Social procurement is on the rise. It’s rising as an aim, an ideal and a practice. In Australia frequently we see improvements in government attitudes to, and awareness of, the social aspects of procurement.

The Chartered Institute of Procurement and Supply says: “Whilst the Procurement regime is often cited as a barrier to taking social and environmental issues into account, public authorities can incorporate various considerations within the procurement processes in order to ensure that the outcome is aligned with their social and environmental agendas. There are permissive provisions within the EU procurement regime and other legislation which can be utilised to the advantage of public authorities and the public alike.”

Put another way, if governments require private sector infrastructure tenderers to include (in their bids) community benefit provisions, they can use their purchasing power for significant social impact. And there’s evidence they are heeding and – more importantly – implementing the message.

Social procurement refers to the generation of social value through purchasing and procurement processes. In NSW, it is estimated that up to $27 billion in goods and services are procured each year by state ($20 billion) and local government ($7 billion)

Social Procurement in NSW

The New South Wales Department of Premier and Cabinet introduces its Social Impact Investment Knowledge Hub with these words: “When it comes to procuring public services, governments usually pay a provider to deliver a government-designed program and report on the process to implement that program. Essentially procurement has focused on throughput or output. ‘Value for money’ has been determined by factors such as unit cost, whole-of-life costs, competition and quality. Social procurement moves beyond these metrics and seeks to quantify the social benefits generated by a transaction.”

A local government example of this is the City of Ballarat social procurement policy which states: City of Ballarat supports social procurement when engaging local suppliers, contractors and/or service providers and would seek Ministerial Exemption when the required works provide value for money to Council and would be advantageous to any of the following:-

• Employment of disadvantage groups
• Employment of Apprentices
• Employment of recognised Youth Traineeships
• Employment of Youth labour
• Benefits to local community

Not far away, the City of Melbourne procurement policy endorsed last month, includes these social procurement benefits among the points council must consider when making purchases – Socially sustainable procurement generates positive outcomes for, and contributes to building stronger communities by:

• improving the overall quality of life of the local community
• improving equity of access to services
• improving equity of access to opportunities
• increasing purchases of ethical and fair trade goods (or equivalent).

A focus is placed on people who are underrepresented and people with less opportunity.

Local government generally in Victoria seems to be heeding the message. It’s had a specific local government social procurement toolkit for several years now.

Social procurement is an area where the power really is with the people, as the professor responsible for producing the next crop of Supply Chain Management graduates at Melbourne Business School, Danny Samson, told CIPS in a recent interview:

“Consumers are increasingly voting with their feet on ethical matters. They care more than ever about safety and health, and choose to buy from suppliers whose value systems and ethics are seen to be acceptable. We are more discerning than ever about the sustainability impacts of supply chains. In some industries, such as chocolate, significant changes are in play about increasing the standards of ‘ethical sourcing’ while in others such as textiles, there is still a long way to go.”

And there is a long way to go, although help is available. The CIPS top ten tips for social and environmental issues in procurement starts out: “Traditionally, economic and qualitative factors are foremost to be taken into account when entering into contracts. Issues that are outside the commercial arena are however now becoming increasingly important: non-economic factors, for example, where does the wood come from that we make our paper out of; how environmentally friendly are our contractors and suppliers; and are we benefiting our local economy in the wider sense when we procure?”

Checking the source of the wood used to create the paper they use may be a step too far for many just now, but the signs for social procurement implementation overall seem to be encouraging.

(Image: Southgate bridge, Melbourne. iStock by Getty Images)