Government social procurement policies are becoming increasingly important for driving social change. Let’s look at four important Federal Government initiatives that have informed many of the State Government social procurement frameworks.
“Give a man a fish, and you feed him for a day. Teach a man to fish, and you feed him for a lifetime.”
While the exact source of this rather famous quote is unknown (and hotly disputed), its meaning is widely accepted – that is, that the most effective way to overcome disadvantage is to facilitate opportunity and self-sufficiency.
Thus does the “teach a man to fish” philosophy form the heart of social procurement – the drive for social change by creating opportunity.
With its extensive budgets and public responsibility, government – and the Federal Government in particular – is best placed to drive social change by establishing policies and, in some cases, targets that align government spending with the desired goals. For example, providing opportunity for the disadvantaged, environmental sustainability, equality, protection for the vulnerable and building strong local economies.
So, what are these government social procurement policies and targets? More importantly, if you are aiming to win government business, what are you likely to be asked? And how can you show government that spending with you will help it meet its social procurement goals?
The Victorian Government released its Social Procurement Framework in September 2018 – you can read our summary here. In this post we’ll be looking at four important Federal Government social procurement initiatives.
Commonwealth Indigenous Procurement Policy
The Federal Government has a strong focus on driving opportunity for Indigenous Australians, and introduced the Commonwealth Indigenous Procurement Policy in 2015. The Commonwealth Indigenous Procurement Policy:
- Sets a target of 3% of all contracts to be awarded to Indigenous businesses, across the Commonwealth as a whole and by portfolio.
- Has a mandatory set-aside for remote contracts and contracts valued between $80,000 -$200,000. If an Indigenous SME can meet the requirements and offer value for money, they will be offered the contract.
- Sets mandatory minimum requirements (MMRs) for Indigenous workforce and use of Indigenous suppliers in contracts valued at or above $7.5M in certain industries.
From 1 July 2019, an additional target, based on the value of contracts, will be introduced to ensure that Indigenous businesses win higher-value contracts at a level closer to those of non-Indigenous businesses.
All good news if you are an Indigenous business. But what if you’re not?
The Federal Government enacts social procurement in two ways, only one of which is direct procurement from the key target groups. The other is by buying from organisations that include those target groups in their supply chain.
So, a valuable exercise is to review Indigenous businesses (Supply Nation is a good source) as potential suppliers and partners. By engaging with them, you can play your part in helping government achieve its social procurement goals and build a strong story to tell in your tender response. You can also reference our blog post, How to address the Indigenous Procurement Policy in government tenders.
A newer focus area for Federal Government social procurement is Modern Slavery, with the Modern Slavery Act gaining royal assent in December 2018. Modern Slavery offences include slavery, servitude, forced or compulsory labour, and human trafficking.
The Modern Slavery Act requires all Australian businesses with revenue of over $100M to report on the risk of modern slavery in their operations and supply chains, and the actions in place to address those risks. You may be required to supply a letter of compliance with your government bid.
However, if your revenue is under $100M, don’t assume you are off the hook when it comes to government contracts. I have started to see Modern Slavery questions in a variety of government tenders – both federal and state. Such questions typically ask for an assessment of risk and plans for mitigation – for example:
“How does your business identify, assess and manage the risk of modern slavery in your business operations and supply chains? Describe any policies, guidelines, training or other due diligence frameworks you have in place or in use.”
So, even if you’re under the threshold for reporting, you may want to develop a policy statement, and ask your suppliers for theirs, in anticipation of this question.
Workplace Gender Equality
The Workplace Gender Equality Act has been on the statute books since 2012 and is administered by the Workplace Gender Equality Agency (WGEA) in its aims of promoting and improving workplace gender equality.
Under the Act, all businesses with 100 or more employees are required to report annually on key workplace equality indicators – including formal policies and strategies, employee movements, governing bodies, employer actions and consultations, support for flexible working for carers and parents, and policies for sex-based harassment and family or domestic violence support.
On submission of a compliant report, a business will be issued with a WGEA Compliance letter for the reporting year. Federal Government tenders now often ask for a copy of this letter as a mandatory condition of being eligible to respond.
Benefits to the Australian economy
The Commonwealth Procurement Rules (CPR) (section 10 – Value for money and broader benefits to the Australian Economy) also include a range of measures designed to promote economic growth through procurement. For example, setting targets for use of Small and Medium Enterprises (SMEs) and early market engagement that contribute to a vendor’s value for money assessment.
Questions around this can be found in almost all Federal Government tenders. To answer well, you will need to cover a broad range of factors to demonstrate how Australia benefits. These factors include:
- taxpayer savings (low price)
- additional infrastructure created
- skills and training
- employing local workers
- paying taxes
- environmental benefits, such as energy efficiency
- contributing to positive social outcomes
- use of indigenous businesses
- use of SMEs
- sharing knowledge, skills and technology with SMEs, and
- supplies from an Australian Disability Enterprise.
The above four policies and initiatives highlight just how serious the Federal Government is about social procurement. Social procurement questions of one form or another have been in just about every Federal or State Government tender I have seen over the last year. The key is to understand government’s goals and position yourself as helping them to achieve them.