Social procurement frameworks around Australia
Current November 2020
New South Wales
NSW uses the term ‘sustainability procurement’ to describe the social procurement objectives around economic development, social and environment outcomes that create jobs and develop the skills to build and sustain a fairer NSW.
Under its social impacts policies, NSW supports two main outcomes: support for Aboriginal and disability enterprises. Both these outcomes are related to how government plans to procure services from these enterprises. There is also a secondary outcome aimed at fostering apprenticeships. Interestingly, these outcomes are related to how government plans to procure services from these types of enterprises. What is also interesting is that Aboriginal participation is mainly an obligation on businesses, particularly when going for high-value government contracts. Disability outcome is mainly focused on government procurement, and there is no direct obligation for suppliers.
NSW has a procurement policy that aims to support 3,000 employment opportunities for Aboriginal people, and a target of at least 3% of government’s goods and services contracts awarded to Aboriginal businesses by 2021. Government agencies can buy from a recognised Aboriginal business valued up to $250,000, as long as the costs are in line with market rates and a written quote is supplied. Anything above $10 million requires consideration for Aboriginal participation, including for sub-contracting, employment and training activities. Suppliers will need to include an Aboriginal Participation Plan in their tender response. The NSW Procurement Board may also allocate specific targets for Aboriginal participation for both contracts and procurement categories.
Government can buy from any Australian disability enterprise no matter how large (or small) the contract value is, as long as there is a quote and it can be proven that there is value-for-money.
Takeaway: If you’re a disability or Aboriginal enterprise, then you should be talking to government directly, or through recognised associations (such as BuyAbility or Supply Nation) to see how they can support you. For all other businesses, think about how you can include Aboriginal or disability enterprises in your business or supply chain. This will position you well when you’re applying for any government opportunities (regardless of the contract value size). If it’s possible for you to integrate an employee, apprenticeship, trainee or graduate program into your organisation, you should consider doing so.
NSW has policies around how and when government is required to buy from small to medium enterprises (SMEs) and regional businesses. The NSW government has also identified that it is open to collaborations between businesses and will encourage SMEs to form partnerships, joint ventures or consortiums. This approach is to not only create greater efficiency but to encourage a better result.
SMEs and regional businesses
If the contract value is:
- Under $10,000 or $50,000: Government agencies can buy direct from SMEs and regional businesses.
- Under $250,000: Government must first consider an SME or regional business if they have authority to buy directly.
If you’re a business planning on engaging with government, note that for procurements that are:
- Up to $1 million: SME and regional businesses can negotiate a trial for an innovative solution.
- Over $3 million: Suppliers have to indicate how they will work with SMEs. Government must consider how suppliers will support the government’s economic, ethical and/or social priorities. It may apply a weighting of up to 10% to the evaluation criteria to encourage SME participation to deliver the contract.
Note that the definition of a SME is any Australian or New Zealand-based enterprise that employs below 200 people (full time staff equivalent). Regional businesses are those outside the metropolitan areas of Sydney, Newcastle and Wollongong. Government agencies that are based outside metropolitan areas are encouraged to first consider buying from a SME or a regional business.
Collaboration, partnerships and groups of businesses
Government is also open to collaborations between businesses, and will try to encourage SMEs to form partnerships, joint ventures or consortiums. This approach is to not only try to create greater efficiency but to encourage a better result.
Takeaway: Don’t be discouraged to apply for tenders or other government opportunities because you’re a small business. Government recognises that you have strong skills and are more nimble and agile than larger companies. As long as you have the capacity to deliver, you should always apply. If you don’t have the capacity to meet the requirements, think about whether you can leverage your business networks and connections to partner/collaborate with each other to apply for a complex tender. Together, you might have enough to apply for a complex tender.
NSW defines sustainability to include environmental, ethical and socio-economic requirements. Government is required to spend public money wisely, seek out innovative solutions and efficiencies, buy only what is needed and source sustainable alternatives whenever possible. Government also seeks to encourage skill development and diversity in supply chain sourcing. This also means that government expects organisations to be a fair and ethical workplace and make all reasonable efforts to ensure that businesses in their supply chain don’t engage in or are complicit with, human rights abuses such as forced or child labour. In 2019, the government released the NSW Circular Economy Policy to incorporate circular economy principles into a 20-year waste strategy for NSW. The principle looks to waste avoidance and resource recovery to reduce waste generation. The policy stipulates that government will lead by example and drive market change through its procurement practices.
The Northern Territory (NT) has embedded social procurement goals (social, environment and economic benefits) throughout its procurement policy principles.
The main objective for NT relates to maximising Indigenous participation. This includes how government and the private sector can support more Aboriginal participation. Under its Buy Local Plan (see Economic Impact section), the NT government will apply a local content test that includes Aboriginal development initiatives. The Territory Benefit Policy is applied to activities such as Aboriginal employment outcomes, as well as training operations to local Aboriginal communities. The policy will also consider any other specific workforce-diversity target groups (but there is not specific cohort identified).
The NT government has a commitment to procuring goods and services locally. It will apply a local content test to its procurement practices, invite at least one quote from a Territory business and establish a Buy Local Industry Advocate. Any project that leverages government investment will also have an expectation for a local business participation, and workforce development and employment component.
Buy Local Plan
The Buy Local Plan is the internal procurement policy that sets out the government’s commitment in procuring goods and services efficiently and effectively, while also supporting the needs of industry and the broader community. The plan applies to all government agencies and sets out nine actions that government needs to take, such as:
- applying a local content test in its procurement practices (worth a minimum of 30%)
- inviting at least one quote from a Territory business, and
- establishing a Buy Local Industry Advocate to provide an independent advocacy function to government on behalf of local industry.
Territory Benefit Policy
The Territory Benefit Policy is more industry-facing and sets out expectations by government of what businesses need to do in order to work with NT. It looks to facilitate projects that leverage private sector investment and support those that maximise the local benefit, including in:
- local workforce development and employment
- regional and Aboriginal economic and community development
- local business participation and small to medium enterprises capability development, and
- economic, industry and social infrastructure investment.
The policy also acknowledges obligations under the Australian Jobs Act 2013 (Federal) and the Australian Jobs (Australian Industry Participation) Rule 2014, including the potential to gain an exception from the Australian Industry Participation Plan by using a compliant Territory Benefit Plan. The policy can be adopted voluntarily by any project or business, but does specifically apply to projects listed:
- private sector projects awarded major project status under the NT Major Projects Status Policy Framework
- private sector projects receiving support from the NT government valued at or greater than $500,000, and
- projects where a Territory Benefit Plan is specified as a condition of an NT Government agreement.
The policy does not apply to government procurement. The Territory Benefit Policy will eventually replace the Building Northern Territory Industry Participation and its associated industry participation plan.
Building Northern Territory Industry Participation Plan (BNTIP)
NT is currently revising its procurement framework to provide guidance on local content plans, currently documented in the BNTIP. It is expected that the Territory Benefit Policy (see above) will replace the BNTIP. The BNTIP will continue to apply to government procurements in excess of $5 million for a transition period until the new procurement framework is finalised.
An industry participation plan is required for:
- Government tenders worth $5 million or more, and
- Private sector projects that have support from the government worth $5 million or more.
Elements of the industry participation plan include:
- Estimated local employment and proposed workforce operation in NT
- Activities that enhance business and industry capability, such as:
- skills and training
- research and development
- use of proven emerging technologies and materials
- integration of local industry into global supply chains
- Regional economic development benefits, including specific proposals to maximise regional environment
- Proposals for Indigenous participation, and
- Reporting and methodology.
NT has a principle dedicated to environmental protection and looks to harm-minimisation and sustainable practices. This includes:
- ensuring suppliers comply with environmental policies, strategies and legislations
- consideration, and mitigation of potential environmental impacts from procurement activities
- avoiding materials that impact or come from threatened species or environments
- promoting the development and acceptance of products and processes that have a low environmental impact, and
- collaborating with potential suppliers to develop and implement environmentally sustainable approaches.
Queensland uses the social procurement goals (social, environment and economic benefits) throughout its procurement policy principles. In July 2019, it introduced an Ethical Supplier Mandate to manage any contracted supplier’s failure to meet a policy requirement (such as commitments to social or economic objectives). Demerit points apply to non-compliance, and sanctions will be used if an organisation exceeds 20 demerit points. This can include suspending prequalification or panel or making an organisation ineligible for a contract award for a defined period.
QLD’s social priorities are:
- increasing its spend with genuine social enterprises that provide award-based wages and pathways to mainstream employment for disadvantaged Queenslanders
- as part of supplier evaluation and selection, consider workplace policies and practices aimed at ending domestic and family violence, and
- ensuring that all procurement activities are compliant with the Disability Discrimination Act 1992.
QLD also has a target to increase procurement spend with Aboriginal and Torres Strait Islander businesses to 3% addressable spend by 2022.
Takeaway: Consider developing and implementing workplace policies around domestic and family violence. In August 2018, the federal government updated the minimum entitlements of the National Employment Standards to include family and domestic violence leave. All employees (including part-time and casual employees) are entitled to five days unpaid family and domestic violence leave a year. Look at your current OH&S policies and consider including some around work-related gendered violence. In March 2020, Worksafe Victoria recently included sexual harassment as an occupational hazard covered by workplace health and safety regulators.
The QLD government is committed to supporting Queensland suppliers and local workforces first, particularly in the regions. It is one of the states that defines local being from QLD (and down to a radius level!). Most other states have stuck to the definition of ‘local’ being Australia and New Zealand (which is the definition in the New Zealand Australia free trade agreement).
There is a focus on using its procurement activities to create genuine, quality and secure ongoing jobs for Queenslanders. For purchase of catering (food and beverages at events and corporate functions), QLD businesses have priority in the first instance. Any infrastructure projects at or over $100,000 require the use of local contractors and manufacturers, and also the use of apprentices and trainees. There is also a commitment on reducing long-term unemployment and youth unemployment through increasing opportunities for training apprentices.
Takeaway: Consider if your business can support apprentices, trainees or graduate employments. You could also work with a university or TAFE to see if you can establish a work-integrated learning or industry-based learning program.
QLD’s main environmental priorities are around:
- Purchase of Australian-sourced, environmentally accredited paper products
- Achieving net zero emissions by 2050
- Achieving one million rooftops or 3000 megawatts of solar photovoltaics (PV) in Queensland by 2020.
There are no direct targets or objectives to meet from a procurement perspective.
South Australia (SA)
SA uses social procurement principles (social, environment and economic benefits) in several related procurement-related policies.
The SA government’s Industry Participation Policy focuses mainly on activities and guidelines to drive economic development outcomes. The Skilling South Australia policy (which forms part of the Industry Participation Policy) does seek targets for construction projects for projects that are over $50m. This includes cadets, upskilling, long-term unemployed with training needs, people with barriers to employment, Aboriginal jobseekers and graduates.
SA’s Industry Participation Policy mainly focuses on economic outcomes. The government’s Office of the Industry Advocate is responsible for the implementation of this policy. While it has not strongly defined ‘local’ to mean SA, it does define local labour as being in SA, and has provisions to specify SA (defines Metropolitan Adelaide and Regional South Australia). The primary economic development objective is to support employment for SA and use of businesses and supply chains that support SA employment. These mainly attract a minimum weighting of 15% in tender assessment criteria.
Other economic outcomes include:
- Regional development
- Aboriginal economic participation – policy allows for government to purchase from a single Aboriginal business if they fit established criteria. Government can purchase from an eligible Aboriginal business for procurements valued up to and including $220,000.
- Other social-economic objectives – which can be used from time to time to encourage workforce participation or skill development opportunities for particular groups.
The Office of the Industry Advocate also offers assistance to businesses needing to develop an Industry Participation Plan (IP Plan). An IP Plan applies to all procurement more than $550,000. There are some expectations of government agencies that seek to expand economic opportunities for SA. All procurements need to consider small, start-up and Aboriginal businesses operating in SA. Government needs to seek at least 1 quote or tender from a SA business for any procurements valued above $33,000.
SA’s sustainable procurement policy framework includes the following principles:
- adopt strategies to avoid unnecessary consumption and manage demand
- in the context of whole-of-life value for money, select goods and services that have lower environmental impacts across their life cycle, compared with competing goods and services
- foster a viable Australian and New Zealand market for sustainable goods and services by supporting businesses and industry groups that demonstrate innovation in sustainability, and
- support suppliers to government who are socially responsible and adopt ethical practices.
It also stipulates that government is required to conduct a sustainability impact assessment for all procurements valued at or above $4.4 million. This considers things such as if there are significant climate change or greenhouse emissions associated with the purchase, any pollution or waste associated with production, or identifying opportunities to reuse or recycle.
The Tasmanian government’s procurement policy does reference social procurement principles around supporting local businesses, and environmental and climate change considerations; but while it acknowledges considerations around social benefits, it does not call out any particular cohort.
The procurement policy acknowledges social benefits can be part of the evaluation criteria and may be subject to weighting, but doesn’t specifically call out commitments to any particular cohort. Weighting for social and economic benefits is at least 25%.
There is a commitment to approach at least two Tasmanian businesses for any procurement, if there is local capacity, capability and value for money. For procurements valued below $100,000, government can directly approach suppliers. Policy stipulates that they should first approach a Tasmanian business, where there is local capacity, capability and value for money. A Tasmanian Industry Participation Plan (TIPP) is required for all procurements and private sector projects that receive government support exceeding $5m. It’s at the government’s discretion whether an industry participation plan is required for any from $2 million up to $5 million. A TIPP can include details such as how many local jobs will be created, local workforce employment (including pathways to employment for disadvantaged Tasmanians) and use of local businesses.
The procurement policy does call out climate change and environmental considerations as part of its process. This includes considerations such as:
- opportunities to reduce energy and fuel consumption
- transport and waste disposal implications
- environmental certifications
- the supplier’s level of commitment and/or capacity to deliver positive climate change outcomes
- carbon emissions in the production, and/or
- utilisation of a product or in the delivery of a service.
The government is also committed to growing Tasmania’s forestry industry on a sustainable basis. The Tasmanian Wood Encouragement Policy looks to support responsibly sourced wood that has a positive social and economic impact for the local community. It applies to private sector and local government building and construction projects that receive government support.
Western Australia (WA)
The State Supply Commission (SSC) is the Western Australian government’s agency that regulates government procurement, mainly through policy development. It sits in the Department of Finance. On 13 March 2020, the SSC released a policy on Sustainable Procurement. This requires WA public authorities to apply sustainable principles at all stages of the procurement process. WA defines social procurement as: sustainable procurement to encompass positive environmental, social and economic impacts over the entire lifecycle of a product or service.
The WA government considers the social factors of a product or service, such as whether suppliers:
- are socially responsible through adopting ethical practices, or
- adopt actions that benefit society, such as being inclusive, equal, diverse, and where possible include regenerative practices (such as reuse, recycling and closed-loop systems, where any waste is returned to the lifecycle).
They also include supporting socially inclusive practices, such as employment and training focused on disadvantaged groups. These include commitments around:
- Supporting Aboriginal-owned businesses, with a 3% target of awarded contracts going to registered Aboriginal-owned businesses by 2020-2 (Aboriginal Procurement Policy).
- Increasing the number of apprentices and trainees in the building and construction industry. Contracts over $5 million are required to meet a target training rate (around 11.5% for general building construction and maintenance contracts; 5% for civil construction contracts) (Priority Start). Note that the government has a demerit scheme in place for non-compliance.
It also acknowledges the Federal Government Modern Slavery Act and associated policies.
Note that on 27 May 2020, the WA Minister for Finance announced temporary changes to the procurement thresholds to provide contracting opportunities for local businesses and to support economic recovery following the COVID-19 pandemic. Some WA government authorities are able to obtain a single quote from a local business (includes aboriginal businesses) for procurements up to a value of $250,000 (previous threshold was $50,000). This has been done to help increase opportunities for local businesses and to speed up the post-pandemic economic recovery. These thresholds are available until 31 December 2020.
WA is focused on supporting job creation such as through supporting local suppliers or creating markets (i.e. recycled products) and back-to-work schemes. Like other states, they also have goals in supporting local business and community sectors:
- Supporting local businesses, including initiatives and price preferences to provide businesses with better opportunities to supply to government
- The Buy Local Policy sets the rules for large contracts (valued at $27b or more), including regional price preferences.
- The Western Australia Industry Participation Strategy is for goods and services valued between $500,000 and $1m, and housing and works between $500,000 and $3m.
- Note that regional businesses, Aboriginal businesses and local content apply in some aspect across both initiatives.
- Encouraging partnerships between government agencies and the community service sectors to create sustainable service delivery and reduce administrative burden on service providers (Delivering Community Services in Partnership Policy)
Takeaway: Now is the time to look for government opportunities, particularly if you’re a local business. Don’t be afraid if you have an innovative new product, particularly if it’s one that can have environmental or social impacts. You may not be cost-competitive up-front, but if you can demonstrate the economic (and social and environmental) benefits of the whole-of-life service or product, this will be something government will be very interested in and will buy.
The WA government seeks “environmentally preferable products and services”, meaning those that have a lower impact on the environment over the lifecycle of the product or service (compared with other competing products or services). Consideration will be given to things such as:
- inputs of natural resources, energy and water in the manufacture,
- use and disposal of goods,
- end-of-life options (i.e. reuse, recyclability, resource recovery), and
- impact on any natural habitats or environments.
Note that there was a WA Premier Circular released in November 2019, stipulating a policy for WA to reduce the amount of single-use plastics by government. There are minimum requirements regarding selection of sustainable options and increasing the use of recycled products.
Takeaway: Look at the products and services you supply and consider whether you can adopt more environmentally friendly practices (or encourage it in your supply chain). Consider whether you can purchase products that use recycled materials. Consider also how your processes can be more environmentally sustainable (for example, you may be able to use the waste in one process for another purpose).