7 Value for Money (VfM)
Value for Money is defined in the Scottish Public Finance Manual as "the optimum combination of whole life costs and quality to meet the customer's requirement".
Despite the fact that VfM should be based on the cost of procuring the core elements, which in the case of CBIP will include the Community Benefit, there are perhaps two concerns expressed by the procurement community concerning Value for Money -
- the community benefit requirements will add inappropriately to the cost of a contract;
- this may happen inadvertently by discouraging or eliminating the contractor that would have provided best VfM because they could not or would not address the community benefit requirements.
Until the CBIP pilot study there was not sufficient evidence of the impact of including TR&T requirements in a contract on VfM. 30 However, based on scoring of 340 PQQs and 84 Targeted Recruitment and Training Method Statements, the GHA case study indicates that:
- the inclusion of the TR&T requirements at all stages of the procurement did not deter bidders;
- the bidders with the highest scores overall - at both PQQ and tender stage - were those that also scored highest on the recruitment and training requirements.
In each case the Community Benefits requirements helped the contracting authorities to achieve their policy objectives without additional cost to the contracts.
In the GHA tendering it was made explicit that the contractors would be expected to access external resources to fund the additional costs of meeting their training and recruitment obligations. In other examples ( e.g. Inverclyde) contractors could include a net cost (after deducting grants, etc.) in their tenders, but none chose to do so. By including the community benefit requirements in the whole tendering process, they are subject to competitive pressures that will deter a contractor from submitting a potentially inflated price for delivering these requirements.
Finally, there is another issue of VfM that can be considered. This relates to the VfM obtained from the public investment in training and job-matching services. The case studies have not produced significant data on this, but two of the supply-side agencies, (in Raploch and Inverclyde), referred to the efficiencies they achieved by having a single employer that is committed to taking on a number of trainees. This means that a 'placement worker' can get much better outputs from their time, and training providers get a higher progression rate into jobs because the training can be bespoke to the employer's requirements.