New NHS guidance on applying net zero and social value in the procurement of goods and services

NHS England has published new guidance to formally adopt central government’s policy requiring contracting authorities to take account of social value when awarding contracts (PPN 06/20). This is intended to help NHS England to meet its stated policy objectives in relation to net zero carbon targets and wider social value priorities. NHS buyers and suppliers to the NHS will need to be aware of this requirement when they are running and participating in procurements.

From 1 April 2022 all in-scope NHS organisations commissioning and buying goods and services must now adopt the requirements of PPN 06/20. In particular, this means applying the social value model including net zero emissions requirements published alongside the PPN and ensuring that a minimum weighting of 10% of the total score is applied to social value considerations in tenders.

More than 60% of NHS carbon emissions occur in the supply chain, so this is an important step in helping the NHS to meet the targets. As an anchor institution, the NHS is keen to use its assets and resources to maximise social, economic and environmental benefits. 

The requirements in the new guidance build on the Government’s ‘Taking Account of Carbon Reduction Plan’ (PPN 06/21) and are outlined in the recently published NHS Net Zero Supplier Roadmap. Further guidance, including a new Sustainable Supplier Assessment, will be published later in 2022.

NHS England’s guidance sets out detail on:

• Selecting the social value themes. In-scope NHS organisations must decide what social, economic and environmental themes within the Cabinet Office Social Value Model are relevant to each individual tender and/or in support of local priorities. Importantly, to support the delivery of net zero carbon across the NHS, the Social Value Model theme of ‘Fighting Climate Change’ should be included in all NHS procurements either in the technical specification, through the social value criteria or a combination of these.  For this theme, buyers could select the following, by way of example:
  • Demonstrate reduced greenhouse gas emissions
  • Initiatives to reduce environmental impact with the redesign of the product or service 
  • Source materials from and manufacture products within the UK (or relevant region) to reduce carbon emissions and improve supply chain transparency 
  • Delivery optimisation and use of low/zero carbon vehicles
  • Reduce single use plastics, packaging and increase recyclability of products
  • Support environmental protection and improvement through the delivery of the contract
  • Biodiversity initiatives developed or supported in the local area
    Other themes include Wellbeing, Equal Opportunity, Tackling economic inequality and Covid-19 recovery.
• Determining net zero and social value weighting. It is up to tendering organisations to decide the level of emphasis to place on net zero and social value in a procurement, but it must be at or above a minimum of 10% of total scoring. This will depend on the type of product or service being procured. It will be important to ensure the process is inclusive for small to medium enterprises (SMEs) or voluntary, community and social enterprises (VCSEs), if appropriate to the procurement. Care should be applied to ensure the social value requirement set is proportionate, linked to the subject matter of the contract, and specific to the contract delivery. Where relevant, the requirement for social value should not create a barrier for SMEs or VCSEs to bid for the contract.
   
• Adding net zero and social value questions to the tender. Appropriate tender questions should be created, for example in relation to commitments and reporting requirements on suppliers. The guidance recommends that the relevant NHS Standard Contract is used to contract with suppliers and ensure they deliver on the net zero and social value commitments which form part of the tender.
   
• Evaluating the tender response. The central government Social Value Model requires additional social value benefit to be delivered over the life of a contract. Therefore, it is important to ensure: 
  • the net zero and social value responses are not activities already being undertaken by the supplier for the NHS buyer
  • the supplier provides clear metrics in its tender response that form a contractual requirement at award stage
  • when reviewing submissions from multiple applicants, the buyer refers to the model response guidance in the Social Value model to ensure fairness and transparency activity already in place.
• Effective contract management. Contract key performance indicators (KPIs) are critical to ensure additional benefit to the NHS is delivered.

If you would like to discuss these issues further please contact Jamie Foster.