The Public Services (Social Value) Act 2012 now in force

The Public Services (Social Value) Act 2012 passed through Parliament last year and requires public bodies to take into account economic, social and environmental well-being in procuring services from suppliers. The Act imposes an obligation upon public bodies to consider these factors only (i.e. there is no obligation upon public bodies to account for social value in commissioning public services).

Public bodies commissioning services in England and Wales will be obliged to take the Act into account, but it will not apply in Scotland.

Whether the Act will have a positive impact upon the ability of charitable and non-profit distributing organisations to win Government contracts remains to be seen. Some people are sceptical with regard to the Act's potential impact because it only imposes an obligation to consider. There have been calls for the Act to be bolstered in terms of the obligations it imposes upon public bodies. However, the Act has only just come into force (31 January 2013) and it will inevitably be some time before its impact can be reviewed. However, it focuses attention upon delivering social value and public bodies will have to consider social value along with price and quality.

Charities and non-profit distributing organisations will not be given preference over private providers. Private providers will inevitably be considering how they can deliver social value as part of their bids, but charities and non-profit distributing organisations already have social value at the heart of their ethos. Being non-profit distributing also helps charities to demonstrate social value because any surplus will be ploughed back into supporting their charitable aims and benefitting the wider community as opposed to being distributed to private owners. Furthermore charities and social enterprises which engage a disadvantaged local workforce (e.g. train unemployed people to get back into work or use their beneficiaries to deliver the services will directly be able to demonstrate social impact).

There are many ways in which charities and social enterprises provide social value and charities' aims are required to be for public benefit. Established organisations will also have a track record in demonstrating social impact. Charities and social enterprises bidding for public contracts should consider how best to maximise the opportunities presented by the Act by clearly explaining in their bids how they deliver social value and measure social impact to help put them ahead of the competition.

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.