You might be aware that the ASVB is based on a model that was developed by the UK housing sector, the UK Social Value Bank. The tool was developed in response to their Government’s introduction of the Social Value Act in 2012.

The UK Social Value Act requires people who commission public services to think about how they can also secure wider social, economic and environmental benefits. This made being able to demonstrate social value, alongside cost effectiveness, a priority for the UK housing sector.

We don’t have an equivalent Social Value Act here in Australia but we are starting to see our State Governments seek these additional benefits through their social procurement initiatives. At this stage, it is most prevalent in initiatives that involve large government investment, such as the development of infrastructure.

TENDERING ON SOCIAL IMPACT

Companies involved in development and construction are already being asked at the tender stage to outline their strategies to deliver social impact. It is one of the criteria that their bids are being assessed on.

There are a couple of  main strategies that these companies are using to embed the creation of social impact in their tenders.

PURCHASING SOCIAL VALUE

The first is to include their own social procurement strategy within their organisational approach. This means that they commit to purchasing goods and services from social enterprises that contribute positive social outcomes as part of their standard business operations.

For example, they may contract a social enterprise, who is an inclusive employer, to clean up waste on their construction sites and divert usable resources away from landfill. This approach would include environmental outcomes as well as employment opportunities for people with a disability who are hired by the social enterprise.

Using this strategy, the company may set a target amount or percentage of overall spend that they will direct toward social enterprises throughout their supply chain. Or, as in the example above, they may outline specific partnerships and the amount this contract will cost them.

CREATING SOCIAL VALUE

The other strategy is to embed formal training and job creation initiatives within your own organisation’s activities, as part of your bid. This approach has already been successfully used in a number of large scale projects.

Generally the construction company will partner with a vocational education provider to up-skill a group of recruits to fulfill specific positions on their work site. Depending on the target cohort of the program, it is likely additional supports will be required to achieve sustainable outcomes. In the case of supporting highly marginalised young people, new migrants or ex-offenders for example, it is best to partner with skilled NGO who has experience in supporting people with additional needs through training and into sustained employment .

COMPETING ON SOCIAL VALUE

Currently, these types of approaches are being submitted with training and employment outcome targets, which may suffice for now. However, as the market matures and competition increases, an approach like the ASVB will be able to make a real difference.

By simply taking the amount of money you intend to invest towards your social impact initiative, and estimating the number of jobs you will create, the ASVB will allow you to forecast the social value that could be created if yours were the successful bid.

This is a cost-effective strategy that can really strengthen your proposal, by including the dollar value of the social impact that would be delivered by this component of your tender.

From the government perspective, or whoever may be procuring high value services, the ASVB will allow you to compare different social impact strategies to help inform your decision making knowing which bid offers the greatest likely creation of social value.

Of course once successful in winning the tender, the ASVB is the obvious choice to report back on the actual social value created from your social impact initiative.

We believe that the ASVB can make a real difference in this context by helping to encourage money being allocated towards projects that create more social value. In response, we are now starting to offer one-off impact valuation statements that can be used to support your tender. If you’d like to discuss this opportunity, please get in touch at info@asvb.com.au.

Governments in Australia are leading a dramatic shift in how they procure goods and services, embedding social procurement into their own supply chain practice and demanding similar of anyone who wants to work with them. This, in turn, is leading to businesses, of all sizes, adopting social procurement strategies and identifying ways they can adapt their business to include the creation of social benefits.

The social procurement space is years ahead of other approaches to creating social value, such as commissioning for outcomes and social impact bonds.

The Victorian and Queensland governments are leading this change in Australia with highly detailed targets for social procurement growth and guidance on how to go about it.

The Victorian Government wants to see the social benefits of their procurement benefiting those in most need in Victoria. Ensuring that where feasible, contracts for goods and services are delivered in Victoria by Victorian-based companies and enterprises.

Similarly, the Queensland Government has identified key target groups which they hope will benefit from their focus on social procurement. The policy commits the Queensland Government to:

• increase government procurement with Aboriginal and Torres Strait Islander businesses to three per cent of addressable spend by 2022
• requirement to invite regional and Queensland suppliers to quote or tender can be met by asking local social enterprises to tender for work, thereby addressing social needs as well.
• includes a commitment to increase government spending with genuine, quality social enterprises and to ensure that all procurement complies with the Disability Discrimination Act 1992

Benefits of social procurement

So, what are the potential benefits of social procurement for government and society:

• Social inclusion
• Employment and training
• Local sustainability
• Diversity and equality
• Fairtrade
• Service innovation

Social procurement can take different forms, which can be loosely grouped into direct and indirect approaches. Direct approaches involve purchasing from “for-social-benefit entities”, such as not-for-profits, social enterprises, Australian Disability Enterprises, Aboriginal-owned businesses, social businesses, worker or community-owned cooperatives and others with a focus on social outcomes.

Indirect approaches include social clauses in contracts with private sector providers, screening supply chains for ethical considerations, as well as embedding social enterprise in the supply chain of larger contracts (i.e. as sub-contractors). (Beyond Value for Money Social Procurement for Victorian Local Government (2017)

While these benefits and forms of social procurement are unquestionably positive for local economies and communities, it can be hard for those taking their first steps down this path, or small businesses, to understand if the benefits outweigh the additional time to implement a new approach or change to another supplier.

We know through our work here at the ASVB, that there are large wellbeing benefits attached to some of the focus areas of social procurement.

Increasing your social value contribution

Here are two examples where outlining social outcomes in your procurement can increase the social value your business is creating in the community you operate in.

The first example is where the procurement team request that an organisation who wins a tender bid will train a defined number of employees each year to gain Certificate I and Certificate II qualifications. They may already be doing this ad-hoc but not with a contractual obligation or consistent numbers each year. This simple change will ensure their enrolment program for staff becomes standardised and guarantees that this number of people will get the opportunity to complete these qualifications.

Through our value bank, we know this has a large social value attributed to it in terms of wellbeing uplift for the individual. If we wanted to maximise the social value from this training clause in the tender document, we could also stipulate that those who complete the qualifications are young people in the 16-25-year-old range. This is because the wellbeing uplift and associated social value for this outcome of completing training are of the highest value to young people.

The second example would be where the tender asked for a focus on targeting certain groups to join their workforce to deliver the goods or services in the contract. Our analysis shows there is a significant increase in the wellbeing uplift and social value attributed to gaining full-time roles as opposed to casual roles. Secondly, for people with an injury, illness or disability, the increase in wellbeing and attributed social value is higher when they move into permanent part-time or full-time employment. By employing the same number of people but targeting who takes on these roles the overall social value created can be increased.

These two examples outline how slight changes in the contractual obligations can have dramatic effects on the amount of social value being created by an organisation or government procuring goods and services.

Conversely, where there are no social procurement stipulations in a tender, you can gain a competitive edge against your competition by including the social outcomes you will create in addition to the required goods or services. This will make your bid stand out, with your social impact being a major point of difference, above and beyond pure value for money.

Tendering for government contracts

Businesses who wish to tender for government contracts, now, and in the future, need to address social value clauses and targets set out in the tender process. Failure to address these requirements or being unable to clearly articulate how they will go about delivering social benefits will be at a competitive disadvantage in the tendering process. This does not mean you are guaranteed to win contracts ahead of competitors just because you outline your ability to deliver on social clauses and targets, as it is only one part of the procurement matrix and scoring process. However, it does provide a clear competitive advantage where two companies are equally matched on price, quality and capacity to deliver. And of course, the next step on the journey includes competing on the amount of social value your bid will create!

With the Australian Social Value Bank (ASVB) recently becoming a certified social enterprise, I was keen to attend my first Social Traders Conference in Melbourne. I wanted to gauge the current momentum behind the social enterprise movement here in Australia, and see if there was a place for the ASVB in it?

I’ve always been aware of social enterprise as a mechanism used to tackle poverty in developing countries; like microfinance initiatives for women living in Asia. And I’d certainly heard of some of Australia’s leading social enterprises, like: STREAT, CERES and Vanguard Laundry. What I hadn’t fully comprehended, prior to attending my first Social Traders Conference, was the collective will and government support to create a social enterprise sector in Australia.

For those not sure of what a social enterprise is, they are generally defined as “businesses led by a social purpose, deriving a substantial portion of their income from trade and reinvesting most of their profits to fulfil their purpose”. The beauty of the true social enterprise is that it finds a gap in the market where it can leverage market forces to address social, economic and environmental issues.

Governments are realising the potential of social enterprise to address some of society’s most pressing issues, but here’s the kicker, they can support its growth without having to invest additional money, instead just leveraging their existing spending. Such is the power of social procurement!

The Victorian Government has always been viewed as leaders in the space, having released their Social Enterprise Strategy in February 2017, which outlined their plans to grow the sector. Then, in April 2018, they released “Victoria’s social procurement framework; Building a fair, inclusive and sustainable Victoria through procurement.”

The framework sets out their objectives for leveraging maximum value from the Victorian Government’s significant buying power, specifically their ongoing investment in infrastructure.