Government departments to examine ‘social value’ in procurement after Carillion scandal
The government will force its departments to examine “social value”, and not just cost, when making procurement decisions, it will announce today.
Bids by smaller firms, mutuals, charities and co-operatives for government work will also be boosted, David Lidington, Prime Minister Theresa May’s de facto deputy, will announce in a speech in London.
The move will extend the requirements of the 2013 Social Value Act, in a move it said will “level the playing field” for bidders. The Social Value Act forces government bodies to take into account environmental and social benefits in its calculations of value for money.
The government will also “use its purchasing power”, which amounts to £200bn spent per year on private companies, to force major suppliers to “do better on equality and diversity”.
The moves come in response to outrage over the practices of outsourcing and construction firm Carillion, which collapsed at the start of the year, leaving the government to pick up the slack left in operations across the country.
Larger operators will be forced to publish data and make action plans for tackling “key social issues and disparities – such as ethnic minority representation, gender pay, and what they are doing to tackle the scourge of modern slavery,” Lidington is expected to say.
Big firms will be forced to make “living wills” to plan for their collapse, the publication of key performance indicators for projects, improved training for government procurers, and “enhanced measures” on cyber security.
“If we are to build a fairer society, in which the public has greater trust in businesses not just to make a profit, but also to play a responsible role in society, then we must use the power of the public sector to lead the way,” Lidington will say.
The changes will be part of the government’s efforts to promote “responsible capitalism”, echoing language used by senior Conservative figures from the Prime Minister to the chancellor saying that capitalism needs to be reformed.
Matthew Fell, chief UK policy director at the Confederation of British Industry, said firms “will welcome a change of focus to long-term value rather than short-term costs in procurement, and its intention to reduce complexity and cost involved in bidding to allow more SMEs to compete for work.”