Bridging the gap: From theory to practice in delivering social value locally
John Newton
Marketing Director, Oxygen Finance
As an organisation, we’ve always believed that one of the most impactful ways local governments can positively influence their region is by carefully deploying capital close to home. The shift from MEAT (Most Economically Advantageous Tender) to MAT (Most Advantageous Tender) reflects the general recognition that public procurement can be a real force for good - setting a direction, driving change, and prioritising values for others to follow.
The National Procurement Policy Statement has embedded social value into procurement processes and identifies careful spending and investment in local businesses through public procurement as a key policy aim. It also seeks to maximise procurement spend with SMEs, including ring-fencing some contracts for local firms.
The Vital Role of SMEs in Local Communities
Small regional providers who make up much of the social care provision, mend our roads, build local facilities, and nurture local skills, entrepreneurship, and jobs. Moreover, money spent with SMEs typically stays within the regional economy, with small suppliers more likely to employ people within the locality and bring other SMEs into their supply chain.
But what isn't measured can't be managed. Without a target, procurement teams have nothing to aim for.
This is why PPN001 was recently published, mandating that central government departments must set a three-year target for direct spending with SMEs, which they must hit by the end of March 2028. In 2024, the Central Government spent 16% of their third-party spend with SMEs. The government also encourages other public bodies, including local government, to set similar targets. Our research with local authorities shows that whilst 83% of local authorities have an internal objective to increase spend with SMEs, 79% don’t work to a specific target for their region.
Using Data To Achieve Procurement Goals
Even when there is a target, it is useless if you don’t have access to the data needed to track progress against that target over time. Without this data, procurement teams cannot assess whether the changes they make in how and with whom they spend public money are moving them in the right direction. This is where good data and the private sector’s expertise come in.
Public sector procurement intelligence, such as that offered by Oxygen Insights, draws on transparent spend data from thousands of public sector organisations, categorises and cleanses it, and makes it available for use through a user-friendly interface. This provides public sector organisations and the category managers within their procurement teams with the necessary data. They can see, down to individual directorates, how much spending has been directed towards large national suppliers versus local SMEs.
Real-Time Insights for Local Authorities
We’ve seen considerable uptake from local authorities purchasing our SME and regional data. This not only provides them with a month-by-month account of their spend and the percentage allocated to local SMEs but also breaks it down by market, category, and even individual supplier. This allows them to track their progress and make targeted interventions in real time, shaping their planned procurements to hit and exceed their spend targets.
Nothing is felt more keenly than the presence or loss of local jobs. Through carefully planned procurement and leveraging the private sector’s ability to turn data into intelligence, public procurement can encourage the employers on their doorstep and reinforce the ‘local’ in local government.
