Social value in Procurement: Learning from East London NHS Foundation Trust
Guest long read
Author: Una Geary, NHS Public Health Specialty Registrar
East London NHS Foundation Trust (ELFT) provides mental health, community health and primary care services to a population of nearly 2 million people in East London, Luton and Bedfordshire, serving some of the most deprived communities in the country. As a large employer with over £500 million annual expenditure, ELFT recognises its significant role and responsibility as an anchor organisation to support the health and wealth of the communities it serves, beyond healthcare provision. Based on research by The Health Foundation [1] into practical ways in which NHS organisations can act as anchor organisations, a key part of ELFT’s Anchor programme is embedding social values into its procurement processes.
Defining and implementing social value in procurement
The Public Services (Social Value) Act 2012 requires all public sector organisations (and their suppliers) to consider how their procurement (i.e. purchasing) of services might be used to improve the economic, social and environmental wellbeing of an area [2]. The government defines these three key aspects of social value in the following ways [3];
Economic wellbeing: employment, apprenticeship or training opportunities;
Social wellbeing: activities that promote community cohesion and;
Environmental wellbeing: efforts to reduce carbon emissions.
Delivering social value means that a supplier delivers added value, or benefit, for local communities, beyond the core requirements of their contract to deliver a given service.
ELFT has set the below local priorities, developed in partnership with service users and staff, to guide its work to deliver social value through its procurement of goods and services:
Ensuring suppliers pay the Real Living Wage set by the Living Wage Foundation (based on the cost of living)
Investment to grow (and retention of spend in) local economies
The creation of equal employment and training opportunities for local people, people with protected characteristics, service users, and groups hardest hit by the COVID-19 pandemic
A commitment to sustainability, including a reduction in carbon emissions
Support for young workers, school leavers, care leavers and apprenticeship schemes.
These priorities were voted on by ELFT’s Council of Governors in 2020, launching ELFT’s social value approach to procurement.
ELFT has been working to implement these priorities through its procurement processes since then by:
Including a mandatory requirement in all new contracts for suppliers to pay their staff at least the Real Living Wage, as well as supporting existing suppliers to do so, with the aim of having 100% of suppliers compliant with this priority by 2025.
Setting a 15% minimum weighting for social value in the evaluation of bids from prospective suppliers, above the minimum 10% level required by NHS England [4].
Assessing the social value commitments of bidders, and prioritising those that correspond to ELFT’s social value priorities, using the national social value measurement framework, developed in line with the 2012 Social Value Act, and associated online tool, the Social Value Portal.
The Social Value Portal provides an overview of the 48 social value measures included in the national framework – when submitting a bid, the bidder selects from among these measures to identify and create their social value offer (i.e. the activities they will undertake to add social value through the contract delivery).
ELFT has allocated higher weightings to measures that correspond to its priorities (e.g. paying staff the Real Living Wage) – thus, when bidders select these measures, they will get a higher score in the bid evaluation.
ELFT is further using the Social Value Portal to monitor the delivery of social value commitments by suppliers who are successfully awarded contracts.
Why is this work important?
One aspect of NHS procurement that has been under scrutiny is outsourcing; i.e. paying an external, third-party supplier to deliver non-medical services such as cleaning and catering. A recent inquiry by the Equality and Human Rights Commission in the UK into the experiences of lower-paid workers from ethnic minority communities in health and social care found that outsourcing of services has resulted in greater job insecurity and poorer pay and conditions compared to those employed ‘in-house’, and that people from ethnic minority communities are more likely to be working in these outsourced roles [5].
One of the key reasons NHS Trusts use outsourcing is to reduce costs, but it is clear that, without proactively considering social values in the procurement process, outsourcing may worsen social and racial inequalities.
Further, outsourcing may negatively impact the quality of services – a study of 126 acute trusts in England found that that outsourcing of cleaning services was associated with greater incidence of MRSA infection, fewer cleaning staff per hospital bed, worse patient perceptions of cleanliness and worse staff perceptions of availability of handwashing facilities [6].
ELFT’s evaluation of its implementation of social values in procurement
In 2022, with grant funding from the Health Foundation and NHS England, ELFT commissioned a process evaluation of its implementation of these social value priorities in the procurement and delivery of two key contracts; one with a small to medium sized enterprise (SME) to develop a new intranet and website, and one with a multinational corporation to provide soft facilities management (such as cleaning and catering).
The methodology included interviews, focus groups and surveys. Participants included social value leads within the two contracted suppliers, ELFT’s procurement and contracts team, and ELFT’s service users. Including the perspectives of service users was a priority, given they are key intended beneficiaries of the implementation of social values in procurement. Over summer 2022, seven interviews were conducted, two focus groups were held (including one with 19 ELFT service users) and two surveys were carried out.
Key learnings from the evaluation
A key finding related to the inequality in expertise and resource between small and large suppliers in terms of their ability to fulfil social value requirements when bidding for public sector contracts. Larger organisations are more likely to have experience from other public sector contracts, and further may have dedicated staff resource to work on their social value proposition.
This inequality leads to a risk that prioritising social value in procurement has the unintended consequence of biasing bidding processes in favour of larger companies.
To address this inequality, proactive support needs to be given to smaller suppliers, and those in the voluntary and community sector (VCS), with less experience of bidding for public sector contracts to improve their understanding of how to implement social value principles in practice, and how to develop their social value proposition to better compete in the bidding process.
A key suggestion from suppliers in terms of support that ELFT could provide was to develop a social value ‘toolkit’ (i.e. support document) to provide guidance on ELFT’s approach to social value in procurement and on developing a social value offer as part of a competitive bid.
In the 6 months since the evaluation findings were published in October 2022, ELFT has acted on this suggestion and developed a social value toolkit for suppliers and prospective bidders, which is free to access.
Other recommendations made in the evaluation report were to consolidate service user involvement in the social value approach to procurement, and to work proactively with North East London Integrated Care System (ICS) to develop a community of practice for suppliers, and NHS procurement teams, to promote social value principles and share knowledge and successes. ELFT has begun engagement work both with service users, and the ICS, in relation to implementing these recommendations.
Conclusion
Prioritising social values in procurement is a key way for NHS Trusts to benefit local communities and mitigate the potential impact of outsourcing on social and racial inequalities. For instance, ELFT has ensured that staff in outsourced roles on its soft facilities management contract are employed on NHS terms and conditions, setting an example for others to follow.
In adopting a social value approach to procurement, it is important for Trusts to proactively support SMEs and VCS organisations, who are likely to be at a disadvantage compared to larger organisations in terms of their experience and ability to compete in bidding processes. To this end, ELFT has developed a social value toolkit to provide guidance for prospective bidders on developing a social value offer as part of a competitive bid.
Although there are other social value resources available for SMEs and VCS organisations to support them in bidding for public sector contracts, ELFT’s toolkit provides a guide that is tailored to a NHS procurement context, and serves as a model which can be used and adapted by other Trusts.
Acknowledgements
I would like to acknowledge and thank Angela Bartley, Tom Morgan and Mohit Venkataram at ELFT for their support with the evaluation, as well as James Sandy and David Frith at the Strategy Unit for their work conducting the evaluation.
References
Reed S, Göpfert A, Wood S, Allwood D, Warburton W. Building healthier communities: the role of the NHS as an anchor institution. The Health Foundation; 2019. Available from: https://www.health.org.uk/publications/reports/building-healthier-communities-role-of-nhs-as-anchor-institution
United Kingdom. Public Services (Social Value) Act 2012. 2012. Available from: https://www.legislation.gov.uk/ukpga/2012/3/enacted
Government Commercial Function. Guide to using the Social Value Model. 2020. Available from: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/940827/Guide-to-using-the-Social-Value-Model-Edn-1.1-3-Dec-20.pdf
NHS England. Applying net zero and social value in the procurement of NHS goods and services. 2022. Available from: https://www.england.nhs.uk/greenernhs/publication/applying-net-zero-and-social-value-in-the-procurement-of-nhs-goods-and-services/
Equality and Human Rights Commission. Experiences from health and social care: the treatment of lower-paid ethnic minority workers. 2022. Available from: https://equalityhumanrights.com/en/publication-download/experiences-health-and-social-care-treatment-lower-paid-ethnic-minority-workers
Toffolutti V, Reeves A, McKee M, Stuckler D. Outsourcing cleaning services increases MRSA incidence: Evidence from 126 English acute trusts. Social Science & Medicine. 2017;174; 64-69. doi.org/10.1016/j.socscimed.2016.12.015