Definition of social procurement
Social procurement is when organisations use their buying power to generate social value above and beyond the value of the goods, services, or construction being procured.
In the Victorian Government context, social value means the benefits that accrue to all Victorians when the social and sustainable outcomes in this Framework are achieved.
Approaches to social procurement
Social procurement can be grouped into two broad approaches:
Direct – Purchasing of goods, services or construction (by government) from:
- Victorian social enterprises
- Victorian Aboriginal businesses
- other social benefit suppliers, including Victorian Australian Disability Enterprises
Indirect – Using the invitation to supply process and clauses in contracts with the private sector to seek social and sustainable outcomes for Victorians.
Victoria’s Social Procurement Framework will support the expansion and standardisation of social procurement practice across all government procurement activities through both direct and indirect methods.
The Government acknowledges that regional small and medium enterprises play a critical role in the sustainability of regional economies and communities. In applying this framework, government departments and agencies are encouraged to consider how they can use place-based approaches to address entrenched disadvantage and support regional small and medium enterprises.
Purchasing from social enterprises
Social enterprises are businesses that trade to intentionally tackle social problems, improve communities, provide people access to employment and training, or help the environment. They derive most of their income from trade (not donations or grants) and use the majority of their profits (at least 50%) to contribute to their social mission.
Among other benefits, social enterprises play an important role in providing transitional employment for disadvantaged job seekers, including people with disabilities, as a pathway to employment in mainstream businesses. Social enterprises can also provide ongoing employment options for disadvantaged job seekers who may not be well placed to sustain mainstream employment over the longer term.
Purchasing from Aboriginal businesses
The Victorian Government has committed to a one per cent Aboriginal business procurement target by 2019-2020. The Victorian Government defines an Aboriginal business as:
- at least 50% Aboriginal and/or Torres Strait Islander-owned
- undertaking commercial activity
- main business location is in Victoria
highlights that the Victorian Aboriginal business sector is large, diverse, and growing. The sector includes for-profit businesses, Traditional Owner corporations, social enterprises and community enterprises in metropolitan and regional areas. Land-based Aboriginal businesses, including Traditional Owner corporations, are active in several fields, including primary production, natural resource management, ecosystem services and cultural tourism.
Purchasing from Australian Disability Enterprises
Australian Disability Enterprises are Commonwealth-funded and generally not-for-profit organisations operating in a commercial context, specifically to provide supportive employment opportunities to people with moderate to severe disability. Some Australian Disability Enterprises also operate as social enterprises. Under this framework, the Government encourages engagement with Victorian Australian Disability Enterprises that offer award based pay rates for all staff.
Suppliers that provide inclusive opportunities
This framework seeks to incentivise all suppliers and supply chains to adopt and maintain fair, inclusive and sustainable business practices. The private sector plays a vital role in providing direct employment for people from disadvantaged communities, and in providing employment opportunities that are gender equitable and inclusive of people with disability.
The framework incentivises the employment of disadvantaged Victorians by suppliers, to maximise the positive employment outcomes they can provide. The range of employment programs supported through Jobs Victoria present a strategic mechanism through which suppliers can leverage from existing Government programs to support more job seekers at risk of being left behind into work.
Examples of social procurement in action
Kalinya servicing the Department of Premier and Cabinet - Purchasing from Aboriginal businesses
Aboriginal businesses provide a diverse range of goods and services that can be used by all areas of government. The Victorian Government’s Department of Premier and Cabinet, for example, has purchased the services of to provide strategic communications advice, professional editing, and supported research into media bias in reporting of family violence.
Melton City Council, Citywide and the Brotherhood of St Laurence - Using targets to deliver employment outcomes
Melton City Council recently went to market for provision of open space services. As part of their procurement process, the Council included a 10% target for suppliers to offer employment for local people experiencing unemployment. In responding to this tender, Citywide partnered with the Brotherhood of St Laurence in their successful response. The Brotherhood of St Laurence provided identification of personnel, pre-employment training and mentoring. They also provided training and post-placement support for employers to assist them in integrating new staff who may require additional mentoring.
Twelve months on, more than 10% of the workforce (9 out of 70 employees) is filled by people previously having difficulty gaining employment. Supplier market collaboration with the community sector has helped to deliver an outstanding outcome.
Tools and support
Reviewed 02 July 2021