Social procurement involves organisations choosing to purchase a social outcome when they buy a good or a service. For example, a local government area with high levels of unemployment could strategically use their procurement to help address this issue by requiring successful tenderers to employ a percentage of their labour force from the local unemployed population. The contract could be for road maintenance, grounds maintenance, catering, cleaning, graffiti removal, leisure services, home help, consultation, and the like.
The social requirement in a procurement can be delivered by private companies that are able to incorporate delivery of these outcomes into their normal processes, they can also be subcontracted out to or directly delivered by organisations that have expertise in delivering the required social benefit. These organisations are commonly referred to as social benefit suppliers and they include social enterprises, indigenous businesses, Australian Disability Enterprises, Fair Trade Businesses and can also include minority owned and women owned businesses.
Social Procurement is gaining interest from institutional buyers because it provides an opportunity to generate greater value through the procurement process.
- For government the added value is created through the delivery of social benefits beyond the benefits conferred by the products and services being purchased; they are achieving other government goals, adding value that would not otherwise be created.
- For corporates the added value is created in a range of areas including; brand development through the integration of corporate social responsibility into the procurement process; staff attraction and retention through values driven activity.
- For the not-for-profit sector the added value is created by keeping money in the social economy for longer, where it can create more social benefit.
Social Procurement can be general – to the extent that some buyers require the tenderer to identify the social value that they will create through execution of the contract. Social procurement can also be very targeted around specific social objectives. Social objectives range from local economic development, to sustainability, to community engagement, to fair trade, to targeted beneficiaries including public housing tenants, long term unemployed, people with disabilities, migrants and refugees, youth, and women.