A person holds the silhouette of a family house in their hands

Embracing social values in contracts with external providers

Public Services (Social Value) Act 2012

Most of our clients in the social housing sector have for many years been aware of the importance of taking account of social issues in certain of their contracts with external providers. This has particularly been the case in respect of regeneration projects involving significant capital investment. There has been a natural desire to ensure that local residents benefit as much as possible from the investment, both in the nature of the project itself and the long term benefits that it should bring, and also in the implementation of the project, and the employment and training opportunities that this should provide to the local community.

This natural desire has now become a legal obligation under the provisions of the Public services (Social Value) Act 2012 (“the Act”) which requires RPs (among others) to have regard to economic, social and environmental well-being in connection with public services contracts; and for connected purposes. In implementing public services contracts an RP must consider:

  • How what is proposed to be procured might improve the economic, social and environmental well being of the relevant area; and
  • How, in conducting the process of procurement, it might act with a view to securing that improvement.

In our opinion it is bizarre that the Act covers only contracts for the provision of services, which excludes housing maintenance contracts and capital investment projects.

Another criticism is that compliance with the Act has created something of a legal minefield. RPs will need to take care in discharging their obligations under the Act to ensure that there is no breach of the requirements of the Public Contracts Regulations and the principles of the Treaty of Rome, which have precedence over the Act. For example, social issues which are not linked to the subject matter of the contract (such as the extent to which materials will be purchased locally) may not be used as criteria in the evaluation of tenders.

On the positive side, a whole range of social considerations may quite legitimately be included in the contract performance provisions, such as the:

  • provision of on-site vocational training;
  • employment of people experiencing difficulty in achieving integration;
  • recruitment of long term job seekers;
  • recruitment of more handicapped persons;
  • etc.

For any further information, please contact Bill Bullivant on 07980 290 995 or email bill.bullivant@clarkewillmott.com.