Report to follow as a supplement: To consider a report concerning how the how the social value requirement relates to the current procurement process at Oxford City Council, and what processes are in place to monitor the social value delivered by council contracts.

Amanda Durnan, Strategic Procurement and Payments Manager, introduced the report. She explained that in preparing the report, she had looked at other best practice authorities that champion social value through the procurement process. Oxford City Council compared well to other local authorities, in terms of spend with local businesses and wider consideration of social value. Spend with local companies peaked in July 2018 at 73.6%. Another local example of social value through contracts was the prioritisation of low sugar products at the Town Hall cafe, for example.

The report also highlighted a number of ways to improve the level of influence social value had in the procurement process, including providing a scored weighting to social value outputs, and updating the Councils Environmental, Sustainability and Ethical Policies to draw attention to the requirements of the Social Value Act 2012. It was explained that the Council’s current weighting in awarding contracts was 60% for quality and 40% for value / cost. The Panel was pleased to note the emphasis on quality in contracts.

The Panel discussed the challenges of monitoring whether social value had been delivered, given its subjective nature. One example of social value that the Panel wished to see in the awarding of contracts related to whether contractors paid their employees the Oxford Living Wage. However, it was recognised that as private companies, the Council had no role or right in knowing the salaries paid by an external contractor, beyond assurances that they are legally compliant. In response to questions, it was clarified that businesses were offered support by the Council to access and use the procurement portal, but there had been a low level of take up on this.

The Panel noted that social value was also delivered through the Council’s Grants Programme to voluntary and community organisations, but it was not clear where these grants were scrutinised and reviewed to ensure they were delivering on the Council’s objectives. The Panel wanted to understand where the transparency was in the grant awarding and review process, and asked that this question be put to the Council’s Welfare Reform Manager. For example, it was not understood why Bicester Green Re-use Centre had been awarded a grant, because it was outside of the City.

The Panel supported the principle of providing a weighting to tender bids which could demonstrate social value. Whilst there were specific European Union Contract Regulations (OJEU) which set out how social value must be taken into account for contracts of more than £181,000, there was more autonomy for local authorities to give a greater social value weighing to contracts below this level of spend. Manchester City Council for example had a target of 10% of the quality score in awarding contracts (as opposed to the cost / value score) being based on social value when evaluating non OJEU tenders, and this was increased in November 2018 to 15% of the overall weighting. Bristol City Council similarly retained a 10% weighting.

The Panel were of the view that where contractors can reliably demonstrate that they can meet the tender specification; account should also be taken of what role the contract can have in delivering the Council’s wider objectives. For example, where it is demonstrated that one contractor can reduce its impact on the environment over the life of the contract, this should be given reasonable weighting in the decision to award a contract. Based on examples at other Councils, and officer advice, the Panel wished to recommend that a 5% social value weighting is given in all non OJEU contracts, which should be reviewed and potentially increased annually.

The Panel noted that the Council had a standard of paying local companies within 14 days upon request. The Panel agreed to recommend that this standard should also be extended to payments for small and medium size enterprises and voluntary community sector organisations within 14 days. The Panel believed that employing local contractors was a means of generating social value in terms of local employment, and quick payments by the Council would no doubt be a welcome benefit for local contractors.

The Panel noted that Green Public Procurement (GPP), which is championed by the European Commission, is a means of delivering social and environmental value through the awarding of public contracts. Compliance with the GPP, which is voluntary, requires the inclusion of clear and verifiable environmental criteria for products and services in the procurement process.

The Panel recognised value in the procurement of goods, services and works with a reduced environmental impact throughout their life-cycle, compared to contracts of equal quality, which did not offer the same social value. Examples of where these standards may be applied included indoor cleaning services and refurbishment contracts. It was noted that many of the Council’s contractors and services already had regard to these standards, but they were not applied universally throughout the organisation.

The Panel noted that the Council’s Environmental, Sustainability and Ethical Polices do not contain details about the Council’s duties under the Social Value Act 2012. It was suggested that the Council should update these policies to reflect this. However, the Panel first wanted to understand more detail about how these policies would be updated, before such a change could be recommended.

Resolved

That the Finance Panel recommends to the City Executive Board:

1)    to consider introducing a 5% social value weighting for all non OJEU procurement requirements within the Council, which should be reviewed annually (and reported to the Finance Panel) to consider whether subsequent increases are appropriate. This change should be subsequently recommended to Council for incorporation in the next Constitution review.

2)    that the Council sets a target of making payments to small and medium size enterprises and voluntary community sector organisations within 14 days of a contract being agreed, where it is requested.

3)    That the Council should seek to apply the Green Public Procurement Policy on all of its future contracts, and that these requirements are highlighted to all prospective companies seeking to bid for a Council contact.