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Social value in UK public procurement: a new era under the Procurement Act 2023

August 2025

Introduction

The UK’s public procurement landscape has undergone a significant transformation with the introduction of the Procurement Act 2023 (PA 23). An important element of this change is the greater significance placed upon social value and public benefit.

Whilst even before the introduction of the PA 23, sustainability considerations were increasingly being pursued in procurement, the PA 23 pushes this agenda even more forcefully. One reason is that contracting authorities must now consider the procurement objectives set out in section 12 of PA 23, which include:

• delivering value for money;
• maximising public benefit;
• promoting transparency in procurement policies and decisions; and
• acting, and being seen to act, with integrity.

As part of these changes, environmental, social and governance (ESG) factors are no longer on the periphery of how contracts are awarded, managed, and monitored. No longer limited to cost-efficiency and quality, the concept of “value” has expanded to include social value and public benefit.  Before embarking on their procurement journey, authorities are obligated to take these matters into account.

The PA 23 encourages recognition of non-monetary value, empowering contracting authorities to define social value criteria that aligns with the government’s broader social missions. These commitments should be integrated into contract terms and monitored through Key Performance Indicators (KPIs).

The draft toward social value is supported by four key factors:

1. the shift from Most Economically Advantageous Tender (MEAT) to Most Advantageous Tender (MAT);
2. the National Procurement Policy Statement (NPPS);
3. the Procurement Policy Notice 002: The Social Value Model (PPN 002); and
4. the role of Key Performance Indicators (KPIs).

We look at each of these in turn in this article.

1. From MEAT to MAT: a shift in evaluation priorities.

Under the previous regime, authorities were required to award the contract to the “Most Economically Advantageous Tender” (MEAT).  MEAT referred to the evaluation approach that balanced quality and cost, provided the award criteria related to the subject matter of the contract.  Whilst authorities could weigh quality and cost criteria in the scoring scheme as they saw fit, the winning supplier would be adjudicated on the basis of their scores in these two broad areas.

The PA 23 replaces MEAT with ‘Most Advantageous Tender’ (MAT).  As the omission of “economic” would suggest, this change broadens permissible considerations to include wider public benefit and ESG objectives.  However, the PA 23 retains the legal requirement that award criteria must still be linked to the subject matter.

To illustrate how this works, it would not be permissible at tender stage to ask bidders “how much material do you recycle in a year?”, as that would not be related to the subject matter of the contract.  On the other hand, in some previous tenders authorities have lawfully advanced circular economy goals by scoring contractors on the proportion of demolition materials generated by the project they will recycle. As this directly relates to the performance of the contract, it is permitted.

MAT empowers authorities to look beyond cost alone to focus on other factors. Outlined in s 19 PA 23, tender value now accounts for:

• environmental sustainability;
• local job creation and apprenticeships;
• supplier diversity, and
• Small and Medium Sized Enterprise (SME) and Voluntary Community and Social Enterprise (VCSE) participation.

MAT reflects a growing understanding that lowest cost does not always equate to best value for the taxpayer or the communities which will be affected by the performance of the contract. Authorities should instead look at public benefit and social value. Authorities must consider how contracts contribute to broader national priorities like economic growth, environmental sustainability, and community wellbeing.

This continuity – linking criteria to the contract’s subject matter – ensures that ESG goals pursued under MAT remain relevant to contract delivery and performance, preventing award decisions from being based on unrelated policy aims.

On this front, change may be afoot.  In its consultation paper on late payment and public procurement the Government has signalled a wish to dilute the requirement for a connection between award criteria and subject matter of the contract.  The Government has said it is concerned that “the rule prevents authorities the flexibility of targeting social value delivery to where it is most needed. To address this, we are proposing measures which will remove this restriction in specified circumstances, to allow contracting authorities to define social value award criteria based on specific locations, while taking into account fair and equal treatment of suppliers”.  As yet, no further details have been released but this initiative may push the ESG even more strongly under the PA 23.

2. The National Procurement Policy Statement

As of 24 February 2025, in-scope contracting authorities must, for most procurements, have regard to the NPPS when making procurement decisions. Authorities must align procurement and contract awards with the government’s social value principles. The NPPS sets out five key missions which should underline public procurement:

The NPPS operates alongside these subject-matter requirements. Authorities must design award criteria and technical specifications that advance NPPS missions while remaining contract-related and proportionate.

1. Kickstart economic growth: supporting SMEs, VCSEs, and create high quality jobs with fair wages and good working conditions.
2. Make Britain a clean energy superpower.
3. Reduce crime and promote inclusive employment opportunities.
4. Break down barriers to opportunity, addressing skills gaps and improving access.
5. Support physical and mental health, including rebuilding the NHS.

Contracting authorities should not only award contracts based on ESG promises tied to the key missions, but also embed and enforce these commitments through contracts and KPIs.

3. Procurement Policy Note 002: The Social Value Model (PPN 02)

The Public Services (Social Value) Act 2012 required contracting authorities to account for social value elements in procurement. The PPN 002 builds on the Social Value Act and requires central government departments, executive agencies, and non-departmental public bodies to apply a minimum 10% weighting to social value in tender evaluations.

The PPN 002 also introduces a revised Social Value Model, including defined metrics, exemplar criteria and objectives. Section 2 mandates a three-step process: (1) selecting a relevant, proportionate and non-discriminatory outcome from the Model; (2) incorporating the corresponding model social value question into tender documents, tailored where appropriate; and (3) including the aligned award criteria and sub-criteria, refined to suit the contract. Authorities must apply the PPN to all in-scope procurements at the planning stage where relevant, proportionate, and PA 23-compliant. Any social value commitments in the tender submission should be reflected in contract terms and monitored via KPIs.

It is to be noted that the ESG objectives referenced in the PPN 002 go beyond mere environmental goals.  PPN 002 also encourages the pursuit of social goals such as fair pay, the reduction of crime and providing employment for those who face barriers to recruitment.  That said, PPN 002 does encourage award criteria linked to reducing carbon footprint, protecting nature, minimising waste, and promoting the use of clean energy and green technologies.

4. The role of KPIs

Under section 52 of the PA 23, contracts valued over £5 million must generally include at least three KPIs, which can include addressing social value metrics. Authorities are required to monitor supplier performance throughout the contract term.

Failure to meet KPIs can lead to:

• supplier exclusion on discretionary grounds:

A supplier can be excluded where they have a) not performed a contract to the authority’s satisfaction, b) been given the opportunity to improve performance, and c) failed to do so. Although there has been no judgment on this point, it is thought that this is a reference to missing KPIs.

If KPIs are tied to social value, then falling short of social value commitments can amount to failure to perform the contract to the authority’s satisfaction.

• contract termination under sections 78 and 79 of the PA 23:

Under sections 78 and 79, the contracting authority has implied rights of termination under the contract if the supplier has, since the contract award, become an excludable supplier (including on discretionary grounds), and/or if a sub-contractor becomes an excludable supplier.

What this means for authorities and suppliers 

Both authorities and suppliers should remain mindful that, despite the broader remit of MAT, criteria and ESG specifications must still have a clear and direct link to value and performance under the contract, as under the previous MEAT framework.  We suggest that in some cases, authorities may score bidders on the ESG targets they are able to commit to and then for the winning bidder(s) to turn those commitments into binding contractual obligations.

These changes create both opportunity and responsibility. Authorities and suppliers face new pressures, including increased transparency and reporting, investment in ESG data tracking, aligning tenders with long-term public benefit, and more collaborative problem-solving between public and private sectors.

Tenderers must consider social value when drafting and submitting their proposals. Suppliers must embed social value into proposals and operations, ensuring that submissions highlight their contributions to local communities, inclusive employment, sustainability, and public wellbeing.

The 10% social value weighting in tender evaluations is substantial. Suppliers should treat it as a strategic priority and ensure alignment with national goals set out in the NPPS.

Conclusion

Whilst the direction of travel in UK procurement had been moving in favour of more ESG, the Procurement Act 2023 has accelerated that shift. The move from MEAT to MAT, the emphasis in the NPPS on industrial policy and community objectives, and the statutory duty to “maximise public benefit” together elevate ESG to a central consideration. This is reinforced by practical tools: enhanced pre-market engagement, greater procedural flexibility for dialogue with bidders, updated guidance in PPN 02, and mandatory KPIs. The Act therefore not only mandates more ESG, but equips contracting authorities with the means to deliver it: ushering in an era where measurable public value is as critical as price, and where suppliers will face increasing scrutiny over their ESG delivery.

If you require any advice on ESG and social value in your tender submissions, or any advice on procurement more generally, please contact our Competition and Procurement team or your Beale & Co lawyer.

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