Social value under the Procurement Act 2023

Following the UK’s departure from the European Union, the Government needed to establish a new procurement regime tailored to domestic priorities. 

Historically, public procurement has been governed by strict and tightly regulated processes designed to ensure fairness, transparency, and value for taxpayers. However, procurement teams have often been left feeling restricted, with limited ability to design contracts that deliver strategic outcomes, including Social Value. 

The Procurement Act 2023 introduces a simpler, more transparent system with improved accessibility for SMEs and VCSEs.

What's new for social value

Under Section 12 of the Procurement Act 2023, contracting authorities must "have regard to the importance of maximising public benefit" when awarding contracts. This represents a major shift from the Social Value Act 2012, which only required authorities to "consider" Social Value.

This change places a greater legal obligation on procurement teams to ensure public contracts deliver measurable social, economic, and environmental benefits.

How the Procurement Act 2023 will support social value

Broader definition of 'value'

For years, public contracts were awarded to the “Most Economically Advantageous Tender” (MEAT) under the Public Contracts Regulations 2015.

However, Section 19 of the Procurement Act 2023 updates this principle, allowing authorities to award contracts based on the “Most Advantageous Tender” (MAT) instead.

This change empowers authorities to take a broader view of value and base procurement decisions not just on cost, but on Social Value benefits like: 

  • Local job creation and apprenticeships 
  • Sustainability and environmental impact 
  • Supplier diversity and SME participation. 

Stepping up transparency and reporting

The Procurement Act 2023 isn’t just about prioritising Social Value at the tender stage. It also strengthens accountability and transparency by requiring:

  • Authorities to set and publish at least three Key Performance Indicators (KPIs) for all £5 million+ contracts
  • Where KPIs for Social Value are used, annual reviews to assess whether suppliers are delivering on their Social Value commitments
  • Public reporting on supplier performance, meaning Social Value failures will be visible to stakeholders where KPIs are used to measure Social Value performance

Public debarment a risk for suppliers that don’t deliver

Additionally, the Act introduces stronger consequences for suppliers that fail to deliver on their commitments. 

This includes a public debarment list, which will exclude suppliers with a record of unethical behaviour or persistent non-delivery from securing future government contracts. 

New opportunities in public procurement

A top priority of the Procurement Act 2023 is making public contracts more accessible to small-medium enterprises (SMEs) and Voluntary, Community, and Social Enterprises (VCSEs). 

The Act introduces several measures to break down barriers for SMEs and VCSEs, including:

  • A duty on contracting authorities to remove unnecessary obstacles that prevent smaller organisations from bidding.
  • Mandatory 30-day payment terms across public sector supply chains to improve cash flow for SMEs and VCSEs.

These measures aim to diversify public sector supply chains and strengthen local economies, which will inherently create Social Value.