesses compete effectively on social value?

Yes, and often more convincingly than large multinationals. A regional SME may employ locally, source from nearby suppliers, and have genuine community ties that a national contractor cannot replicate. The key is to quantify those commitments rather than describe them in general terms.