Social Value Model update: what PPN 026 means for public sector suppliers

The Cabinet Office has now published guidance on the new social value model announced this summer. These new rules apply to central government contracts from 1 January 2027, but you may see them applied earlier. 

Central government departments, their executive agencies and non-departmental public bodies are encouraged to use the new rules before 1 January 2027 where they can*.

Under procurement policy note (PPN) 026, social value will be assessed at framework and call-off. If you’re a supplier bidding for public sector work (tenders), it’s essential you understand these updates to shape your future bidding strategy.

What’s changing – a summary of the new social value guidance

The Government wants every pound spent on public procurement to:

• support British businesses
• boost growth
• help build a fairer economy

This has led to changes to the social value rules. The updated Cabinet Office PPN 026 guidance outlines how public sector buyers can integrate the new rules across every phase of procurement.

What does the new PPN 026 mean for suppliers?

From January 2027, supplier bidders for central government contracts will be assessed on:

• how they help people get a job, stay in work and move on in their careers
• how they help address skills shortages and support skills development

The new rules replace all previous social value PPNs for the central government.

Will it apply to your bids?

The new rules apply to in-scope procurements by central government contracting authorities. Therefore, if the contracts you are bidding for are outside of central government, these changes are unlikely to affect your bids.

Be aware that if you are a supplier on an existing framework, buyers may ask you to support the outcomes in the new Social Value Model. However, this is only where the current social value arrangements in the agreement would allow it.

Community programmes

To support this policy, the Cabinet Office will publish a ‘List of Community Programmes’ in the near future. The list will provide details of existing schemes that suppliers can support. This support can be a way of delivering targeted and place-based social value commitments.

The list is intended as an optional resource for bidders. You are not required to deliver social value through a Community Programme if you have other ways of meeting the buyer’s social value needs.

Social value outcomes and award criteria

The new social value model includes award criteria to support the government’s social value outcomes. 

Before a buyer chooses the award criteria for a procurement, they should research market conditions. This includes whether SMEs and VCSEs are active in the market, and their ability to meet the criteria.

During preliminary market engagement, buyers (contracting authorities) should test with suppliers:

• social value policy outcomes, criteria and sub-criteria
• metrics
• scoring methodology

Buyers may also inform you of relevant Community Programmes and encourage you to engage with these.

If you are a supplier, this is your chance to understand what will be expected of you. It is also an opportunity to give feedback on whether the criteria are realistic for your organisation.

Social value weighting

There is a minimum social value weighting when procuring public contracts. For example, those that are above the Procurement Act 2023 thresholds will work like this:

• under £1 million: none
• £1 million to under £5 million: 10% of the overall score
• £5 million or more: 20% of the overall score

In-scope authorities may add extra social value requirements above these minimums where relevant and proportionate to their contract.

What buyers will ask you for

Buyers may choose from a set of award criteria under 2 outcomes, related to the subject matter of the contract.

Good jobs

• creating and/or retaining high-quality jobs or apprenticeships in the local community
• fair working conditions, such as permanent contracts and flexible working
• fair pay, including paying above the National Minimum Wage or National Living Wage

Skills

• training and retraining
• support for in-work progression
• building a talent pipeline for future employment

Buyers will review the list of community programmes and provide details of relevant schemes for their selected Social Value Model award criteria as an additional resource for bidders.

Criteria suppliers should be mindful of

Buyers are asked to consider groups facing barriers to employment. Therefore, when preparing your bid, consider how your proposal can support these specific targeted groups, including:

• young people (age 16 – 24) not in employment, education or training (NEETs)
• people who have recently left education or training
• care leavers
• people with long-term health conditions, special educational needs or disabilities
• people on probation, in or leaving prison
• victims of domestic abuse and veterans

To help you submit a competitive proposal, you should:

• propose clear, actionable commitments that align directly with your operating model for the contract
• take part in early market engagement: this will help you get a clear understanding of what buyers expect, how you can meet these expectations

How a contracting authority will assess your bid

Buyers will ask you to confirm how you propose to deliver their chosen Social Value outcomes. This can be done in one of two ways:

1. By providing evidence of your commitment to support one or more listed Community Programmes. 
2. Outlining your commitment to achieve this through your own activities, including:

• how your commitment meets the criteria 
• who you will support, and how you will reach them
• how you will work with staff, suppliers and communities

Method statements

Whichever approach you choose to take, you will be asked for a method statement. This should outline your plan to deliver your commitments towards their chosen social value outcomes. It should be specific, measurable and time-bound. 

This statement must also meet the following implementation criteria:

• the quantities of any stated activities that you commit to deliver  
• how you will support participants and help them move on when the activity ends
• how you will publish your commitments and performance

How you will be scored

Buyers will score the quality of your plan, not the size of your commitment. A small business with a well-thought-out, realistic plan can score as well as a large one. 

Suppliers who commit to supporting a Community Programme and also meet all the above Implementation Criteria will automatically receive a minimum score. 

For jobs and apprenticeships on contracts of £5 million or more, buyers can choose to score quantity in limited cases, provided it will not create barriers for SMEs and VCSEs.

It’s important to note:

• your commitments must be additional to the contract itself – you cannot count the services you are being paid to provide
• you can expand something you already do, but only if the expansion is a direct result of winning the contract
• financial donations do not count

What happens after call-off?

After call-off, your commitments will be written into your contract. For contracts of £5 million or more, the buyer must:

• set and publish at least one social value key performance indicator (KPI)
• publish a performance notice at least every 12 months

Should you fail to fulfill your commitments, and continue to demonstrate poor performance following an opportunity to rectify it, the buyer retains the right to publish this outcome. Under certain circumstances, you may be excluded from future tendering opportunities.

What to do now

1. Check whether the contracts you are applying for come through central government and are worth £1 million or more.
2. List what you already do on jobs, skills and fair pay.
3. Identify which of those activities you could expand if you won a contract.
4. Think about how you would measure and report your commitments.
5. Look out for the list of community programmes being published this autumn. Start to familiarise yourself with programmes you might be able to support.

How will GCA apply the new social value model to frameworks?

We’re here to help you maximise social value in your procurement process. When we create a new multi-supplier framework, we will include PPN 026 where relevant.

Framework providers do not need to apply a percentage weighting for Social Value when awarding framework contracts. However, we will ask you about social value.

As a minimum, we will ask you to confirm your commitment to delivering social value for buyers. Where appropriate, we may ask a specific weighted question around social value outcomes.

As we develop frameworks, we will use our market engagement to understand what social value outcomes buyers may need to achieve. We will share this with prospective bidders and test proposals for framework-level evaluation. 

Find out more

Questions about the guidance can be sent to info@gca.gov.uk.

Read the full guidance on using PPN 026: The Social Value Model.

*For procurements commenced under the Procurement Act 2023 prior to 1 January 2027, in-scope organisations are encouraged to transition to PPN 026. However, they may apply the previous model during this transition period if using the new model would require disproportionate resources or invalidate previous market engagement activities.