Sustainable procurement policy

This page sets out NHS Property Services' (NHSPS) approach to sustainable procurement and will act as guidance for internal stakeholders responsible for the procurement of goods, services and works when determining the specifications, outputs and/or outcomes of the procurement exercise.

1. Introduction

NHS Property Services (‘NHSPS’) is a “contracting authority” as defined in 2004/18/EC (‘the Directive’). Where a body falls within the definition of a contracting authority its procurement will be subject to the Directives.

As a buyer of goods, services, and works for NHSPS a ‘body governed by public law’ as defined in the Directive, NHSPS colleagues need to understand and be able to readily access the regulations and policies relating to public procurement.

Central government’s Social Value Model, including net zero emissions requirements, as outlined in Procurement Policy Note (PPN) 06/20, and Taking Account of Carbon Reduction Plans as outlined in PPN 06/21 has been adopted by NHS England and applied since 1 April 2022.

NHS England’s (NHSE) stated policy objective is to meet its Net Zero carbon targets while achieving its wider Social Value priorities. The Sustainable Procurement Policy (the Policy) will detail how NHSPS procurement of goods, services & works can play its part in helping the NHS achieve these policy objectives.

From 1st April 2022, NHS England have extended the reach of PPN 06/20 to the commissioning and purchase of goods and services by NHS organisations, as well as to organisations acting on behalf of such commissioners and purchasers.  This means that NHSPS is an ‘In Scope Organisation’.  As such, Social Value should be explicitly evaluated, where the requirements are related and proportionate to the subject-matter of the contract, rather than just ‘considered’ as currently required under the Public Services (Social Value) Act 2012.   However, the statement is clarified for procurement with the comment, ‘unnecessary burdens should not be placed on commercial teams or suppliers.

This page outlines the approach taken by NHSPS in its adoption and application of the principles outlined in PPN 06/20 and PPN 06/21, in relation to above threshold procurement activity. 

2. Background and history

Social Value is defined by the Public Services (Social Value) Act 2012, which came into force in January 2013. The act requires all public sector organisations (and their suppliers) to look beyond the financial cost of a contract and consider how the services they commission and procure might improve the economic, social and environmental wellbeing of society. It is transforming the public sector by placing Social Value alongside quality and price as a consideration in supplier procurements. 

The principal aim of procurement undertaken by NHS organisations is to deliver essential goods and services and improve patient outcomes, while increasing value from every pound spent in the NHS.  

NHSPS procurement also has an essential role to play in delivering a net zero NHS. The aim is to be the worlds first net zero national health service. NHS England has two targets: to reach net zero by 2040 for the emissions we control directly and 2045 for the emissions we can influence.

Currently, more than 60% of NHS carbon emissions occur in the supply chain[1].  

Social Value refers to the wider financial and non-financial value created by an organisation through its day-to-day activities, covering the wellbeing of individuals and communities, economic prosperity and the environment.

Social value, when incorporated effectively, will help reduce health inequalities, drive better environmental performance, and deliver even more value from procured products and services.  

This Policy identifies how NHSPS will support the NHS to achieve its aim.

[1] Source: Applying net zero and social value in the procurement of NHS goods and services.

3. Purpose

Sustainable procurement represents an opportunity to provide more value to NHSPS by improving productivity, assessing value and performance, enabling communication between purchasers, suppliers, and all stakeholders, and by encouraging innovation.

Public procurement is critical in translating required purchasing decisions into the right contracts with the right suppliers to achieve the required outputs, in the way that offers the best social value for money. The huge power of public money spent through public procurement every year in the UK should support government priorities to boost growth and productivity, help our communities recover from the COVID-19 pandemic, and tackle climate change.

Through accounting for social value directly through spending decisions, NHSPS can help the NHS maximise the benefit for the communities it has been established to serve.

Adoption of this Policy will provide the following benefits, which are 3 key pillars of sustainable procurement:

  • Social responsibility - protecting the health and wellbeing of employees, providing fair employment opportunities, and supporting local communities
  • Environmental sustainability – achievement of net zero carbon target, building resilience to climate change, ensuring compliance, minimising environmental impacts, and encouraging innovation throughout the supply chains of goods, services and works
  • Ethical compliance – supply chain conforming with Modern Slavery Act 2015

4. Key principles of the social value model

Theme 1: COVID-19 recovery

Policy Outcome: Help local communities to manage and recover from the impact of COVID-19

Why is this a priority?

The COVID-19 pandemic has exacerbated existing economic and social challenges and created many new ones. Social value provides additional benefits which can aid the recovery of local communities and economies, especially through employment, re-training and return to work opportunities, community support, developing new ways of working and supporting the health of those affected by the virus.

Theme 2: Tackling economic inequality

Policy Outcome: Create new businesses, new jobs and new skills

Why is this a priority?

The Industrial Strategy sets out government’s vision to make the United Kingdom the best place to start and grow a business. It describes how government must shape our business environment to take on the challenges and opportunities of new technologies and new ways of doing business.

The strategy also describes government’s plan to help businesses create better, higher-paying jobs in every part of the United Kingdom. Developing the skill levels of the current and future workforce is the essential enabler for this. A nationwide focus on jobs and skills, especially in high growth sectors with known skills shortages, will help to narrow disparities between communities. Providing better jobs also helps employers to attract and retain the talent they need to grow and thrive.

Government will monitor progress under this policy outcome by asking contracting authorities to report the number of full-time equivalent jobs, traineeships, T Level industry placements and other Level 2 and above training opportunities created through their contracts.

Theme 2: Tackling economic inequality

Policy Outcome: Increase supply chain resilience and capacity

Why is this a priority?

Growing and diversifying supply chain opportunities is at the heart of government’s Industrial and Civil Society Strategies. An economy with diverse, resilient and innovative supply markets is a cornerstone of prosperity. It provides the best environment to start and grow a business. Markets with a broad range of suppliers of different types can offer better value for money, promote innovative solutions and give public services access to expertise and knowledge on complex issues. There is also a commercial advantage to spreading risk more broadly since it reduces commercial risk.

Whether as prime contractors or within the supply chain, it is essential that new businesses, entrepreneurs, start-ups, small and medium-sized enterprises (SMEs), voluntary, community and social enterprises (VCSEs) and mutuals have the same opportunity to tender for and, where appropriate, win government contracts as other firms. Government is therefore monitoring progress under this policy outcome by asking contracting authorities to report the number, value and proportion of total contract spend of prime or subcontracting opportunities awarded to these types of business as the Reporting Metrics for this policy outcome.

In delivering its National Cyber Security Strategy, government’s objectives include having the means to ensure UK networks, data and systems are protected and resilient throughout the supply chain. Citizens, businesses and the public sector must also have the knowledge and ability to defend themselves. The Cyber Essentials scheme has been developed to show organisations how to protect themselves against low-level ‘commodity threat’. Properly implementing the scheme will protect against the vast majority of common internet threats.

Where relevant, levels of adoption of the ‘10 Steps to Cyber Security’ and the Cyber Essentials scheme within the contract supply chain are therefore used as additional Reporting Metrics under this Policy Outcome

Theme 3: Fighting climate change

Policy Outcome:  Effective stewardship of the environment

Why is this a priority?

Government’s 25 Year Environment Plan sets out goals for improving the environment within a generation and details how it will work with communities and businesses to do this. To meet the goals and targets it has set, government has identified key six areas in the plan through which it will focus action.

Activities in support of additional environmental improvements form the Model Award Criteria for this policy outcome in the model. The Reporting Metrics are based around the reduction of three of the target areas in the Greening Government Commitments: greenhouse gases, waste and water. In addition there are Reporting Metrics relating to protecting and improving the environment, and creating green spaces

Theme 4: Equal opportunity

Policy Outcome: Reduce the disability employment gap

Why is this a priority?

In its strategy for the Future of Work, Health and Disability government has set out its vision for a society where everyone is ambitious for disabled people and people with long-term health conditions, and where people understand and act positively upon the important relationship between health, work and disability.

Government is committed to increase the number of high quality applicants available, to create a workforce that reflects the diverse range of customers it serves and the community in which it is based, and to bring additional skills to business. As part of these commitments, government is determined to see one million more disabled people in work over the next ten years. This commitment is reflected in the Reporting Metrics for this policy outcome.

Theme 4: Equal opportunity

Policy Outcome: Tackle workforce inequality

Why is this a priority?

Government is committed to tackling inequality and giving everyone across the country the opportunity to fulfil their potential. The Good Work Plan affirms government’s ambition that all work should be fair and decent, and that everyone, regardless of where they live in the UK or which sector they work in, should be able to benefit from high quality jobs.

Furthermore, government is committed to tackling the scourge of modern slavery and has set out guidance on how departments must take action to ensure modern slavery risks are identified and managed effectively in government supply chains (see Procurement Policy Note 05/19 Tackling modern slavery in government supply chains).

The benefits that can be driven through social value can be a vital component in advancing equality, creating training and better employment opportunities, and combatting modern slavery. The Reporting Metrics under this policy outcome have been developed to focus on these outcomes.

Theme 5: Wellbeing

Policy Outcome: Improve health and wellbeing

Why is this a priority?

Benefits that can be driven through social value are an important tool in improving wellbeing. Government has partnered with Mind, the mental health charity, in the creation of the Mental Health at Work website, which includes documents, guides, tips, videos, courses, podcasts, templates and information from key organisations across the UK, all aimed at helping employers get to grips with workplace mental health. Government encourages employers to better support all employees, including those with mental health problems, to remain in and thrive through work.

Government is monitoring progress under this policy outcome by recording the proportion of suppliers in the contract supply chain who have implemented measures to improve the health and wellbeing of employees. It is also asking contracting authorities to report on the proportion of suppliers in the contract supply chain who implement the 6 standards in the Mental Health at Work commitment and, where appropriate, the mental health enhanced standards for companies with more than 500 employees in Thriving at work: The Stevenson/ Farmer review of mental health and employers with respect to the contract workforce.

Theme 5: Wellbeing

Policy Outcome: Improve community integration

Why is this a priority?

In the Civil Society Strategy government sets out how it wants all people to be able to thrive, connect with each other, and give back to their communities, whilst having a sense of control over their future and that of their community. As part of its drive to level up the UK economy, government is committed to enabling communities everywhere to collaborate with local private and public sector organisations in creating a shared vision for the places in which they live and work. A key area through which these organisations and communities can come together to make a difference is volunteering. This is reflected in the reporting metric for this policy outcome.

5. Evaluating social value in tenders

The role of procurement is to translate the desired outcomes into the right contracts and select the contractor or contractors that will deliver these in the way that offers best social value for money.  Contracting authorities should consider the evaluation of tenders right from the start of the procurement process as it is integrally linked to the final contract and the type of suppliers that will perform it. There is also a legal requirement for contracting authorities to be transparent with tenderers about the evaluation criteria and the evaluation process.

6. Reporting social value

Reporting Metrics are the numeric outputs related to how the supplier will deliver the quantitative aspects of social value under the contract, e.g., the number of full-time equivalent (FTE) employment opportunities created by the supplier in the contract supply chain in the performance of the contract.

It is essential that any Award Criteria and Reporting Metrics used are clearly linked to the social value deliverables in the tenderer’s proposal for the particular contract. Criteria and metrics based on the tenderer’s general corporate policies (e.g., corporate responsibility statements) are not relevant or proportionate to the subject of the contract so must not be used.

Social value should be distinct from core deliverables.  Any benefit identified as Social Value in tenders or contracts needs to be additional to the core deliverable/s of the tender or the contract.  For example, in a contract for the supply of employment support for the public, the core service (i.e., employment support) could not be defined as social value delivered through the contract. However, the wellbeing benefit associated with how the tenderer plans to recruit, train and retain the contract workforce carrying out that service could represent social value.

The metrics used for each category should remain constant to allow accurate, cumulative reporting for each theme.

7. Integration of social value model into procurement

Whilst the level of emphasis to place on net zero and social value in a procurement is at the discretion of the Procurement Team - in consultation with Stakeholders and possibly following pre-market engagement - the minimum level must be 10% of the overall score.  The only permissible exception to this is where pre-market engagement demonstrates that the approach would significantly reduce competition due to a lack of market maturity in delivering social value. In these exceptional cases, the social value weighting may be set at 10% of the quality score. Conversely, where there is higher market maturity there is discretion to apply a weighting above 10%.

8. Application of policy within procurement

The NHSPS Sustainable Procurement Policy will be applicable to all new procurements over threshold (currently £213,477 inc. VAT for goods or services or £5,336,937 inc. VAT for works), Carbon Reduction Plan is required for all contracts where the value is expected to exceed £6.0m. inc. VAT in accordance with PPN 06/21.

9. Supplier roadmap

9.1. Net zero

To support the wider NHS Sustainable Procurement Policy, NHSPS has committed to reaching net zero by 2040 for the emissions we control directly and by 2045 for the emissions we influence, through the goods and services we buy from our partners and suppliers.

In September 2021, the NHS England Public Board approved a roadmap to help suppliers align with the net zero ambition.  This approach builds on UK Government procurement policy (PPN 06/20 and PPN 06/21).

April 2022

New, qualifying (above threshold) NHS procurements will include a minimum 10% social value weighting).

April 2023  

For qualifying contracts above £5 million, NHSPS will require suppliers to publish a carbon reduction plan for their UK Scope 1 and 2 emissions as a minimum  

April 2024: 

NHSPS will extend the requirement for a carbon reduction plan to cover all qualifying procurements. Suppliers will be required to publish a carbon reduction plan for their UK Scope 1 and 2 as a minimum and a subset of scope 3 emissions as a minimum, aligning with government procurement policy PPN 06/21

April 2027

Suppliers providing services as a result of an above threshold tender, will be required to publicly report targets, emissions and publish a carbon reduction plan for global emissions aligned to the NHS net zero target, for all of their Scope 1, 2 and 3 emissions

April 2028

New requirements will be introduced overseeing the provision of carbon foot printing for individual products supplied to NHSPS and their customers.  The NHS will work with suppliers and regulators to determine the scope and methodology

April 2030

Suppliers will only be able to qualify for NHSPS contracts if they can demonstrate their progress through published progress reports and continued carbon emissions reporting through the Evergreen sustainable supplier assessment

9.2 Other social value

Completion of the Modern Slavery Assessment tool (MSAT) will be integrated into the tender process for qualifying tenders.

The NHSPS Sustainable Procurement Policy should be considered to be incorporated into any contract extensions for Gold & Silver contracts from Q1 2023. For new qualifying tenders post April 2023, NHSPS Sustainable Procurement Policy should be integrated into the selection process with the tender documentation.