Your Social Value questions answered…
When there’s a fixed cost for a piece of work, it’s straightforward for suppliers to commit Social Value upfront in proportion to the work they’ll be delivering. We’ve found that suppliers are happy to commit resources that represent anything between 3-16% percent of the total contract value.
In a lump sum construction contract for example, suppliers may commit to providing a certain amount of local apprenticeships that can support the work being done, in addition to time, materials and funding for local community organisations supporting the contracting authority’s – say, a housing association of a council – wider strategic objectives.
At the Social Value Exchange, we have a reliable methodology for pricing resources suppliers commit, taking into account multiple data points via a live web scraper. Suppliers then bid on the resources they’re willing to commit as part of a contract in an ascending, sealed bid e-Auction; using either the monetised values themselves, or a points conversion. The supplier who makes the best, most reasonable offer bids of community benefits tends to win the contract.
But how do you create Social Value when there’s no payment guaranteed for the supplier?
In a fixed term contract for instance, suppliers compete during the tender process to be the sole supplier for a defined period of time. Once the contract is secured, the legal structure is there for work to be agreed – in large or small installments – or none at all. Even though ballpark values are used during the tender process to communicate the scale of the work, the contracting authority isn’t tied into paying the winning supplier anything. In this insecure arrangement, suppliers are reluctant to commit to a defined amount of Social Value.
Suppliers could commit a nominal amount and end up getting millions of pounds worth of public money, while delivering little community benefit. On the other hand, they may overpromise in order to win the contract, but not be able to deliver.
Therefore, on the basis that:
– A consistent proportion of Social Value is generally committed in large contracts, regardless of their size
– Suppliers have their own preferred mix of resources that they’re prepared to offer, depending on where their organisation has spare capacity
– A maximum contract value is communicated by contracting authorities in regard to the work needed, allowing suppliers to tangibly calculate their maximum social value commitment…
We ask suppliers to pledge their maximum Social Value commitment, but only hold them to account for delivering in proportion to the work that is given them
Suppliers still participate in the competitive Social Value e-Auction, where there are bidding controls at play. In particular, a bid cap or maximum bid is used in order to avoid commitments becoming disproportionately large.
After contract award, the supplier’s final commitment is converted into a Contract Appendix, stating that resources must be delivered in proportion to the value of work delivered. Then during delivery, the supplier agrees with the contracting authority the resources to be delivered each quarter, facilitated by the Social Value Exchange.
Our tech makes this fast, reliable and easy
Our technology enables efficient administration of this process and we apply behavioural insights and gamification to encourage users to follow it (carrots and sticks). Suppliers are held accountable for delivering their resources as part of a verified feedback process involving both the supplier and recipient organisation. Public ratings are used to encourage optimal performance. We also complete a wider evaluation piece looking at the social return of the resources that have been delivered, beyond their input value.
We believe that suppliers benefit from this approach as much as anyone else: by making the expectation and parameters reasonable and clear from the outset, and by brokering connections with the local community, suppliers can focus on delivering on their area of expertise, while giving back in valuable ways to the communities they’re operating within—and be celebrated for it.
We think this might be helpful…
‘7 Things To Think About If You’re Doing Social Value And Want To Do It Right’
We’d love to hear from you.
Email: hello@socialvalueexchange.org
Telephone: 020 3488 6223