This document provides an overview of how public and private sector organisations can strategically utilise their purchasing power, through a process known as social procurement, to achieve economic, environmental and social objectives. It incorporates insights from research produced both within Australia and internationally highlighting the objectives, opportunities and challenges of social procurement. It looks at how social procurement, particularly in the public sector can be used to generate social value, specifically the creation of employment opportunities for marginalised jobseekers and the alleviation of place-based economic disadvantage by directing procurement expenditure into areas of disadvantage.
- Social procurement provides a pathway for government to leverage its substantial purchasing power to address multiple policy objectives and for larger organisations in the private and not-for-profit sectors to generate social and environmental impact through their procuring practices.
- Social value is incorporated in the procurement process through mechanisms such as direct subcontracting, stipulating employment and social clause requirements in tender contracts and forming partnerships and/or purchasing agreements with social benefit suppliers.
- Social procurement initiatives that generate optimal social value are often place-based initiatives that are backed by frameworks and policies that encourage stakeholder communication as well as a supportive organisational culture.
- Key challenges for social procurement include limited capacity among smaller social benefit suppliers to fulfil large procurement contract requirements, limited capacity among commercial suppliers to generate social impact, implementation issues across various stakeholders in procurement supply chains as well as difficulties measuring social value.
- Risks of social procurement in the public sector include the growth of unscrupulous businesses posing as social benefit suppliers, burdening commercial contractors with social benefit requirements beyond their capacity, overloading public procurement processes with too many additional policy objectives as well as inadequate research linking social procurement to sustainable employment.