Social Procurement Australasia Background Doc
SECTION ONE: CLIMATE & CONTEXT
1.1 The evolving context for social procurement policy and practice
As a professional field of practice, procurement is relatively new and as a result to date it has received relatively little investment into its development. Despite this it continues to evolve and, as interest in procurement as a strategic tool grows, at an increasingly rapid rate.
Over the last 20 years or so, a range of initiatives have begun to broaden the understanding of what constitutes ‘best value’ in a procurement context. The introduction of future workforce development planning, environmental considerations, and fair work practices broadened the concept of value to incorporate sustainability principles. More recently, the parameters have broadened further to include (for example) supplier diversity, local economic development, specific employment equity targets and social enterprise procurement. Value as perceived in 1996 is different to how it is perceived in 2016, and will be quite different to conceptions of value in 2026. What constitutes value in the public sector can also differ to how it is understood in the private sector.
In this evolving context, it is increasingly recognised that strategic procurement includes social procurement. SPA’s 2015 Insights Into Social Procurement: From Policy to Practice publication sums up the evolving context as follows:
“. . . thinking around complex policy objectives has contributed to an increased awareness of the strategic potential of procurement as a function. Aligning budgetary spends to deliver maximum ‘value for money’ against policy priorities is now seen as good practice, and as a result a much more holistic understanding of what constitutes value in this context is emerging. The notion that value is achieved simply through lowest price is seen as naïve with considerations of value now being broader . . .” (p.3).
However, to realise the potential of social procurement policies and strategies “. . . new ways of working, new performance measures and investment tools, and new skill sets . . .” (Barraket et al, 2016) are needed. SPA aims to support developments in this space.
1.2 Example initiatives and activity around Australia
This section is provided to given an indication of the type of activity occurring around the country, and so to demonstrate the evolving context and growing interest. It is not intended to be comprehensive.
Federal Government – Indigenous Procurement Policy
In July 2015 the Federal Government adopted an Indigenous Procurement Policy. The policy mandates that by 2017 three percent of all Federal Government procurement contracts must go to indigenous businesses, and that suppliers to government must source three percent of their supply chain from indigenous business or that three percent of staff in the supply chain must be indigenous. Three percent of the Australian population is Indigenous so this is an example of an affirmative action policy designed to grow Indigenous entrepreneurship. The policy was identified in the Forest Review into Indigenous Training and Employment.
In the first six months of implementation the Federal Government allocated $90 million in contracts to Indigenous businesses – coming off a base of $5 million. Corporate organisations are joining Supply Nation in large numbers to meet their supply chain obligations.
State Government initiatives (some, not all)
South Australia has been using procurement to drive local economic development for a number of years. Some road contracts are specific in identifying that 20% of the workforce must be indigenous, re-skilling from the manufacturing industry or long-term unemployed.
Western Australia has created an internal position and funded an external position to enable government departments to buy from seven Australian Disability Enterprises. More recently, it has also introduced targets for Indigenous procurement.
Queensland has a supportive policy for Indigenous business procurement and is internally resourced to enable this. An internal position under the Chief Procurement Officer has recently been funded to support procurement from social enterprises. This follows on from a state government forum on social procurement in August 2015. A similar event is being held in Cairns on 10 March 2016. Queensland also has a long-standing commitment to the employment of apprentices in major projects
New South Wales introduced an updated Aboriginal Participation in Construction Policy in May 2015, which focuses on increasing the number of Indigenous businesses in the supply chain. A NSW Government target for creating 150 000 new jobs is also driving the Department of Innovation to look at the role of procurement. This has resulted in the Greater Western Sydney Social Procurement Taskforce re-convening in order to better understand how the $65 billion in infrastructure spend in the coming years could drive employment outcomes for Western Sydney.
Victoria is becoming re-engaged in social procurement, following a change of government in 2014. It has just reviewed its Victorian Industry Participation Policy (VIPP) which previously required local content plans for projects over $100 million. Following the Queensland government, it has recently announced a training guarantee requiring all major projects to have apprentices or trainees making up 10% of the labour force. It is also currently considering its position on social enterprise and Indigenous business procurement. This is occurring through a Ministerial committee that is exploring social enterprise, social procurement and social investment. The Minister for Transport and Employment, who also has a target of 100 000 new jobs, has integrated requirements around Indigenous employment and social enterprise suppliers into all major transport and infrastructure projects. The Victorian Government will also be sponsoring a social procurement Forum in Melbourne on 9 May 2016.
Local Government (indicative)
Local government has long been at the forefront of social procurement activity in the public sector – early leaders included Brisbane City Council and City of Parramatta, and a number of case studies on their work are available in the public domain.
Recognising the strategic potential and in response to interest from their members, the Municipal Assoc of VIC (MAV) and Local Government Procurement (LGP) were early supporters of SPA’s establishment, with WA Local Government Assoc (WALGA) also joining subsequently. MAV has also partnered with Social Traders on the establishment of a vendor panel that is helping local government in Victoria connect with social enterprise suppliers. LGP is currently scoping a possible ‘standard guidance suite’ project, which will focus on technical guidance for procurement officers. WALGA is working to open up contracts to Indigenous business and Australian Disability Enterprises (ADEs) in WA. All of three of these have become strong advocates for social procurement within their own jurisdictions. LocalBuy in Queensland has also recently expressed interest in membership.
Several individual Councils were also key actors in supporting SPA to establish – City of Greater Bendigo, City of Port Phillip and City of Melbourne – and Gold Coast City Council has also recently joined. These individual Councils have all engaged with social procurement within their own policies and practices, and continue to provide practical examples around implementation. A number of Queensland Councils have followed the work of Gold Coast Council and are running social benefit supplier tenders.
Much of the activity evident in the sector is also ad hoc and dependent on individual champions, who receive little internal (or other) support. There are still also many Councils not moving into social procurement at all, as yet. Despite this, interest is growing and the leadership being shown by the local government associations is significant in this regard.
Collective impact for local economic development
In May 2015, the GROW (G21 Region Opportunities for Work) Strategic Plan, developed by Knode, was launched. The plan is an ambitious long-term (10 year) strategy for tackling priority areas of disadvantage in Geelong and Colac in Victoria. Based on international examples, the GROW plan was developed through a consultative ‘collective impact’ approach involving a broad range of individuals and organisations from the local public, private and NGO sectors. GROW aims to achieve systemic and sustainable change through three key strategic activity domains: Investment, Social Procurement, and Demand-led Employment Brokerage; all supported by a Shared Impact Measurement Framework. The full plan includes four specialist reports, one of which is a Social Procurement Plan for the G21 Region.
The GROW Social Procurement Plan is designed to generate employment outcomes through harnessing the collective procurement activities of organisations operating within the region. Social procurement is increasingly recognised as a key strategic procurement priority, integrating social and local economic development objectives into the procurement processes for goods, services and/or works. The GROW Social Procurement Plan consists of several key action areas.
One of these action areas is the GROW Regional Procurement Economic Modelling Project. Through this project the impact of increasing local and social procurement activity on regional economic activity is being assessed. The project commenced in September 2015 and is being delivered by ArcBlue Consulting on behalf of Give Where You Live, and with the involvement of the Geelong Chamber of Commerce, the Committee for Geelong, and Regional Development Victoria.
Qualitative and quantitative data on the procurement activities (recent past and future) of key regional organisations (public, community and private sector), is being collected. The data collected is being analysed to provide a better understanding of spend by category and industry, to identify where opportunities to increase local and social procurement may lie. This process includes generating online ‘dashboards’ for each participating organisation and the region, to facilitate ongoing data analysis, tracking and reporting. The project will formulate recommendations for future directions – both for participating organisations and for the overall initiative.
The collective impact model is a useful one for place-based social procurement initiatives.
There is evidence of growing interest in and commitment to social procurement in the corporate sector, along with a willingness to respond quickly to government policies and targets. Membership of Supply Nation is increasing rapidly, at least partly due to the Indigenous Procurement Policy (see above). Membership of the new Social Traders’ Connect program is also growing quickly.
Social Traders Connect
Social Traders launched Connect in November 2015 to link certified social enterprises with corporate business opportunities, and so to assist with generating greater value to the business and community through company spend. There are currently nine paying Connect members – eight from the corporate sector and one government agency.
1.3 Some drivers from elsewhere
Development of ISO 20400 Sustainable Procurement Guidelines
A worldwide network is meeting in Sydney in early May 2016 to finalise the content of the ISO 20400 Guidance for Sustainable Procurement. The document is likely to be made available in 2017. It will not be mandatory for people using ISO 9000 or 14000, but will provide guidance on best practice from an international third party accreditation organisation. Social procurement is well represented in this publication.
UK Public Services (Social Value) Act
The UK Public Services (Social Value) Act came into force in January 2013 and ‘requires people who commission public services to think about how they can also secure wider social, economic and environmental benefits’. A review of the Act was recently completed, with the key impression being that Act is not sufficiently robust to drive implementation as it lacks targets, does not mandate any social procurement and is not supported by policy legislation.
The UK Social Value Awards were established to recognise good practice in commissioning and providing social value. The need for this type of recognition, to encourage ongoing development around demonstrating social value, was a key recommendation of the 2015 Review of the Social Value Act (see below for more info on the background to the Awards). The review also demonstrated that measurement and reporting of social value remains a key focus for both purchasers and suppliers, with a range of initiatives underway to strengthen activity and overcome barriers in this area.
 Hard copies previously provided to all Members (more available), and soft copies available on the SPA website.
 Barraket, J., Keast, R. & Furneaux, C. (2016). Social procurement and New Public Governance. London: Routledge
 Supply Nation was established in 2009 to connect its members (Australian companies and government) with Indigenous businesses across the country. It offers a rigorous registration and certification processes to ensure its members can be confident of Indigenous ownership. With Indigenous businesses active in every state and territory, in every industry sector, Supply Nation has been central to the growth of a new economic force. See: http://www.supplynation.org.au/
 See: http://www.socialtraders.com.au/buy/dsp-default.cfm?loadref=260
 See: https://www.gov.uk/government/publications/social-value-act-information-and-resources/social-value-act-information-and-resources