Understanding the latest Procurement Policy Note on social value

The focus on social value in procurement has never been greater and the Government has announced that it wants a focus on every pound of public money spent on public procurement to support British business, boost growth and help build a fairer economy to ensure people see the impact of investment in their local communities.

The Government has not been shy in making it clear exactly what it means by this.

The most recent Procurement Policy Note (PPN026/26) explains that the concept of social value is now somewhat narrower than it was previously and should now be defined as:

“taking account of how a supplier will work for our communities to provide good British jobs, skills and opportunities in every postcode.”

The intention is that this will drive an increase in good quality jobs, skills and opportunities, which in turn will see an increase in growth and productivity across the country.

Who does the new PPN on social value affect?

The new PPN is applicable only to central government departments, their executive agencies and non-departmental public bodies. So, potentially, it won’t have the national impact across local communities that is intended yet as it doesn’t apply to local authorities or combined authorities (though they are invited to adopt the same approach if they wish and we might see these requirements widen over time).

The PPN’s requirements will only apply to higher value procurements, i.e. contracts with a value in excess of £1 million (incl VAT) procured with processes commencing on or after 1 January 2027.

How should social value be assessed for Frameworks under the new PPN?

The PPN states that social value should be assessed at two points: the first in the evaluation, which takes place when the framework is established and secondly when a call-off contract is awarded.  Notably, for social value to be taken into account at the call-off stage, it must have been assessed at the framework establishment stage.

The age-old problem with social value

Those of you familiar with my views on social value will know that I always mention this “age-old problem” with social value, which is that to be part of the evaluation criteria, the social value criterion must be directly relevant to the subject matter of the contract.  

In many cases, it can be difficult to see a link between the social value being evaluated and the subject matter of the contract, but this is what is required by procurement legislation and the PPN does nothing to change this; in fact it reinforces it as a principle.  

Social value considerations must also be proportionate, not create unnecessary burdens for suppliers or barriers to participation, and must not discriminate against treaty state suppliers.

Mandatory weightings

A 2025 PPN (PPN02/25) mandated that social value criteria must make up at least 10% of the overall score for tenders where contracts are awarded by central government bodies.  

The new PPN now requires that social value criteria will have mandatory minimum values of:

• 10% of the overall score for tenders where the value of the contract is between £1 million and £5 million; and
• 20% of the overall score for tenders where the value of the contract is more than £5 million

It’s not entirely clear whether the “over £1 million requirement” imposed by the new PPN now means that there is no minimum weighting for social value for above threshold contracts below the £1 million value for central government bodies, or whether PPN02/25 still applies to contracts valued at less than £1 million, but we anticipate that the guidance will clarify this.

What do I need to do in response to the new PPN?

When designing a procurement, authorities should select a relevant delivery outcome from the model in Annex A to the PPN with corresponding award criteria. The two delivery outcomes included in the PPN are:

Outcome 1: Good jobs offering fair pay and good working conditions, helping people to get a job, stay in work, and progress in their careers, with good employment opportunities across the country

Outcome 2: Skills: activities to address skills shortages, promoting skills development opportunities particularly to those who face barriers to employment or struggle to engage in the labour market

The model in Annex A to the PPN sets out objectives relating to each of these two outcomes, model award criteria to use and a summary of how they should be taken into account. The model can be accessed at the end of the PPN here. Sub criteria will follow with more detailed guidance, which has been promised for Autumn 2026.  

The social value outcome, objectives and evaluation approach selected for the procurement (which needs to be relevant to the procurement) should be included in the tender documents with a list of related community programmes which are available for bidders.  

What is the “List of Community Programmes” in the PPN?

The List of Community Programmes is a document which hasn’t been published yet, but will be published alongside the more detailed guidance promised for Autumn 2026.  It’s designed to be a list of approved local and national community initiatives that bidders can choose to support or deliver as part of the social value commitment in their bid.  

It appears authorities will be encouraged to include relevant community programmes from the list in their tender documents, which are relevant to the subject matter of the contract and will create meaningful social value relevant to the outcomes selected in the evaluation criteria.

How do I continue to demonstrate social value?

Social value does not stop once the procurement is complete. The PPN reminds authorities that they must ensure that social value is incorporated into the contractual commitments of the successful bidder(s) and that these are monitored and measured throughout the life of the contract using KPIs.  

The PPN also requires at least one KPI to be focused on social value for contracts valued at £5 million or more. For these contracts, at least three KPIs must be included under the Procurement Act 2023, as well as a social value KPI. Performance against the social value KPI must also be reported on at least once each year via a contract performance notice.  

Those familiar with contract performance notice provisions in the Procurement Act 2023 will know that the content of a contract performance notice relating to poor performance, generally, but also including social value performance, can be taken into account when awarding future public contracts through discretionary exclusion grounds. Bidders will therefore have a clear incentive to comply with their social value commitments.

Getting social value right when it comes to procurement

There is nothing stopping any authority from including social value criteria in their procurements from now, for any above threshold contract (and in fact most authorities already do this). However, real care should be taken to ensure:

• You have given genuine thought around how the social value criteria are relevant to the subject matter of the contract being procured
• Your scoring methodology works with the social value questions you have included
• The social value criteria do not effectively act as a barrier to participation in the procurement for SMEs and VCSEs
• The social value weighting will not effectively “skew” the result of the evaluation due to the weightings used for social value as compared to the other criteria being used – will you still be ensuring good quality services are being delivered in a value for money manner?

If you’re looking for legal support with anything covered in this article or procurement law generally, contact Alison Walton using [email protected] or 0191 2117850.