PPN 026 And The New Social Value Model: What Contracting Authorities And Suppliers Need To Know

The Cabinet Office has published Procurement Policy Note 026 (PPN 026), introducing a revised Social Value Model for central government procurement. The new model represents a significant shift in focus: social value is no longer a broad concept spanning carbon reduction, community engagement and wellbeing. Instead, it is squarely aimed at delivering good British jobs, skills and opportunities in local communities - particularly for people facing barriers to employment.

For central government contracting authorities, PPN 026 demands a rethink of how social value is scoped, weighted, and monitored across the commercial lifecycle. For suppliers holding or bidding for central government contracts, the changes will require a fresh look at how social value commitments are framed, evidenced and delivered.

What does PPN 026 introduce?

PPN 026 redefines social value for central government contracts as "taking account of how a supplier will work for our communities to provide good British jobs, skills and opportunities in every postcode."

The revised model applies to covered procurements valued at £1 million (inclusive of VAT) or more, commenced under the Procurement Act 2023. It is structured around two core outcomes, delivered through six model award criteria:

• Outcome 1 - Good Jobs: good employment opportunities in every postcode, assessed through criteria on (a) creating and retaining high-quality jobs, (b) fair working conditions and (c) fair pay.
• Outcome 2 - Skills: learning and development activities to address skills shortages, assessed

Minimum weightings are prescribed: 10% of the total score for contracts between £1 million and £5 million, and 20% for contracts of £5 million or more.

In-scope organisations should apply PPN 026 to procurements commenced on or after 1 January 2027.

Focus on employment barriers and local communities

A defining feature of PPN 026 is its focus on people who face barriers to employment within local communities. The model rewards suppliers who adapt their recruitment, training and workforce development practices to reach those who are furthest from the labour market.

Future guidance, expected in autumn 2026, will add detail on specific target cohorts, including:

• those not in employment, education, or training (NEETs);
• those transitioning from education to employment;
• people with a long-term health condition or disability;
• care leavers; and
• other communities facing barriers to employment, to be set out in the supporting guidance.

Target skills will be drawn from government skills strategies - for example, skills for clean energy jobs.

Which organisations does PPN 026 apply to?

PPN 026 applies only to central government departments, their executive agencies, and non-departmental public bodies. It does not extend to local government, the NHS or the wider public sector.

That said, other public sector contracting authorities "may wish to adopt the approach set out in this PPN", and many are likely to do so voluntarily - particularly those already embedding social value in their procurement strategies. The model does not apply to private utilities contracts or contracts with a primary purpose of overseas delivery.

What contracting authorities need to do

PPN 026 places clear obligations on in-scope organisations - central government departments, their executive agencies and non-departmental public bodies - to embed the revised model into their procurement processes. Key actions include:

1. Select and apply model award criteria

For each covered procurement, contracting authorities must select a relevant delivery outcome from the model and include it in their tender documents, attaching details of any available community programmes from the published list. The model should be applied across all stages of the commercial lifecycle, provided the selected criteria are relevant to the subject matter of the contract, proportionate and do not create unnecessary burdens for suppliers or barriers to participation.

2. Apply minimum weightings

A minimum 10% weighting must be applied for contracts valued between £1 million and £5 million, rising to a minimum 20% for contracts of £5 million or more. Where absolute methodologies are used (such as Price per Quality Point), the weighting applies to non-price criteria.

3. Set and publish social value KPIs

For contracts of £5 million or more, at least one social value KPI must be set - in addition to the three or more KPIs required under section 52(1) of the Procurement Act 2023 - and published on the central digital platform with reporting at least annually. Where suppliers commit to delivering outcomes through a listed community programme, the KPI should monitor delivery of that programme.

4. Use poor performance as an exclusion signal

Evidence of poor performance against social value KPIs can be taken into account in considering whether there are grounds to exclude a supplier from future tenders. This creates a meaningful accountability loop and reinforces the expectation that social value commitments are contractual obligations, not soft pledges.

5. Upskill commercial and contract management teams

In-scope organisations should ensure that commercial, procurement, and contract management staff undertake relevant training - including reading the accompanying guidance and engaging with the Government Commercial College and Cabinet Office Community of Practice sessions.

6. Research the market

Before selecting award criteria, contracting authorities should research market conditions - including the presence of SMEs and VCSEs and whether the procurement is likely to attract international bidders - to ensure the criteria selected are achievable and do not inadvertently exclude smaller or treaty-state suppliers.

How suppliers should prepare for PPN 026 and the new social value requirements

Even though the formal effective date is 1 January 2027, suppliers would be well advised to begin preparing now. Here are the key steps:

Key takeaways for contracting authorities and suppliers

PPN 026 signals a clear policy direction: social value in central government procurement is no longer a menu of optional extras - it is a focused instrument of labour market and industrial strategy. The emphasis on measurable employment outcomes, combined with enforceable KPIs and the threat of exclusion for poor performance, suggests that the government intends suppliers to treat these commitments with the same seriousness as any other contractual obligation.

For suppliers already active in this space, the streamlined model may be welcome - fewer themes to juggle, with clearer expectations. For those who have treated social value as a tick-box exercise, the message is straightforward: the bar is rising, and preparation should begin now.

Expert advice from our Procurement team: how we can help

The introduction of PPN 026 represents a significant change in the way social value is assessed and delivered in central government procurement. If you would like to discuss how the new requirements may affect your organisation, our Procurement team can help you understand the implications, review your approach and prepare for implementation ahead of the 1 January 2027 deadline.

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