Social procurement – Contract management for buyers

Find out how to manage contracts to ensure that social and sustainable outcomes are delivered.

Social procurement commitments within an individual procurement activity

The level of monitoring and reporting of Social Procurement Framework commitments should be proportionate to the individual procurement activity. The approaches detailed here are therefore not prescriptive – they provide guiding principles and should be tailored to the specific circumstances of the procurement activity.

Government buyers and contract managers work together in relation to social procurement commitments

In determining what opportunities to pursue in an individual procurement activity, government buyers may be guided by the social and sustainable procurement objectives and outcomes prioritised in their department’s or agency’s Social Procurement Strategy. Government buyers will also work with the supplier to identify social procurement opportunities and ultimately reach agreement with the supplier on the social procurement commitments that will form part of the contract. As part of this process, the contract will outline the applicable management, monitoring and reporting regime in relation to social procurement commitments.

Contract managers play an important role in managing the contract to ensure that:

  • each party to the contract meets their obligations, including the social procurement commitments; and
  • the goods, services or construction is delivered as agreed over the life of the contract and value for money is achieved.

In many procurement activities, the government buyer will also be the contract manager. However, in some cases, such as in large construction projects, these roles will be undertaken by different people. For that reason, this section draws the distinction between the roles of government buyers and contract managers.

It is important that consideration is given to social procurement monitoring and reporting throughout the procurement lifecycle and not just in the contract management phase. The government buyer should also be considering how social procurement will apply in planning their market approach, issuing an invitation to supply, evaluating, negotiating and selecting a supplier, and in executing the contract. Guidance on these steps is available in the Social Procurement Framework – Buyer Guidance.

Government buyers and contract managers develop suppliers’ social procurement capability

Suppliers have different levels of awareness and experience with social procurement. It is important that government buyers and/or contract managers work with suppliers in a manner that reflects the supplier’s level of awareness and experience, whilst maintaining appropriate probity standards.

Where social procurement is new to a supplier, the government buyer will be instrumental in providing the supplier with information and guidance about any social procurement requirements relevant to the individual procurement activity.

It is recommended that government buyers consider each of the following steps:

  • Inform the market of any relevant social procurement requirements during the market approach;
  • Support suppliers to understand and respond to social procurement requirements in the invitation to supply to ensure that social procurement opportunities are identified;
  • Evaluate tender responses based on the social procurement opportunities identified and the weighting applied to the social procurement criterion;
  • Assess risks relating to the identified social procurement opportunities and explore mitigation strategies with the tenderer(s) as required;
  • Clarify and negotiate social procurement commitments based on the identified social procurement opportunities;
  • Ensure that the agreed social procurement commitments are incorporated into the contract and support suppliers to understand their contractual obligations; and
  • Ensure that the contract manager (noting that in many instances the government buyer may also be the contract manager) is aware of the social procurement commitments that need to be monitored, so that the contract manager can track and discuss the supplier’s performance against social procurement commitments.

By following these steps, suppliers that are new to social procurement will feel supported and gain the confidence they need to effectively deliver on their social procurement commitments. Over time, social procurement will become embedded into suppliers’ processes, culture and supply chains.

Government buyers and contract managers will therefore help to develop suppliers’ social procurement capability and expand the pool of suppliers that are able to deliver social and sustainable outcomes through government procurement.

Suppliers’ achievement of social procurement commitments

Contract Managers are responsible for ensuring the successful delivery of social procurement commitments and meeting reporting requirements. This will include monitoring and acting upon non-compliance issues.

Activities that will help government buyers and contract managers ensure that social procurement commitments are effectively managed, monitored and reported on over the life of the contract are recommended in the following sections.

The principles that underpin these activities are relevant to all procurement activities, from small goods and services procurements to large construction projects. However, the activities proposed are not prescriptive and may need to be tailored so that they are proportionate to the individual procurement activity.

Plan market approach - Suggested activities for government buyers and contract managers

The market approach for any procurement activity requires careful planning and preparedness.

Social procurement - individual procurement activity requirements and detailed guides sets out practical guidance (including model clauses) on incorporating social procurement requirements into the sourcing phase of the procurement lifecycle.

Refer to Departmental / Agency Social Procurement Strategy to be guided by Social Procurement Framework objectives.

Consider which Social Procurement Framework objectives and outcomes are priorities for the individual procurement activity and any anticipated reporting requirements.

Plan for how potential suppliers will be expected to respond to any social procurement requirements in their responses. Consider if suppliers will be required to complete a Social Procurement Commitment Proposal, or other form of response to social procurement requirements, as part of their response. If so, clearly explain these expectations in the invitation to supply.

Issuing invitation to supply - Suggested social procurement activities for government buyers and contract managers

Government buyers must ensure that potential suppliers are informed of the social procurement requirements (including in relation to reporting) in the invitation to supply, so that suppliers can be fully prepared to meet these requirements. Detail what the supplier will need to report on, how they will report, and when to report. All anticipated requirements should be clearly communicated from the outset of the market approach.

Inform potential supplier(s) that, if successful, they will be required to provide updates on their performance against social procurement commitments.

An example scenario is as follows:

  • The contractor may be required to submit Social Procurement Performance Reports to the contract manager, outlining its performance against social procurement commitments identified in its Social Procurement Commitment Proposal. The frequency of reporting should be clearly stipulated.
  • The contractor may be required to submit a final Social Procurement Performance Report within a specified period of practical completion or the date the contract is completed. This report should be supported by a properly executed statutory declaration.
  • The contractor is advised that the department / agency will have the right to inspect the contractor’s records for the purpose of verifying compliance with the social procurement commitments; and
  • The contractor is advised that the statistical information related to social procurement commitments that form part of the contract may be reported to the Department of Treasury and Finance and considered in the assessment or review of the contractor’s eligibility to tender for future Victorian Government contracts. The government buyer should explain to the supplier that the information used for reporting is aggregated and de-identified. Social procurement – Department and agency reporting requirements provides further details on the reporting of Social Procurement data at the agency level.

Social procurement - Individual procurement activity requirements and detailed guides provide model clauses for inclusion in invitations to supply and subsequent contracts.

Evaluation, negotiation, selection - Suggested social procurement activities for government buyers and contract managers

Government buyers will need to clarify and negotiate a final agreed position with the preferred supplier(s) on social procurement commitments and applicable measures and performance indicators. These performance indicators will form part of the works or scope of work under the contract. From a probity perspective, it is important that all shortlisted suppliers are provided the same information regarding Social Procurement Framework related requirements.

Social procurement – Evaluating social and sustainable procurement objectives and outcomes provides practical guidance on evaluating supplier responses against social procurement criteria during the sourcing phase of the procurement lifecycle, including example approaches to incorporating social and sustainable outcomes into an evaluation process.

Government buyers may need to work with the preferred supplier(s) to identify and / or refine social procurement opportunities and agree to social procurement commitments for the procurement activity. This may involve direct and indirect approaches to social procurement. It is essential to establish performance indicators that enable reporting, monitoring and verification of performance against social procurement commitments. An agreed verification process will also be necessary to satisfy contract managers that any social procurement achievements by the contractor or subcontractors (as reported by the contractor) are true and accurate.

Advise the potential supplier(s) that agreed social procurement commitments will be documented in the Social Procurement Commitment Response Form.

Create a contract - Suggested social procurement activities for government buyers and contract managers

The government buyer and preferred supplier(s) have reached an agreed position on social procurement commitments, which must form part of the contract between Government and the preferred supplier(s).

Government buyers must translate any social procurements commitments documented in the Social Procurement Commitment Response Form into contractual obligations. Requirements relating to the monitoring, reporting and verification of performance against social procurement commitments must also form part of the contract. A Social Procurement Performance Report template is to be finalised and incorporated into the contract.

Provide preferred supplier(s) with any information required to effectively deliver their social procurement commitments, such as arrangements for accessing social benefit supplier directories.

Social procurement - Individual procurement activity requirements and detailed guides provides model clauses for inclusion in contracts.

Manage contract - Suggested social procurement activities for government buyers and contract managers

The contract has been executed and the priority for the contract manager is the monitoring, reporting and verification of the contractor’s performance against social procurement commitments.

Contract managers must be in regular contact with the contractor to monitor progress and achievement against their social procurement commitments. This can be done by:

  • establishing regular performance meetings with the contractor;
  • analysing the Social Procurement Performance Reports submitted by the contractor, at a frequency agreed in the contract. The contract manager should be familiar with the details of the schedule of works or scope of works to progressively monitor whether the cumulative social procurement achievements are likely to result in the successful achievement of the contractor’s social procurement commitments;
  • the contract manager being satisfied that the contractor’s social procurement achievement report is true and accurate;
  • discussing the contractor’s progress against their social procurement commitments. If the contractor has reached 100% of their deliverables, discuss what has worked well and identify stretch opportunities for the remainder of the contract. If progress does not meet the contract manager’s expectations, work with the supplier to identify barriers and any remedial activities; and
  • tracking overall performance of the contractor against social procurement commitments. This may be done through use of a ‘master spreadsheet that has the agreed social procurement commitments, with cumulative totals as a percentage of the overall contractual obligation.

Social procurement and measures to address non-compliance

The Social Procurement Framework does not contain measures to address a supplier’s non-compliance with its contractual requirements for the Social Procurement Framework. Each department and agency will need to determine (and contractually negotiate) the consequences that will apply if a supplier does not meet the agreed contractual social and sustainable obligations. For example, contracts may include financial disincentives that apply if the Social Procurement Framework related obligations are not met.

Each agency will determine whether there has been a valid reason for non-compliance (such as an unavoidable change of supplier). Where no valid reason can be identified, the agency may determine that this represents a breach of contract and take appropriate action under the contract. A supplier’s non-compliance with the Social Procurement Compliance Plan as reported will also be considered in the assessment or review of the Supplier’s eligibility to tender for future Victorian Government Contracts.

Tools and support

This content on this page is taken from the Social Procurement Framework – Buyer Guidance Guide to contract management and reporting. Access a PDF version in the social procurement document library.

For more information about social procurement, please contact the Social Procurement team.

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