Description: occ_blk

To:

Finance Panel

Date:

25th February 2020

Report of:

Head of Financial Services

Title of Report:

The Social Value Act 2012 and Social Responsibility in Procurement

 

Summary and recommendations

Purpose of report:

In December 2018 The Finance Panel considered a report on the Council’s response to the Social Value Act 2012 and Local Government Act 1999 with regards to the Procurement of supplies and services.

This report summaries progress to date.

Key decision:

No

Cabinet Member:

Councillor Ed Turner – Cabinet Board Member for Finance and Assets

Corporate Priority:

Economy, efficiency and effectiveness

Policy Framework:

Corporate and Budgetary framework

Recommendation(s):That Cabinet resolves to:

1.

Note the report

 

 

 

 

 

 

 

 

 

 

Appendices

Appendix 1

Appendix 2

Social Value Question for ITTs and RFQs

Break down of social value achieved on procurements from suppliers 2019


 

1.    Introduction and background

1.1       Social Value is considered as the wider benefit gained by the local community, businesses and the environment through the better spending of public money.

1.2       In December 2018 The Finance Panel considered a report on the Council’s response to the Social Value Act 2012 and Local Government Act 1999 with regards to the Procurement of supplies and services. Recommendations from Finance Panel were subsequently approved by Cabinet (formally known as City Executive Board) on 13th March 2019. This report provides an update on progress to date on the embedding of these recommendations into procurement processes.

 

2.    Progress to date

2.1       The agreed recommendations were as follows:

Table 1: Recommendations agreed at CEB in regard to Social Value

Agreed CEB Milestone Description

Target Date

Completion Date

% Complete

Minimum requirement of 5% weighting on all non OJEU (below £180k) tenders to be included on all procurement templates

 

December 2019

 

May 2019

 

100%

Minimum requirement of 10% weighting on all non OJEU (below £180k) tenders to be included on all procurement templates in 2020

 

December 2020

 

 

0%

Minimum requirement of 15% weighting on all non OJEU (below £180k) tenders to be included on all procurement templates in 2021

 

December 2021

 

 

0%

 

2.2       The Procurement Team continually identify and implement improved processes and exceeded the first recommendation above by adding the 5% weighting to all Procurement templates i.e. OJEU, non OJEU and Request for Quotes to capture Social Value on all low and high value projects.

2.3       In addition to the above the Procurement Team have also introduced the evaluation of suppliers in compliance to the Modern Slavery Act 2015 for both Invitation to Tender (ITT) and Request for Quote (RFQ).

 

3.    Data report for Social Value proposals 2019

 

3.1       The concept of social value and the subsequent agreement to include within the evaluation of the procurement of goods and services when relevant and proportionate, has been introduced not only into the Council but also into the business undertaken by the Councils wholly owned companies, Oxford Direct Services Ltd (ODSL) and Oxford City Housing Limited (OCHL).

 

3.2       The data is taken from the suppliers written response/submission to the Council’s requirements for each project and therefore may not have included everything they treat as ‘business as normal’, such as paying the Living wage, using electric vehicles, waste recycling, paperless systems etc.

 

3.3       Some Request for Quote Social Value responses are currently not captured on the Contract Register, this is because a formal contract is not required due to a Purchase Order constituting the contract.

 

3.4       The award criteria for Social Value when relevant and proportionate is mandatory at 5%, but can be increased if it is felt to be  relevant and proportionate to the project. Supplier’s proposals are evaluated using the scoring framework below and the total pro-rated to give a percentage score out of the maximum percentage set for Social Value:

 

·         Score of zero - Nil Response, or Proposal is so incomplete or irrelevant that it is not possible to form a judgement

·         Score of 1 - Almost unacceptable, response is limited or proposal is inadequate or substantially irrelevant.

·         Score of 2 - Below expectation, proposal does not fully address the requirement and gives rise to a number of concerns about its potential reliability.

·         Score of 3 - Satisfactory, proposal generally meets requirements, gives minor reservations about meeting some of the requirements.

·         Score of 4 - Good, meets expectations, proposal provides detail that is directly relevant, gives confidence as to reliability to meeting all key aspects of the requirements.

·         Score of 5 - Comprehensive, proposal exceeds expectations, gives high confidence that all key aspects of the proposal may be relied upon without reservation, offers added value and innovation that is relevant to requirement.

 

3.5       In 2019/20 to date out of 52 awarded contracts valued between £35,000 and over the OJEU threshold of £180K, for OCC, ODSL and OCHL there have been 75 varying proposals from 33 awarded contracts (19 contracts were not relevant) regarding Social Value and environmental benefits. This information is shown for each organisation in Appendix 2 with a summary shown in Table 2 below.

 

 

Table 2 :  Social value submitted by suppliers

OCC

ODSL

OCHL

Support mentoring, placements and apprenticeships: Offers vary from taking on an apprentice in years 2 or 4 of a contract, or taking one on when the spend is over £5m, or just looking into the apprenticeship schemes/ ex-military schemes

3

7

3

Recruit/support local subcontractors and SME                Offers vary from using local suppliers as sub-contractors, spending locally for supplies, support local employment, sub-contract 80% to SMEs

1

6

3

Support a charity donation

Offers vary from charitable contributions, donations to community funds, donations to Oxford based charity, Oxford office to raise money for local hospice

0

7

0

Support/provide time to volunteer for community work/engagement

Offers vary from providing 1 staff a day to help at a community or voluntary group, provide 1 day voluntary work, 1 hour per week community engagement

0

5

3

General response in line with our corporate priorities.

Some responses just agreed with our objectives/principles with no specific benefits

6

0

0

Contribute to the delivery of Oxford’s Zero Emission Zone

Proposals around supporting a reduction in emissions

7

1

0

Support Oxford Living wage

Only 3 tender proposals included in SV submissions but all suppliers sign up to Terms and Conditions that state that supplier/sub-contractor shall make all reasonable endeavours to ensure they comply with the “living wage”

0

0

3

Provide H&S cost advice/awareness training

1

1

0

Support paperless systems

2

0

0

Support the environment (reduction of noise, air and chemical pollution)

1

1

0

Work placements

Offers vary around work experience, 4 weeks work placement, work placement for Academy

0

3

0

Work with schools or colleges in Oxford

Offers vary from 40 hours with schools or colleges, attending a school career event, run sustainable design w/shops, career fairs.

1

3

0

Increase tourist revenue

1

0

0

Invest in hybrid vehicles - reduction in carbon footprint

1

0

0

Specialist advice to local people

0

1

0

Support disabled residents of Oxford (and their families)

1

0

0

Support the eradication of vehicle congestion

1

0

0

Support waste recycling

0

1

0

Use environmental friendly packaging

1

0

0

27

36

12

 

3.6       The Council is not at liberty to legally enforce the payment of the Oxford Living Wage. The Council has recently introduced a Self-Certification Scheme for suppliers to sign up that they pay the Oxford Living Wage and there are currently around 20 suppliers who have done so.  Whilst this is not a specific requirement for a supplier to self-certify currently, this will be introduced as an improvement for 2020.

3.7       It should be noted there are no specific government guidelines to measuring the value of social value offered by different organisations, therefore in this initial phase of introducing an element of social value into our procurement process, much of what has been put forward can only be checked through appropriate contract monitoring by purchasing managers once the contract has been awarded. In 2020 contract management training is to be undertaken by the Procurement Team and will address the Councils Social Value objectives such as:

·         realising Social Value proposals

·         supporting the Oxford Living Wage scheme

·         annual check on the Council’s suppliers on their Modern Slavery Act Statements

 

4.    Conducting Business with SME’s and local suppliers

4.1       Since Social Value is concerned with local communities it follows that undertaking business with local suppliers and indeed, Small and Medium sized Enterprises (SME’s) would add to the Councils embedding of social value.

4.2       What is an SME?  The UK government follows the EU’s definition of SMEs, and to qualify as an SME, there are two criteria: staff headcount of between one and 250, and an annual turnover of no more than €50 million (approximately £45 million). The current target for Government spend with SMEs is 33% by the end of the current Parliament in March 2022, a revision of the end date of 2020.

4.3       The Council report into Corvu on the percentage of spend with national and

local SMEs used per month.  As of December 2019 the target for the Council’s SME spend was set at 28.53% (taken from Corvu measure FN052).

 

Spend for OCC (excluding ODSL, ODST and OCHL) from January 2019 to December 2019 was £33,455,562.43.

 

From January to December 2019 the Council (excluding ODSL, ODST and OCHL) achieved an average of 64.10% of spend with national and local SMEs, peaking In the month of August at 72.86%.

4.4       Consideration should also be given to the amount of spend which is via other large contractors who then purchase through an SME (classed as indirect SME spend) (contractors who sub-contract to local suppliers) Figures indicate for ODSL this is running between 20 and 43%% of spend.

4.5       In 2020 to try and increase the Council’s and wholly owned companies procurement spend with SMEs, Procurement will look at various options:

·         In early 2020, hold a suppliers engagement event, to include local suppliers, SMEs and Voluntary Community Social Enterprises (VCSE).

·         To raise awareness of the SME, VCSE and Social Value Agenda across the business via team bulletins, workshops and contract management training

·         To engage with local SME representative groups i.e. Federation of Small Businesses

 

·         To review all Procurement processes and identify where we can compliantly assist SMEs to engage and bid for more contracts

 

·         Consistency of approach with other departments within the Council

 

4.6       The Council has a good track record of work in this area as shown in the following graphs. The graphs below show Information for spend in the Council, Oxford Direct Services and Oxford City Housing Ltd over the period 1-1-2019 to 31-12-2019 split between national and local SME’s

 

 

 

 

4.7 Use of local suppliers

4.7.1      Using local suppliers clearly helps the local area in terms of employment and wellbeing of residents in the locality. Oxford City Councils local spend for December 2019 achieved 38.92% and for local SMEs we achieved 31.52% as shown in the following graphs:

 

4.7.2   It is ODSLs intention to engage with more local suppliers and to find ways to make it easier for SMEs to work and bid for work with ODSL.

 

 

 

4.7.3   OCHL local (and SME) spend can be unpredictable as the charts show below, the    100% point indicates spend of £8k with local suppliers, whereas for April and May, spend was around £400k (in total) with minimal local suppliers being used, most being National SMEs.

 

 

 

Payment for Goods and Services

4.7.4   In addition to paying 99.9% of our undisputed invoices within 30 days of receipt the Council already pay all local SME’s within 14 days of receipt.

 

5.    Key Learning points to date

 

5.1      Recent Social Value webinars acknowledge that there are challenges to embedding Social Value into Procurement processes, the three main areas of concern have highlighted that many authorities are:

·         still struggling to have a consistent approach with mixed practices from public sector buyers and suppliers,

·         there is no standard effective way to measure SV  and

·         there is no scrutiny or consequence for failing to deliver SV commitments identified during the procurement process.

 

5.2       Whilst Oxford City has made a start there is still much to do across the organisation. Issues that have arisen to date include:

 

·         Risk of Internal staff using old templates.

·         Risk that Contract Managers will not ‘realise’ the benefits offered on tender proposals.

·         Tenderers proposals come in many different formats and often their proposals are difficult to place a value on in GBP.

·         Social value should be linked to the subject-matter of the contract and proportionate to its requirements, therefore case by case considerations must be made ensure relevant social value questions are included in the building of tender/quote documents.

·         Balancing how we take into consideration and incorporate sustainability, ethical, environmental, social value and working with local SMEs and voluntary enterprises including Social Enterprises into Procurement exercises, as well as obtaining “value for money” and choosing the supplier that offers “the optimum combination” of whole life costs and benefits to meet our requirements.

·         We cannot insist a Supplier pays the Oxford Living wage (or, indeed, that it adopt any pure employment terms beyond those required by law). Problems arise where:

o   Staff members are employed to work on a mixture of contracts, not all of which require the Oxford Living wage to be paid.

o   Where only some suppliers named on Framework Agreements pay the Living Wage. The suppliers who don’t adopt it can win mini competitions on proposing lower prices. There is a risk of challenge from the losing supplier supporting our OLW scheme.

·         Contracting authorities cannot easily monitor adherence to the payment of the Oxford Living wage or be able to enforce it.

·         SME’s may be disadvantaged if the Council cannot effectively create a level playing field for the scoring of SV , Oxford Living Wage and various other elements

·         Not all Contracts are awarded by Procurement and therefore it is unlikely that all Contracts have SV, Oxford Living wage, Modern slavery etc. captured.

·         There does not appear to be a SV corporate policy encompassing a procurement element.

·         Other Councils and partnerships may be experiencing the same issues and it may be pragmatic to work with those organisations to create an Oxford wide policy.

·         If too much weighting is placed on SV, Oxford Living Wage, Environmental impacts etc. it may mean that a supplier is selected who scores highly in this area, but who may not be technically better or provide best value for money to the Council

5.3       Within the report from Finance a number of other recommendations were put forward for consideration, although little work has been undertaken on these areas to date. These include:

·         To update all Environmental/Sustainable/Ethical Policies to include more details on the requirements of the SV Act

·         The Council should seek to implement the Green Public Procurement Policy on all spends

·         For the Council to consider paying all SME’s and Voluntary Community Sector (to include Social Enterprises) within 14 days, as we do currently for Local companies.

 

6.    Future Goals and Milestones

6.1       Whilst some good progress has been undertaken to date on establishing Social Value offered by suppliers there is more to be done. It is an area which is taxing most local authorities, whilst they understand the principles they have yet to start implementing it in earnest, by benchmarking our local and District Councils we feel Oxford City Council has made an earnest effort to implement it with further improvements defined for 2020.

6.2      A survey of our neighbouring authorities indicates that some do not have any firm processes for dealing with the Social Value element of procurement, whilst others do not have mandatory weightings but ask around social value in individual procurement projects according to what it is they are sourcing and whether Social Value is relevant.

6.3      The Councils Procurement Strategy is in the process of being redrafted and social value and green procurement will form a major part of this strategy going forward. Future actions over the coming 12 months are shown below:

 

Milestone Description

Target Date

% Complete

Redraft Procurement Strategy

April 2020

20%

Apply the Green Public Procurement Policy in the  Procurement Strategy for 2020

December 2020

10%

On award, contract handover document to include any Social Value benefits proposed

February 2020

25%

Contract Management training to include the benefits of realising SV

Start February 2020

0%

‘Meet the Buyer’ event to include Voluntary Community and Social Enterprise sector

 

April 2020

 

20%

Review 4 toolkits to aid embedding SV and working with Voluntary and Social Enterprises into all procurement processes from pre tender to realising the benefits

 

September 2020

 

25%

All RFQ contracts SV responses to be detailed on the Contracts Register on set up of contract/supplier

April 2020

25%

Consider increasing Social Value weighting to 10% where relevant and proportionate

December 2020

0%

 

6.4       As part of 2020 Social Value improvements the Procurement Team would like the Council to adopt a question on Social Value (Appendix 1) where relevant and proportionate, the benefits for adopting this will be:

·         Council stakeholders and Tenderers will have a better understanding of the areas encompassed in Social Value and the Council’s objectives

·         Tenderers responses will be closer to being ‘like for like’ and therefore fairer and more transparent to evaluate

·         Making this an approved approach will make it easier to embed into Procurement processes and templates, with communication ranging from internal training workshops, Intranet updates, contract management guidance and one to one advice as required

With better understanding of the benefits proposed and any additional value this offers the Council, we may be in a position to increase the weighting.

 

 

Report author

Kay Allsopp

Job title

Contract and Procurement Specialist

Service area or department

Finance

Telephone

07917791906

e-mail

kallsopp@oxford.gov.uk

 

Background Papers: None

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

Appendix 1

 

Oxford City Council are seeking to engage with providers who will be able to promote

and deliver to the economic, social and environmental well-being of the City as part of

the contract, as covered under the Public Services (Social Value) Act 2012.

 

Please demonstrate where your organisation is able to meet Social Value considerations and your direction of travel over the past 2 years as part of the wider impact of goods, works or services, giving specific details of what will be delivered in line with this contract.

 

To help Tenderers understand Oxford City Councils commitment to Social Value, we have listed ideas below which the tenderer may wish to consider, these may promote good ideas or are practices/processes already in place and counted as business and usual.

Weighting 5%

Jobs: Promote Local Skills and Employment (incl. schools and colleges)

  • Supporting payment of the Oxford Living Wage, align with the Councils self-certification scheme
  • Number of meaningful apprenticeships, work placements and mentoring opportunities that pay the Minimum, Local or National Living wage
  • Number of hours supporting unemployed people into work by providing career mentoring / CV advice / career guidance
  • Number of hours supporting local schools/colleges with career talks / curriculum support / literacy support / workshops / career events
  • Supporting opportunities for disadvantages people, long term unemployment / rehabilitating young offenders / people with disabilities
  • Improving skills for local people, training opportunities.
  • Supporting the Council’s vision of an inclusive economy

Tenderers response:

Please state if you are willing to support payment of the Oxford Living Wage and  align with the Councils self-certification scheme                                          Yes/No

 

 

 

Growth: Supporting growth of responsible local business

  • More opportunities for local SMEs and VCSEs, equipment or resources donations to local VCSEs
  • % of contracts that include commitment to ethical Procurement
  • A workforce and culture that reflect the diversity of the local community, diversity training for contractors and sub-contractors
  • Amount spent in local supply chain through this contract
  • Amount spent with local micro, small and medium enterprises (SMEs)
  • % of contracts with Social Value embedded in the supply chain, how this is measured and monitored
  • Supporting the Councils vision of delivering more affordable housing

Tenderers response:

 

 

 

Social: Healthier, Safer and more resilient Communities

  • Initiatives to help crime reduction
  • Creating a healthier community, initiatives taken or supported to engage people in health activities or initiatives
  • Vulnerable people are helped to live independently, initiatives taken to support elderly, vulnerable, disabled people
  • More working within the Community, hours volunteered to work on local projects, support provided to help local Community

·         Supporting the Council’s vision of flourishing communities

Tenderers response:

 

 

 

 

Environment: Protecting and improving our Environment

  • Savings in the reduction of air pollution and how it will be achieved
  • Better places to live, voluntary time dedicated to the creation or management of green infrastructure, keeping green spaces green
  • % of contracts that include sustainable Procurement commitments
  • Saving CO2 emissions and how it will be achieved
  • Number of low or no emissions vehicles
  • Climate impacts are reduced
  • Reduction in waste, recycling / paperless systems / food waste
  • Supporting the Councils vision of a zero carbon Oxford

Tenderers response:

 

 

Innovation: Promoting Social Innovation

  • Please describe any other initiatives you are committed to or willing to commit to if awarded this contract i.e. local charity donations / staff or company voluntary time / improving staff wellbeing

Tenderers response:

 

 

 

 

 


APPENDIX 2

 

Social Value supplier proposals (May 2019-December 2019)