Social procurement in context

Understand the broader legislative and policy framework for social procurement, and related developments.

Legislative and policy framework for social procurement 

The Social Procurement Framework and the suite of guidance materials that support it supplement, and do not replace, the broader legislative and policy framework that applies to Victorian Government procurement (outlined in the table below). Therefore, requirements established by the Social Procurement Framework apply in addition to any requirements that apply to an individual procurement activity under the broader framework. 

It is for the Accountable Officer of the relevant department or agency to decide how to implement the Social Procurement Framework. To the extent of any inconsistencies, the Supply Policies issued by the Victorian Government Purchasing Board under the Financial Management Act 1994 (Vic), Supply Policies issued by Health Purchasing Victoria under the Health Services Act 1998 (Vic) and the Ministerial Directions for Public Construction Procurement in Victoria issued under the Project Development and Construction Management Act 1994 (Vic) take precedence over the Social Procurement Framework. 

  Goods and services Construction
  • Financial Management Act 1994 (Vic) 
  • Health Services Act 1988 (Vic) 
  • Project Development and Construction Management Act 1994 (Vic) 
Applicable Ministerial Directions/subordinate legislation
  • Victorian Government Purchasing Board Supply Policies are subordinate legislation to the Financial Management Act 1994 
  • Health Purchasing Victoria Supply Policies are subordinate legislation to the Health Services Act 1998 
  • The Ministerial Directions for Public Construction Procurement in Victoria, are subordinate legislation to the Project Development and Construction Management Act 1994 
Oversight and coordination 
  • Victorian Government Purchasing Board 
  • Health Purchasing Victoria  
  • Public Construction Procurement Committee 
Policy framework (and applicable entities) 
  • Applicable for Victorian Government Purchasing Board Mandated Entities  
  • The five Victorian Government Purchasing Board Supply Policies cover end-to-end procurement activity from identifying needs, planning, and market research through to contract management 
  • All procurement activity is required to meet Victorian Government Purchasing Board procurement principles of value for money, accountability, probity and scalability 
  • The Victorian Government Purchasing Board Supply Policies  
  • Each of the Supply Policies is supported by non-mandated good practice, guides, tools and templates 
  • Applicable for public hospitals and health services 
  • Health Purchasing Victoria Supply Policies  

Applicable for departments and agencies subject to the Standing Directions 2018 made under the Financial Management Act: 

  • Ministerial Directions for Public Construction Procurement in Victoria (mandatory); 
  • Instructions for Public Construction Procurement in Victoria (mandatory); and 
  • Guidance for Public Construction Procurement in Victoria (non-mandatory) 
Social Procurement Framework application 
  • Applies to all departments and agencies subject to Standing Directions 2018 made under the Financial Management Act 
  • Applies to all individual procurement activities 
  • Applies to all departments and agencies subject to Standing Directions 2018 made under the Financial Management Act 
  • Applies to all individual procurement activities 
Other relevant Victorian Government procurement policies 
  • Local Jobs First – Victorian Industry Participation Policy– projects valued at or above $1 million in regional Victoria or $3 million in metro Melbourne or state-wide 
  • Local Jobs First – Victorian Industry Participation Policy– projects valued at or above $1 million in regional Victoria or $3 million in metro Melbourne or state-wide  
  • Local Jobs First – Major Projects Skills Guarantee – projects valued at or above $20 million 

Application to aggregated purchasing arrangements

A substantial proportion of Government procurement is undertaken under state purchase contracts, sole entity purchase contracts and pre-qualification registers, including registers established under the Ministerial Directions for Public Construction in Victoria. 

Existing state purchase contracts sole entity purchase contracts and registers provide some opportunities for departments and agencies to pursue social and sustainable procurement objectives. Lead departments are currently exploring, and will continue to explore, opportunities to incorporate Social Procurement Framework objectives and outcomes into aggregated purchasing arrangements. 

Any request to be exempted from using a mandated state purchase contract made by a participating party on Social Procurement Framework grounds will be considered in accordance with the existing process outlined in the Victorian Government Purchasing Board Market Analysis and Review Policy. 

The Social Procurement Framework is consistent with, and supplements, other Government procurement policies and reflects broader developments in relation to procurement best practice. The most relevant policies and developments are summarised below. 

Supplier Code of Conduct

The Victorian Government Purchasing Board’s Supplier Code of Conduct reflects the Victorian Government’s commitment to ethical, sustainable and socially responsible procurement. It outlines minimum ethical standards in behaviour that suppliers will aspire to meet when conducting business with, or on behalf of, the Victorian Government. 

The Supplier Code of Conduct applies to all contracts, agreements and purchase orders from 1 July 2017, and requires suppliers to acknowledge minimum ethical standards of behaviour in the areas of: 

  • integrity, ethics and conduct; 
  • conflict of interest, gifts, benefits and hospitality; 
  • corporate governance; 
  • labour and human rights; 
  • health and safety; and 
  • environmental management. 

For large contracts and agreements, suppliers are required to sign a commitment letter acknowledging Government’s minimum expectations and confirming that they will aspire to meet those expectations. The commitment letter is incorporated into the invitation to supply documentation and forms a compulsory part of a supplier’s submission. The requirement to sign and incorporate a commitment letter does not apply to low value, intermittent purchase orders because Government has amended the applicable terms and conditions to reflect the suppliers’ acknowledgement of, and commitment to, the Supplier Code of Conduct. 

Local Jobs First

Local Jobs First supports Victorian businesses and workers by ensuring that small to medium enterprises are given a full and fair opportunity to compete for both large and small government contracts and helping to create job opportunities including for apprentices, trainees and engineering cadets. The policy comprises: 

Local Jobs First – Victorian Industry Participation Policy, which provides opportunities for local suppliers to compete for work on all types of government projects, helping to create and sustain opportunities for Victorian businesses and workers. 

Local Jobs First – Major Projects Skills Guarantee, which provides opportunities to Victorian apprentices, trainees and cadets to work on high value construction projects to grow the next generation of skilled workers in Victoria. 

ISO 20400 – Sustainable Procurement

International Organization for Standardization is an independent, non-governmental international organisation with a membership of 161 national standards bodies. Through its members, ISO brings together experts to share knowledge and develop voluntary, consensus-based, market relevant International Standards that support innovation and provide solutions to global challenges. 

ISO 20400 – Sustainable Procurement was published on 24 April 2017 and is the first international guidance standard on ‘sustainable procurement’. ISO 20400 defines ‘sustainable procurement’ to mean ‘procurement that has the most positive environmental, social and economic impacts possible over the entire life cycle and that strives to minimise adverse impacts’. 

Sustainable procurement is relevant to any organisation, regardless of their sector, size or location, as well as any stakeholder involved in or impacted by procurement decisions and processes. ISO 20400 does not contain requirements for suppliers and is not a tool to assess the sustainability performance of suppliers. It does not replace legislation, policy and ethical frameworks that regulate procurement activities, but provides a basis for an effective integration of (environmental, social and economic) sustainability concerns into the procurement process and supply chains. 

ISO 20400 defines the principles of sustainable procurement (e.g. accountability, transparency, ethical behaviour, and full and fair opportunity) and focusses on seven core subjects of sustainable procurement, namely: 

  • organisational governance; 
  • human rights; 
  • labour practices; 
  • the environment;  
  • fair operating practices;  
  • consumer issues; and 
  • community involvement and development. 

Infrastructure Sustainability rating scheme

The Infrastructure Sustainability Council of Australia takes a holistic approach to sustainability to ensure that the planning, design, construction and operation of an infrastructure asset helps to deliver positive outcomes for society. 

The Infrastructure Sustainability Council of Australia first piloted the IS rating scheme in 2011. It has been widely adopted and infrastructure projects and assets worth more than $80 billion in capital value have used the IS rating scheme, resulting in over 120 rating registrations. 

The latest iteration of the Infrastructure Sustainability rating scheme – Infrastructure Sustainability version 2.0 – was released on 7 June 2018 and is available to Infrastructure Sustainability Accredited Professionals. The Infrastructure Sustainability rating scheme helps infrastructure projects and assets embed practical sustainability actions that contribute to achieving the United Nation’s Sustainable Development Goals. 

Tools and support

This content on this page is taken from the Social Procurement Framework – Buyer Guidance – Guide to key concepts. Access a PDF version in the social procurement document library. 

For more information about social procurement, please contact the Social Procurement team.