PPN 026: social value will be won or lost in delivery after award

The policy change makes delivery a commercial issue

PPN 026 raises the stakes for social value in central-government procurement. For covered procurements commencing from 1 January 2027, the minimum weighting is 10% for contracts worth £1 million including VAT or more and 20% for those worth £5 million or more. The policy also requires social-value commitments to be monitored in contract management. At the higher threshold, contracts must include at least one social-value KPI (Cabinet Office, 2026) ↗.

That combination matters more than the headline weighting alone. A 20% score can make social value material to an award decision; a monitored KPI makes it material to subsequent supplier performance. The likely effect is not simply better-written bids. It is a sharper commercial question for commissioners: can the commitments being scored survive contact with workforce demand, delivery constraints and the realities of mobilisation?

The answer will often depend on factors that do not fit neatly into a tender response. A supplier can offer vacancies, work experience, apprenticeships or supply-chain opportunities. Yet an employment outcome will still falter if candidates cannot be reached, roles are unsuitable, security or transport requirements exclude participants, managers lack capacity to support new starters, or no organisation owns the hand-off between training, recruitment and in-work support.

This is the central issue for 2027. PPN 026 can increase the incentive to compete on social value, but it does not itself create employer demand, trusted community relationships or specialist employment support. The policy will add value where commissioners use it to procure a small number of credible, contract-linked pathways. It will add less where ambitious narratives are rewarded at award stage and practical barriers emerge only after the contract is live.

Criteria need an economic mechanism, not a catalogue of good intentions

PPN 026 encompasses outcomes including good jobs, fair work and pay, and skills development for people and communities facing barriers to employment. It points to more inclusive recruitment and retention, and to training and talent pipelines for groups such as disabled people, people with long-term health conditions, care leavers, young people moving into work and people not in education, employment or training (Cabinet Office, 2026) ↗.

This breadth is valuable, but it carries a familiar design risk. Commissioners may assemble a long scorecard of jobs, training, volunteering, local spend, school engagement and charitable activity without deciding which outcomes the contract can genuinely influence. Suppliers then have an incentive to promise across the list; contract managers inherit a dashboard of activity counts; and the authority cannot distinguish a consequential intervention from a peripheral one.

The Procurement Act framework is an important constraint on this tendency. Its award-criteria provisions require criteria to be sufficiently clear, measurable and specific, while PPN 026 stresses relevance to the contract, proportionality and avoiding unnecessary burdens, barriers to participation and discrimination (Procurement Act 2023 explanatory notes, 2023; Cabinet Office, 2026) ↗ ↗. These are not merely legal safeguards. They are disciplines that improve delivery design.

The practical starting point is the contract’s economic mechanism. A service contract with recurring entry-level recruitment may support a pathway centred on accessible vacancies, induction and retention. A construction programme may offer a credible mix of apprenticeships, paid work experience and supply-chain development, subject to its programme and workforce profile. A specialist professional-services contract may have little scope for either at meaningful scale. Applying identical targets to all three would blur accountability rather than create opportunity.

Sanctuary’s judgement is that authorities should score fewer commitments, but specify them more rigorously: the intended outcome, the group to be reached, the route through which the contract contributes, and the evidence required. This makes it harder to score aspirational prose and easier to manage what was actually purchased.

The missing middle is delivery infrastructure

The difficult work sits between a supplier’s pledge and an individual’s outcome. A contract may generate vacancies but have no reliable referral route. A provider may run training that is not aligned to live recruitment. A voluntary, community or social enterprise may have the trust needed to engage residents, but lack the resources or role definition to provide sustained support. Each organisation can complete its own activity while no one is accountable for progression into work or retention once there.

Connect to Work is a useful comparator, not an equivalent model for procurement-led social value. The programme is designed around locally accountable arrangements and supported-employment approaches across 49 delivery areas in England and Wales. Its updated business case projects support for around 300,000 people by the end of 2029/30, while revising projected starts down from 308,819 to 288,455 following delivery-plan changes and the application of optimism bias (Department for Work and Pensions, 2026) ↗.

The relevant lesson is operational rather than numerical. Complex routes into employment depend on assumptions about referral volumes, job suitability, specialist support, employer engagement, information-sharing and retention. Those are operating assets, not administrative details, and they rarely sit wholly within one supplier’s control.

Commissioners should therefore assess interfaces as well as outputs. A credible employment or skills pathway has four linked elements: foreseeable demand created or influenced by the contract; a route that prepares and matches people to that demand; job design and in-work support that make retention plausible; and assurance that tests whether the intended outcomes occurred. A bidder need not control every element, but it should identify delivery partners, allocate responsibility, explain referral and escalation arrangements, and show how its offer complements rather than duplicates local provision.

This approach can also make participation more realistic for SMEs and social enterprises. Smaller organisations may bring local knowledge and relationships that large suppliers do not possess, but lack capacity for elaborate bid production or standalone support services. Proportionate requirements and well-defined partnership roles can surface that capability. The standard should remain demanding: local knowledge becomes commercially meaningful only when it is translated into an accountable delivery route.

Local value should be functional, not geographical

Community wealth building has increased interest in procurement as a way to strengthen local firms, civic economic capacity and routes into work. The weak version of that ambition is simple geographic preference: treat a local address as a proxy for value. That is difficult to defend and can unnecessarily narrow the market. The stronger version asks what the contract can do to make viable opportunities accessible to local firms, social enterprises and residents.

Ahmed’s 2026 study of English local-authority procurement, including the Preston community-wealth-building context, is a useful corrective to the assumption that local procurement must cost more. It finds that contracts awarded to local suppliers were generally lower cost and that, in adjusted analysis, local supply had a small negative association with award value per month. The study concludes that local procurement does not necessarily increase costs and may support smaller local firms (Ahmed, 2026) ↗.

That finding should not be over-read. It is an association in a particular setting, not proof that local suppliers are always cheaper, that lower award value denotes better value, or that location should decide an award. Supplier capability, market depth, competition, contract design and the cost of managing fragmented delivery vary sharply by sector and place. Ahmed also identifies the continuing tension between open competition and wider social objectives (Ahmed, 2026) ↗.

The better objective is functional local value: reducing avoidable barriers for capable SMEs; opening appropriate subcontracting and supplier-development opportunities; developing skills that local employers require; or helping residents facing barriers to enter and retain work. These outcomes have a causal route. A postcode alone does not.

In practice, an authority might ask bidders how they will publicise suitable opportunities, make onboarding proportionate for smaller firms, give useful feedback to unsuccessful prospective suppliers, and report whether access has improved. Such measures do not guarantee contracts for local businesses. They make the market-development mechanism visible while remaining consistent with the requirements for relevance, proportionality and fair treatment in social-value design (Cabinet Office, 2026) ↗.

Measure the pathway, not just activity

Monitoring is necessary, but it can generate false assurance when measures are detached from the intended outcome. Workshops delivered, interviews offered, volunteering hours and job starts are readily counted. None alone demonstrates sustained employment, progression, improved supplier capability or a benefit caused by the contract. Equally, a single monetised social-value figure can imply a degree of precision that the underlying evidence cannot support.

The KPI should follow the delivery logic. Where a contract produces predictable recurring vacancies, retention or progression may be the most meaningful measure. Where direct jobs are limited, a paid work-experience route linked to real progression, or a defined supplier-development intervention, may be more credible. PPN 026’s requirement for at least one social-value KPI on contracts worth £5 million or more should focus attention on the outcome the contract can realistically influence—not encourage selection of the easiest metric (Cabinet Office, 2026) ↗.

Connect to Work’s business case illustrates why impact claims need care. Its economic estimates rely on assumptions about participant numbers, employment effects, participant characteristics and the duration of gains, and its methodology was updated as delivery evidence developed (Department for Work and Pensions, 2026) ↗. This is not a weakness unique to the programme; it is a feature of complex employment interventions. It does mean reporting should distinguish observed results from estimates and assumptions.

Sanctuary recommends a three-layer evidence model. First, delivery evidence records what suppliers and partners provided: outreach, vacancies, referrals, training or supplier engagement. Second, outcome evidence records changes such as starts, qualifications, retention or progression. Third, contribution evidence tests whether the contract plausibly helped produce those changes alongside other services and labour-market conditions. Suppliers can be held firmly to delivery evidence. Claims about outcomes and contribution should use transparent definitions, proportionate caveats and an explanation of weak performance.

Not every contract needs a costly evaluation. Assurance should match materiality. Larger, higher-value commitments justify clearer baselines, cohort definitions and retention checks; smaller contracts may require a simpler model. In either case, the purpose of measurement is to improve decisions and delivery, not merely populate a dashboard.

What commissioners should do before asking the market to commit

The preparation task is not simply to amend evaluation templates. Before procurement begins, authorities should decide which contracts can credibly support which outcomes and establish the conditions that make those outcomes deliverable.

First, segment the pipeline. For contracts above the relevant thresholds, assess the likely workforce demand, subcontracting opportunities, geography, market structure, likely barriers to participation and realistic scope for jobs, skills, fair work or supplier development. This prevents a uniform social-value requirement being imposed on contracts with fundamentally different mechanisms.

Second, test the pathway with the market and local delivery system. Employment services, colleges, disability-employment specialists, voluntary and community organisations, employer networks and prospective suppliers can identify whether proposals are workable. The useful question is not only what each organisation would like to offer. It is whether transport, qualifications, digital access, caring responsibilities, security requirements and in-work support have been considered before the authority scores a commitment.

Third, publish a short delivery specification for every material scored commitment: the intended group, opportunity, route into it, delivery partners, milestones, accountable owner, evidence source and escalation process. If these elements cannot be described before tender, the authority may be purchasing aspiration rather than an intervention it can manage.

Finally, make the handover to contract management explicit. Evaluators, commercial leads, social-value specialists and contract managers need common definitions, a reporting cadence and authority to address delivery failure. Adaptation should be possible when an initial route proves unworkable, but it should preserve the intended outcome rather than silently weaken the commitment.

PPN 026 creates a stronger incentive to compete on social value. Its long-term significance will depend on whether that incentive produces polished promises or a limited number of supported, contract-relevant pathways into opportunity. Only the latter can credibly connect procurement to sustained local economic value.