VIC's Social Procurement Framework: Addressing its biggest challenge

A major challenge to the successful implementation of the Social Procurement Framework in Victoria - or of any such initiative for that matter - is the issue of scale. Common procurement practice is to bundle work into large packages, which can exclude social enterprises that lack the capacity to deliver at such a scale.

Gary Sinclair, manager of YMCA social enterprise ReBuild, sees the issue as a significant inhibitor to the ultimate success of the Framework. Despite operating in an industry flush with funding, Sinclair says that unless changes are made to the way work is packaged and released to market then ReBuild may not be able to benefit from the new policies.

“The Social Procurement Framework is a huge opportunity for our sector, but if the disconnect between the size of packages and the maturity of the sector is not addressed then I fear it will pass us by.”

Collaborating with other social businesses to meet tender requirements is one-way ReBuild are tackling this. They have recently run a joint tender submission with Brite Nurseries to service a $750K job, and they plan to collaborate with Ability Works on an upcoming tender.

So, as the Social Procurement Framework continues to be rolled out, how can Victoria Government departments and agencies adapt their procurement practices to the social sector? I believe there are three ways.

1. Mandating social policies in commercial contracts

At the Social Traders conference last month, Major Road Projects Victoria were identified as leaders in social procurement for mandating social policies in their tender documents and being proactive with supplier engagement.

This approach - supporting large commercial contractors in driving social outcomes through their supply chain - is receiving a lot of attention from government and commercial procurement teams. VendorPanel has responded with flexible arrangements that allow companies contracted by our clients to source their subcontractors on the local supplier marketplace, which includes social panels through our partnerships with Kinaway, Supply Nation, Social Traders and BuyAbility. In this way, the spend of major contractors filters down to help achieve local economic development and social procurement targets.

2. Breaking packages down, to enable entry

At the recent Melbourne forum on Social Value, Capability and Inclusion, Leigh Hardingham, GM for Social Procurement & Inclusion at John Holland Group, emphasised the importance of business taking responsibility for generating social outcomes through procurement. For John Holland Group, this involves adjusting the size and scope of work so that social enterprises can reasonably bid on them. Once John Holland have engaged a social enterprise, they make the effort to know and understand the business in order to mitigate risks, and will deploy internal resources to maximise social and economic value from the contract.

These initiatives have helped the company to achieve ambitious inclusive employment targets and be recognised as a leader in social procurement in Australia.

What if the public sector adopted a similar approach? Breaking packages would create more opportunities for SMEs and enable social enterprises to bid on more work with a greater chance of winning. This is precisely the action Gary Sinclair hopes government procurement teams will take to allow social enterprises like ReBuild access to the market.

3. Harnessing sub-tender spend

In the coming year, billions of dollars of Victoria Government spend will fall under the tender threshold. These smaller contracts are often suited to social enterprises. However, as they are not generally managed by procurement specialists, this opportunity risks falling through the cracks.

Encouragingly, the Social Procurement Framework has been a major driver in our conversations with government and its agencies this year. Executives are now motivated to look for ways to help their non-procurement staff find and engage social suppliers in sub-tender work. Partly as a result, 75% of new clients in Victoria in the last year have added VendorPanel Marketplace to their sourcing options. The Marketplace is where social enterprises can be found.

Marketplace works because it allows buyers to easily identify social enterprises but, importantly, it is open to any supplier. This means buyers have access to a marketplace with breadth and depth, and to best practice tools that simplify sourcing, where including social suppliers in their RFQ process is as easy as ticking a box.

In this way, VendorPanel Marketplace helps buyers open up their daily sourcing activity to include social suppliers, growing opportunities for the sector and supporting organisations in achieving their social procurement targets.