Social Procurement - 'Switching the track' on government project expenditure

SCG understands social initiatives…

Having worked with our clients on government tenders, Strategic Connections Group (SCG) is familiar with social targets and strategies. For example, SCG has worked with some of our clients to put together workforce development strategies designed to boost the employment of Victoria’s priority job seekers, including Aboriginal Australians, those with a disability, and single parents. In fact, we are implementing some social strategies of our own, such as:

  • Flexible work/leave arrangements for parents

  • Engaging with Aboriginal businesses (e.g. Red Arrow Group).

  • Engaging with an Australian Disability Enterprises (ADE) for employment of job seekers with disabilities.

This article defines social procurement and social enterprise and explains the Victorian government’s growing focus on the social value of large projects, including how focusing on local socioeconomic development can help address the problem of workforce shortages. The article also briefly outlines Victoria’s new Social Procurement Framework, which aims to make social procurement a normal part of government projects, and how businesses can start preparing for upcoming government tenders now.

 

For government tenders, the focus on the social value of project related activities is growing

According to Victoria’s Social Procurement Framework (1), “Social procurement is when organisations use their buying power to generate social value above and beyond the value of the goods, services, or construction being procured”. Social Traders (2019) add that social  procurement is “when business and government choose to buy from social enterprise” and define social enterprises as “businesses that trade to intentionally tackle social problems, improve communities, provide people to access and training, or help the environment” (2)

 

Examples of types of social enterprises include businesses or organisations that:

 

  • Help people experiencing homelessness or housing instability to access employment, from living arrangements, to getting work ready, to employment, such as Launch Housing or the Public Tenant Employment Program.

  • Provide training and employment services for Aboriginal job seekers such as RAW Recruitment

  • Empower women who have experienced disadvantage to develop their self-esteem and skills in preparation for employment through pre and post-employment programs and services; and

 

Social enterprises work with various other groups seen as ‘priority job seekers’ by the Victorian government, such as:  

  • Youth justice clients

  • Single parents

  • Mature age jobseekers

  • Workers retrenched from diminishing industries

  • Jobseekers with a disability

  • Veterans and their families; and

  • Unemployed people from culturally diverse families.

 

Social Procurement and other social and sustainable practices can help unlock the power of Australia’s diverse job seekers to address skilled workforce shortages

The state government recognises that social procurement and other local, social and sustainable practices can help address skills shortages while creating sustainable local economic growth and development, by helping local priority job seekers into training and employment. For example, around 55% of Aboriginal and Torres Strait Islander (ATSI) Australians are under the age of 25, so engaging with this population in training and employment opportunities has the potential to help address local labour shortages in preparation for future business and industry development. Importantly, education and employment are recognised as key drivers to “Closing the Gap” between Aboriginal and non-Aboriginal Australians in areas of prosperity, health and wellbeing, as indicated in the Australian Government’s 2019 Closing the Gap Report (3)

 

Social targets already exist for State public transport projects

Indeed, the Victorian government already requires project contractors to develop Social Procurement plans, along with plans to employ priority job seekers as part of their workforce development.

For example, Melbourne Metro Tunnel contractors are required to achieve a target of 2.5 per cent Aboriginal employment, among targets for other priority job seekers (4). Meanwhile the Victorian Government’s Major Project Skills Guarantee (MPSG) – as part of the Local Jobs First strategy – requires Victorian project delivery contractors to have apprentices, trainees and engineering cadets fulfil 10% of the labour hours on projects worth $20M or more.

In this way, the State is encouraging project contractors to open up more training and employment opportunities, supporting the efforts of social enterprises, and helping to address predicted skills shortages.

 

Other states are implementing similar requirements. For example, as part of the METRONET rail program in Perth, WA, the METRONET Aboriginal Engagement Strategy, also known as Gnarla Biddi, requires project delivery contractors to develop strategies to meet an Aboriginal Procurement target whereby 3% of project delivery contracts over $50k are to go to Aboriginal Businesses, and an Aboriginal employment target whereby >3% of project delivery hours are to be fulfilled by Aboriginal employees.

 

Meanwhile, gender diversity targets are associated with such events as the Australasian Railway Association’s annual Women in Rail lunches, where women in rail speak about their career experiences, and subject matter experts raise awareness of industry gender statistics and employment barriers.

 

Normalising Social Procurement in government projects – the State’s new strategy

While it’s been some years since the Victorian government has begun asking its suppliers to consider local, social and sustainable practices and targets in their tenders and quotes, Victoria has recently released its new Social Procurement Framework (published in 2018) which aims to make social procurement a part of normal government processes.

 

As Minister for Finance Robin Scott says in his opening message, the government can use its buying power to create “job opportunities or skills-based training in areas of disadvantage, addressing structural and systemic inequalities, or delivering environmental benefits for local communities…” (5)

 

The framework has 10 objectives, 7 of which are Social Procurement objectives (shown below in the left column with actions or outcomes for each objective shown in the right-hand column).

Figure 1 Extract from Victoria's Social Procurement Framework, Table 1, p. 7, retrieved from  https://buyingfor.vic.gov.au/social-procurement-framework#social-procurement-framework

Figure 1 Extract from Victoria's Social Procurement Framework, Table 1, p. 7, retrieved from https://buyingfor.vic.gov.au/social-procurement-framework#social-procurement-framework

The Framework lays out targets for government agencies to set out procurement planning requirements for large government projects.  As mentioned before, such targets have been included in previous government projects, however this new framework aims to standardise these requirements.

At the lower end of the scale, for a regional contract under $1 million – or under $3 million for a Metro or State-wide contract – procurement from social enterprises, Australian Disability Enterprises (ADEs) or Aboriginal businesses is encouraged. Meanwhile, at the higher end of the scale, contracts over $50 million need to “include targets and contract requirements that pursue social and sustainable procurement objectives”(p. 19). A snapshot from the framework is shown below:

Figure 2 Extract from Victoria's Social Procurement Framework, 2018, p. 19, retrieved from  https://buyingfor.vic.gov.au/social-procurement-framework#social-procurement-framework

Figure 2 Extract from Victoria's Social Procurement Framework, 2018, p. 19, retrieved from https://buyingfor.vic.gov.au/social-procurement-framework#social-procurement-framework

Such targets tend to encourage – or even require – collaboration, awareness, and sharing of ideas between mainstream organisations and social enterprises. For example, boosting the employment of priority job seekers often requires engagement with social enterprises that understands certain job seeker groups, and which partner with employers to facilitate employment. These specialised services understand their client base well, and often have processes to ensure that candidates are job ready by the time they meet the employer. Furthermore, it is common for these social enterprises to provide ongoing support for both employer and employee. All of this makes it a lot simpler for employers looking to employ more priority job seekers.

 

Preparing your company for future tenders under the framework

In his article “Supply to Government? Price is not everything” (6) Simon Coutts offers his own summary of Victoria’s Social Procurement Framework, as well as some practical suggestions for how companies can prepare for future government tenders, such as:

 

  • Updating environmental, diversity and employment policies and practices

  • Boosting awareness of social and environmental issues

  • Taking on trainees or apprentices, long-term unemployed, migrants and other priority job seekers like single parents or workers in transition

  • Creating your own social procurement strategies (for larger suppliers)

  • Checking out the websites of government agencies you’ve supplied to in the past or which you may supply to in the future, in order to get an idea of what they expect in upcoming tenders

  • Getting an idea of the social enterprises that government endorses through Social Traders

  • Checking out Map for Impact to seek out social enterprises located close to the government contract spending

  • Encouraging and supporting your subcontractors to engage in social and sustainable practices; and

  • Choosing one of the priority areas/objectives identified in Victoria’s Social Procurement strategy and being the best in the state for that focus area.

In closing, the Minister for Industry and Employment says that the new Social Procurement Strategy endeavours to create a “fairer economy from which all Victorians can benefit – one which is innovative, inclusive and adaptive to change” (7) (Minister for Industry and Employment, 2018, Victoria’s Social Procurement Framework).

 

Looking for advice and ideas for Social Procurement or other social strategies?

You can contact Strategic Connections Group at admin@strategicconnectionsgroup.com.

 

Bibliography

1. Victorian Government. Victoria's Social Procurement Framework. Melbourne : Victorian Government, 2018.

2. Social Traders. What is Social Procurement. Social Traders. [Online] 2019. [Cited: March 24th, 2019.] https://www.socialtraders.com.au/about-social-enterprise/what-is-social-procurement/definition/.

3. Australian Government. Closing the Gap 2019. Indigenous.gov.au. [Online] 2019. [Cited: March 24th, 2019.] https://www.indigenous.gov.au/news-and-media/stories/closing-gap-2019.

4. Victorian Government. Jobs. Metro Tunnel. [Online] Victorian Government, March 7, 2018. [Cited: March 29, 2019.] https://metrotunnel.vic.gov.au/about-the-project/jobs.

5. Robin Scott, Minister for Finance. Message from the Minister for Finance. [book auth.] Victorian Government. Victoria's Social Procurement Framework. Melbourne : Victorian Government, 2018.

6. Coutts, Simon. Supply to Government? Price is not everything. LinkedIn. [Online] January 29th, 2019. [Cited: March 24th, 2019.] https://www.linkedin.com/pulse/supply-government-price-everything-simon-coutts/.

7. Employment, Minister for Industry and. Message from the Minister for Industry and Employment. [book auth.] Victorian Government. Victoria's Social Procurement Framework. Melbourne : Victorian Government, 2018.

 

Article by Lauren Coombes, QMS Officer