Social Procurement as a Game-Changer

Social procurement has the enormous opportunity to make an impact on individuals and communities through the simple addition of social clauses into contracts writes Mark Daniels, the Head of Strategy and Market Development at Social Traders.

Ten years ago, working on the Fitzroy Public Housing Estate in inner Melbourne, I was fortunate to be involved in an experiment where the Housing Office staff were encouraged to use the multi-million dollar local procurement budget to create employment opportunities for unemployed public housing tenants.

Our attention focused on the cleaning and security contracts, where we required commercial providers and social enterprise to employ a percentage of their workforce from public housing tenants off the estate.

Housing, part of the Victorian Department of Human Services (DHS) was one of the early movers in social procurement, making a conscious decision to move from passive landlord to active community builder.

The impact of social procurement in that community between 2003 and 2008 was dramatic and contributed to a 400% increase in the number of people working (coming off a base of 5%). It didn't require grants or additional funding but rather the ability to see procurement as a strategic tool capable of delivering targeted social benefits.

DHS created over 800 jobs for public housing tenants between 2005-2010 by taking the learning from the Fitzroy Public Housing Estate and incorporating tenant employment requirements into their housing contracts and the contracts of other interested departments.

Gold Coast City Council recently created 13 jobs for unemployed local residents by socially procuring cleaning services; Toowoomba Council created 40 jobs for people with mental health issues by outsourcing management of gatehouses at tip sites to a social enterprise; Great Lakes Council in NSW won the 2013 Social Procurer of the Year Award at the Social Enterprise Awards for procuring waste services over 21 years from Resource Recovery, a social enterprise employing significant numbers of indigenous ex-offenders.

It is not just Government leading the charge. In the coming months, Social Traders will release a report into corporate social procurement, case studying NAB, Rio Tinto, Thiess and other businesses demonstrating leadership in this area. Telstra has created 300 jobs for people with a disability by utilising disability enterprises to maintain most of their telephone exchanges.

Transfied Services, finalists in this year’s Social Enterprise Awards, has six social enterprises in their supply chain. They are not doing it for altruistic reasons – it’s good business for them.

All of these wonderful examples are just touching the surface of a reservoir of purchasing dollars with the ability to unleash the sort of social change that could dramatically improve hundreds of communities like the Fitzroy Public Housing Estate – creating jobs for marginalised groups including people with disabilities, Indigenous Australians, young people, migrants and refugees and other disadvantaged groups.

The major impediment for social procurement is that it requires change at both a strategic and operational level in the way that we procure; the required change will only occur through leadership. At the moment the leaders are starting to coalesce: Government social procurement networks have been developed in NSW and Victoria and are starting to form nationally; business networks are also forming through the leadership of organisations like The Faculty, who run a corporate social procurement round table in collaboration with Social Traders. Best practice is being captured and case studied and the knowledge base is building.

In the UK, leadership came through politicians passing the UK Social Value Act (2012), which requires all levels of Government to consider how procurement can improve the economic, social and environmental well-being of the relevant area. The US has similar legislation in relation to disability that has resulted in the development of large social enterprises employing people with disabilities.

It may take a Social Value Act of our own here in Australia to unlock the extraordinary social impact that can be delivered from the reservoir of procurement. We are starting to see leaders and champions for social procurement emerging but it has not yet reached the politicians and business leaders who drive agendas.

It’s not far-fetched to believe that this could occur, not when you see the impact on individuals and communities generated through the simple addition of social clauses into contracts. Make no mistake… Social procurement is a game changer.

If you would like to be involved in a networking group, email Mark Daniels.

Social Traders is a small Not for Profit organisation established in 2008 to support and encourage the establishment of commercially viable social enterprises throughout Australia.