With its Social Procurement Framework coming into effect on 1 June this year, the Western Australian government continues the growing trend of Australian governments adopting broad-based social and sustainable procurement policy initiatives.
Over the past five years, some of the biggest strides have been made with Indigenous procurement, a distinct type of social procurement, with the commonwealth and every state and territory government in Australia either already having adopted or planning to adopt Indigenous procurement policies. In 2018, the Victorian government introduced the Victorian Social Procurement Framework, which supports the expansion and standardisation of social procurement practice across all government procurement activities. Other recent initiatives include the Queensland government’s Social Procurement Guide (May 2020), reflecting its commitment to social procurement under its broader Procurement Policy; the NSW government’s formal partnership with Social Traders (November 2020); and the establishment of the ACT government’s Charter of Procurement Values (January 2021).
Social procurement is a social justice mechanism whereby a government or organisation uses its purchasing power to generate social value above and beyond the value of its purchases. Social procurement initiatives are typically aimed at creating jobs for those disadvantaged in the labour market, stimulating local industry, encouraging environmental sustainability, and/or ensuring ethical supply chain management, including upholding best practice labour standards.
With governments spending hundreds of millions of dollars each year on goods, services, and construction, the potential for social procurement to drive positive social and economic change is significant.
When purchasing goods, services and/or construction, government departments and agencies in Australia are often faced with myriad laws, regulations, rules and policies. Especially when considering how to create social value from a purchase, there are often a number of potentially applicable policies which must be considered by buyers, from policies addressing Indigenous procurement, sustainability and local jobs and industries.
The WA Social Procurement Framework is a whole-of-government policy that sets out several key community objectives and outcomes. The outcomes are clear and measurable and include increased compliance with the Gender Equality Act, increased purchasing from Western Australian Disability Enterprises, increased purchasing from Aboriginal businesses, and an increased use of regional small and medium enterprises within the supply chain.
Alongside these objectives and outcomes, the framework maps out all the (existing) applicable and relevant government policies and guidelines; this helps government agencies understand which policies to utilise in order to achieve the framework’s objectives. The framework also creates new reporting requirements for government agencies vis-à-vis their performance under WA’s key social, economic and environmental policies and priorities.
The launch of the framework strongly signals the WA government’s commitment to using its spend to ‘maximise positive outcomes for the wider community’ and it will undoubtedly streamline the way in which WA government agencies approach social procurement.
Significantly, the framework also reinforces the WA government’s concept of value for money (VFM) per its new Procurement Rules. The rules mandate that when considering whether a purchase is VFM, government buyers take into consideration social, economic, and environmental factors.
This reconceptualised notion of VFM combined with the explicit emphasis on social procurement is critical to enabling government buyers to confidently input the creation social value into their purchases. Without it, the potential impact of social procurement policies will ultimately be stunted.
Other governments around Australia are also adopting broader definitions of VFM, with the ACT government’s Charter of Procurement Values becoming operative as of January this year. The charter mandates that all government agencies and departments consider a range of ethical, environmental and social factors in its purchasing activities, regardless of dollar value.
These policies necessarily require social procurement criteria to be incorporated within government contracts. Along with newness of these policies, this adds additional layers of complexity to government procurement and has challenged governments to build internal capacity around social procurement.
These recent developments in Australia’s procurement policy landscape are ultimately positive; it indeed appears that the trend of adopting social procurement policies is growing stronger. However, as is often the way with a federation such as Australia, the content of these policy initiatives by the commonwealth, state and territory governments differ, as do the timing of their adoption.
With most of these social procurement policies in their infancy, it is far too early to compare their impacts against one another. However, it is arguably undesirable for these policies to create a situation where, for example, an Indigenous business or Australian Disability Enterprise has significantly less opportunities to tender for government contracts in one jurisdiction compared with another.
With the rapidity at which these policies are being adopted, it will be interesting to see whether, in time, the commonwealth, state and territory governments come together to establish a more uniformed approach to social procurement across Australia.