Making social value real in the health sector

Jin Sahota and Alan Wain have over 20 years’ experience in public procurement. In 2016 they were commissioned to design, build, and operationalise Supply Chain Coordination Limited (SCCL), the management office of NHS Supply Chain and as CEO and COO respectively they grew SCCL’s market share from 38% to 68%. Here they address the critical topic of social value.

Government spends approximately £212 billion annually on external contracts, with legislation released in January 2021, Social Value has significantly increased in importance. The social value impact (SROI) for every pound spent is now an essential imperative of all public procurement. Social Value is about ensuring contracting authorities and suppliers create additional benefits for the well-being and sustainability of society and the wider environment. In doing this, Social Value helps bring together a wealth of new thinking and collaboration among businesses, employees, and communities, with measurable benefits and impact. Government has released model guidance, but it’s not easily interpreted across all supply chain models, especially product supply. The Regulation cannot be ignored, there could be consequences both legally and commercially.

Mandatory regulatory requirement in public tenders

The new Government regulatory requirement now gaining traction emphasises that from January 2021 all public procurement tenders must include a minimum of 10% of the total award scoring to Social Value. This applies to all businesses, including the medical device and clinical consumable industry. Future tenders will incorporate Social Value; criteria are set by the individual procurement organisation based on a combination of strategy, policy and supply base circumstances, there is not a “one size” fits all approach.

It is a complex model and looks different for every business. It is divided into five themes, eight government policy outcomes, 24 award criteria and 108 award criteria activities.

From our experience of providing professional services to suppliers and contracting authorities, we know that the respective metrics are far-reaching. A cross-functional approach is necessary to leverage functional expertise and initiatives into a consolidated Social Value strategy and response to tenders.

Unless Social Value is proactively addressed by the senior management, the deployment within an organisation is slow and poor. Interpretation of requirements will need significant investment of time and expertise from all parties.

Avoiding social value means loss of margin

A minimum of 10% is meaningful and requires a considered, impactful approach to the qualitative and quantitative assessment criteria. Over the past decade many organisations have invested in ESG and CSR activities. However, at the point of tendering those investments were never recognised, as the criteria focused on ‘Quality vs Price’; one could look at these investments as ‘non-assessed value’. The introduction of Social Value is pivotal because those investments now actually count to winning contracts as the evaluation criteria moves to ‘Price vs Quality vs Social Value’.

Companies embracing Social Value and being able to demonstrate a track record, compliance and future commitment could use this as a strong differentiator to win business in the public sector, not taking this seriously is likely to mean an even greater reliance on price (and margin reduction) to compete.

How to measure Social Value

To embrace Social Value, the preliminary step is to ensure a deeper understanding of the five themes: COVID-19, Tackling Economic Inequality, Climate Change, Equal Opportunity, and Wellbeing, in relation to your company. This is integral to identify the resources invested, the activities performed, the outcome and impact created by a business which contributes towards the upliftment of the society.

Gathering strong evidence to support the company's deep commitment to the themes is key. The evidence should include compliance with legislation, standards, organisational policy and process documents, performance measurement and future commitment, among others.

Takeaways for medtech

Monitoring the respective Social Value evidence operates through a hierarchy of objectives. At a granular level the five themes are further broken down into Model Award Criteria. These outline the specific domains that should be ensured by companies. Although the COVID-19 theme is being used less, elements within it appear across other themes.

Among the above criteria there are specific points that directly address technology and innovation, which are particularly relevant to the medical technology industry. Within each point there exist sub-questions focusing on the key areas that technology-oriented companies should be excelling in (view text-box below). Medtech companies will need to focus on how they can showcase Social Value creation through innovation as well as codify this within their internal documents and procedures.

As the healthcare supply chain begins to deploy the Social Value Model, we are excited to offer professional services to help navigate this complex policy document and support in measuring specific Model Award Criteria.

To support Small Medium Enterprises (SMEs), we have also developed a low cost self-serve online tool which offers primary insights based on business characteristics and tender profiles. At Epscot, we aim to demystify Social Value while making the process simpler and faster. In some respects, we are just at the start of an exciting journey, but it is one we are thrilled to lead.