"Whole lifecycle" costing in procurement, which assesses more than the immediate cost of acquisition, is nothing new. The current public procurement regulations expressly allow public bodies to look beyond the initial purchase price at issues such as environmental costs, end of life, and maintenance costs when evaluating construction contracts.
There are many stories of public bodies which have purchased the cheapest printers or other ICT equipment, only to find that the cost of maintenance breaks the budget later. But the cheapest "up front" bidder still often wins a public tender, because the evaluation criteria are biased in favour of the lowest initial price.
Some of the more innovative work that we are seeing in the social value space includes attributing a monetary tender "sum" to, for example, the number of apprenticeships created through a project, or reduced costs of ongoing maintenance through innovative - but often more "expensive" - construction techniques. Fear of being challenged often drives public procurers to the lowest risk solution, which often means adopting the path of least resistance. The upcoming proposed changes to the Public Services Social Value Act 2013, making social value compulsory in more than just services contracts, could go a long way to making innovative approaches the day to day reality. The UK Government has also just published amendment regulations to the current public procurement rules to deal with Brexit, and it appears that the political intention is to remain aligned to the EU current regime.
For more information or advice, please contact David Hansom, Partner at Clyde & Co on 0207 876 4127 / email@example.com, or your usual contact at Clyde & Co.
But the ultimate beneficiary, were this to be properly executed on central government contracts and then, hopefully, trickled down to local authorities, would be a recognition of those companies that are trying to do business better.