HR could be transformed from a board-level “commercial imperative” under Andy Burnham’s shake-up of the Government’s £90 billion procurement system, experts say.
Companies competing for major public contracts will increasingly need to prove they are creating UK jobs, developing skills and retaining workers, with the weighting attached to social value set to double from 10% to 20% on contracts worth £5m or more, it has been announced.
HR experts say the change means workforce strategy could directly determine whether a company wins or loses millions of pounds of government business.
And the impact could extend far beyond companies bidding directly for public contracts, as major suppliers increasingly demand similar standards from smaller businesses throughout their supply chains.
First Secretary of State Louise Haigh said: “Every pound of taxpayer money should be spent in a way that benefits local communities – creating good jobs and giving young people the skills they need for the future.
“For too long, securing government contracts has been a tick box exercise that fails to deliver the positive change that people feel in their pocket and see in the places they live.
“We are doing things differently. These new rules will ensure the £90 billion that is spent each year through government contracts supports British jobs, skills and people in every postcode.”
Transformed
Kelly Smallcombe, Fractional Chief People Officer at Meliorem HR Consultancy, said the changes alter the commercial importance of HR.
She added: “Whitehall’s procurement overhaul fundamentally transforms HR from a back-office support function into a front-line commercial imperative. Social value weightings doubling to 20% on major tenders, focused strictly on UK job creation, skills pipelines, employee retention and workforce strategy can now directly dictate whether you win or lose government business.
“Technical spec alone may not get you across the line; leaving 20% of your score to generic, off-the-shelf HR policies is a massive risk. Industry needs a clinical HR solution: diagnostic, high-precision workforce architecture engineered to satisfy strict procurement leads.
“The ripple effect across the sector should be immediate. Prime contractors will likely push these mandates down through supply chains, while a fierce war for security-cleared talent will punish firms without strong retention models. Preparing for an upcoming Ministry of Defence bid or maintaining tender-readiness? Aligning your people strategy is vital for the next win.”
Kate Underwood, Founder & Chief People Strategist at Southampton-based Kate Underwood HR and Training, said the changes demonstrate why HR can no longer be treated simply as an administrative function.
She added: “Nobody fires off ‘Hi Finance’ or ‘Hi Procurement.’ But HR? We get ‘Hi HR’ like we are a vending machine for contracts and holiday forms. The idea we just do the transactional stuff is wearing very thin.
“When 20% of a multi-million-pound bid rides on jobs, skills, apprenticeships and fair pay, HR is not admin. HR is the difference between winning the work and losing it. And you cannot blag it at bid stage. Panels want receipts: real apprenticeships, real retention, pay you would happily read out loud.
“Build it in for real, and it sells itself. Ripple into the private sector? Already happening. The big players will squeeze their supply chains, and that drags the small firms in too. Turns out looking after people was the strategy all along.”
