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Winter 2014: Does social procurement deliver social impact?

From the Editor

From the Editor

When buyers use their purchasing power to achieve social outcomes beyond the products and services they require, they are undertaking social procurement. Social procurement is a strategic approach to procurement which allows organisations to achieve multiple outcomes through their procurement spend including:

• The creation of employment for marginalised groups and those excluded from the labour market; and
• Regenerating of local economies; and
• Ensuring fair work practices in developing countries.

Social procurement is gaining traction in Australia and internationally as governments and the private sector come to realise that greater value can be extracted from the procurement process. In the last five years:

• Advocates for social procurement have become more active;
• Supplier networks have been created to make it easier to buy from disability organisations, indigenous businesses and social enterprises;
• Guidelines and tools have been developed to support procurers to ‘buy social’;
• Research has been carried out into corporate and government buyers;
• Networks have emerged in NSW and Victoria; and
• There has been an increase in the amount of social procurement occurring.

This edition of Knowledge Connect utilises recent literature from Australia and overseas to explore social procurement as a tool for delivering social impact, and in particular to better understand what social value is created through social procurement.

Some interesting conclusions can be drawn from the review of literature on social procurement, particularly in identifying that the value created through social procurement differs for private buyers, public buyers, government finances and beneficiaries; the evidence for social procurement is compelling but sparse in relation to some outcome areas; and the critical role of enabling legislation and targets.

Social procurement generates different types of value to the different stakeholders involved. Corporations engaging with social procurement are generally driven by reputation enhancement and the associated community relations benefits. While government also enjoys these benefits, there are also significant benefits generated through employment and community wellbeing that often translate to savings for government. The value for beneficiaries ranges from marginal to life-changing.

The presumption that the value of social procurement is self-evident is unrealistic. There is implicit value in social procurement but there is implicit social value generated in all procurement. As such, capturing the added value is critical in building the evidence and broader adoption of social procurement. Social procurement is being evaluated in different ways, extensively in some fields and sparsely in others, and this is a critical challenge for social procurement. Different social objectives required different approaches, for example buying fair trade is different to buying local which is different again to bringing marginalised people into the labour market. This is not a barrier to all buyers but it often is for some government buyers and Treasury departments who are trying to demonstrate added value.

Social procurement in Australia does not require enabling legislation. Existing legislation does not prevent social procurement, however it does not encourage social procurement either. Nelson and Pound assert that there is a need for targets and benchmarks for social procurement in the UK. Targets and affirmative action through legislation in the US has driven over $100B per annum in government social procurement, creating employment opportunities for people with disabilities and economic inclusion for minority groups.

In this edition, we connect you with some of the most recent thinking on social procurement inspired by Social Traders’ recent research into Corporate Social Procurement in Australia and the social enterprise procurement exchange being established by Social Traders (the need for which was identified in the report). It provides a precursor to The Social Marketplace event – presented by the Centre for Social Impact – which will feature a stream on social procurement.

Mark Daniels
Editor, Knowledge Connect, Winter 2014

Mark Daniels has been involved, engaged and excited by social procurement since designing and awarding a cleaning services contract, containing social clauses, on the Atherton Gardens (Fitzroy) public housing estate in 2002. The contract required the successful tenderer to employ 35% of their labour force from unemployed public housing tenants living on the estate. Overnight, 15 public housing tenants got jobs and the estate’s joblessness rate went from 95% to 93%. With continued social procurement initiatives and job creation schemes the jobless rate at Atherton Gardens reduced to 81% by 2008. As well as being a buyer, Mark has worked in social enterprises delivering on socially procured contracts. Over the last six years he has been a social procurement advocate brokering many contracts between social enterprises and buyers in his role as the head of Market and Sector Development at Social Traders, a specialist social enterprise development organisation. Mark Daniels will be speaking at The Social Marketplace 2014.

Chris Newman is the guest editor for this edition. He came to social procurement through strategic procurement work he was undertaking with local government, where he saw community issues and needs on one side of council and procurement decisions on the other side and never the twain shall meet. The disconnect was not just about silos, it was about poor strategy. Chris now advises organisations across Australia on procurement practice and strategy through Arc Blue.

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