It’s 2016 – Time to Legislate Canadian Social Value Act: Part 1

In 2012, the U.K. House of Commons granted royal ascent to a private member’s bill called the Social Value Act. The Act requested public commissioners to take into account “social values” — such as socio-economic or environmental well-being — when deciding about public service contracts. This rather ambitious piece of legislation received support across the political platforms. The time was right: the idea of having more “holistic” government crossed over with objective of scrutinizing current spending creating healthy mix for social value to be formalized and legislated.

Suddenly, it was possible to think beyond the cost-benefit paradigm. If applied properly, the social value will offset the cost long term while the general public will benefit from more equitable marketplace. The Tory supporter, a fierce opponent of “super-marketisation” of public works and a mega — promoter of social enterprises , Chris White, alleged: “What I believe in is a future in which our public services are run by communities and the organizations close to them that have a sense of responsibility and put people before profit.” In a way, the historically risk-averse public sector procurement was given a temporary relief from the pressure of achieving the bottom line.

The Work Programme (2010–2015) partially appointed to manage this change, however, was disappointing. The critics claimed it marginalized both, social enterprises (SEs) and non-profits (NPs) further. Local authorities found the Act to be complicated if not threatening. Yet, the appetite to transform the procurement was still there and the public was excited with possibilities: “For example, when Wakefield council wanted a new milk supplier in local schools, they selected Fresh Pastures, who in addition to delivering the milk also provide local schoolchildren with lessons on healthy living, food miles and also job opportunities for the long term unemployed. The result is a whole lot more than just a carton of milk for their money.”

And others joined in too: construction companies restructuring sustainability agendas, SEs creating platforms to help to showcase the impact of 3rd sector, government crafting and delivering training for both NPs /charities to learn how to evidence the change they create and for procurement officers to learn to procure better.

The two years Review published in 2015 was somewhat less spirited: “the Act has therefore proved popular and effective amongst those actively using it” but “the incorporation of social value in actual procurements appears to be relatively low when considered against the number across the whole public sector.”(pg. 4). The review listed shortcomings: a) inconsistent application, b) confusion about how to define the social value and its scope, and c) uncertainty around how to include it in the procurement process. Often, the Review noted, commissioners’ inability “to engage with the local market before procurement starts” made processes unreasonably bureaucratic. The recommended action items suggested to continue with increasing awareness about the Act but to expect more from SEs and NPs in terms of demonstrating their value.

Over the past 15 years in Canada, I have held a number of non-profit roles as a volunteer, general member, board member and employee (currently manager of social impact at MCIS Language Solutions) witnessing how our sector has undergone dramatic change. The pressure to bid for requests for proposals (RFPs) encouraged fierce competition amongst agencies that were close partners just recently. This change toward increased “efficiencies” affected not only our collective ability to provide quality services but also undermined the faith invested in us. The particular industry I am in has been exposed to additional challenges of disruptive technologies and super-giants such is Language Line, Google and Apple.

While government continues to focus on “saving”, we focus on survival while trying to fulfill our mission. In bidding wars social values, although mentioned occasionally, are not specifically mandated. We lack legislation and standardized measurements. The sector also lack confidence. We need courage to believe that we can make this change happen requesting government to award public contract only to those who are able to demonstrate creation of solid social value. We also need to reclaim our historical right of not to be seen as an expense line endlessly “optimized”. The outcome of this massive erosion of trust is that we are not only maintaining but also creating low quality jobs (see my other blog post on Casualization of Non-profit Work) with an expectation to maintain the same quality of work.

And, of course, that the quality and availability is compromised. In New York there is a saying, you can have cheap, fast and good quality — pick any two you like. But the most important questions here is: who is actually beneficiary of government optimization? Is the impetus for “cost saving”, “optimization” and “curbed spending” penetrating the government’s procurement for more than a decade (quietly imported from the corporate Economy 101), proven to be in the best interest of public, our communities and our people?

Let’s see.

The purpose of cutting cost is to deliver on the promise of optimization. Optimization appears to be successful if the scope of measurement is narrow, preferably populated with a small number of numeric indicators. For example, when you win an RFPs it means that you were able to demonstrate (promise) the highest number of something government wants for the lowest amount of $$. And further, if you win the contract in our current bidding environment it also means that you are committing yourself to endless cost cutting that translates into saying goodbye to fair pay, living wage, good benefits and keeping professional people. Numbers bread numbers. Quality of work and life seem to be too complex to be captured by current optimization.

In some respect we cannot entirely blame governments. From their perspective the dollar saved is the only dollar earned. If you are not a bread-winner, likelihood is that you will feel be pressured into stern fiscal accountability. But, wait, governments are precisely appointed not only govern but also to spend. Yes, they should spend prudently and wisely to ensure that allocation is equitable. But, allocation is also inevitable. This historical tension between the cycles of saving and spending and a narrow, monetary scope becomes risky to governments too. In fact, some governments fall precisely because their spending did not deliver on the expected value. A few mornings ago we woke up to the reality of Brexit vote. One of deciding factors here was the financial contribution to the EU that public wanted to keep at home.

Clearly, it could be helpful for governments to have a better sense of their long term impact. But to include intangibles is often too much to bear. So governments, without exception, choose the numerical optimization, the business school, the MBA model. And what happens next is that we ignore, for example, how positive influences spill over one generation (e.g. measuring economic successes of 2nd generation of refugee claimants), or how empowering local community capacity in fact increases consumers’ spending and decreases local unemployment (e.g. successes of investing in organically grown, local social enterprises), or how access to critical information and services, such as through languages, in fact decreases hospital and legal bills, moves homeless through the housing system more efficiently and manage refugee crisis better.

On some level governments’ desire is to think holistically about “increased capacity” and “multi-generational benefits”. And another piece of good news, at least here in Canada at this very moment in history, is that the timing seems to be right. Canada is open to change. Canada is open to the business of “social”. Yet, we need to define what is exactly Canadian Social Value to be able to decide on how to legislate.

(continues – Part 2; Part 3)