The requirement for government buyers to consider opportunities to deliver social and sustainable outcomes in every individual procurement activity relates to the sourcing phase of the procurement lifecycle.
It focusses on embedding Social Procurement Framework requirements and considerations within existing processes involved in the sourcing phase, including incorporating social and sustainable outcomes into the market approach.
Sourcing phase of the procurement lifecycle
Overview of sourcing phase
A strategic approach to the sourcing phase of the procurement lifecycle is fundamental to social procurement success.
When planning an individual procurement activity, it is important to understand how the supply market is likely to respond to the incorporation of SPF requirements.
Market analysis and review provides an understanding of market dynamics to determine the optimal market approach. It should follow an assessment of complexity of the individual procurement activity, where applicable. (In the procurement context, the term ‘complexity’ describes the level of intricacy and scope of issues involved in procuring the goods, services or construction taking into account a broad range of factors including risk, total cost of ownership and market dynamics.)
Building on a social procurement opportunity analysis (at either a category or individual procurement activity level, as appropriate), market analysis also helps to test the viability of a procurement requirement, including requirements to deliver social and sustainable outcomes.
Specific to social procurement, proactive market analysis helps government buyers to understand:
- the current level of social procurement awareness and activity in the market;
- the extent to which ‘social benefit suppliers’ participate in the market, as well as their current capabilities and capacity (see );
- the competitiveness of the market (including in relation to quality, service, price or value-add outcomes) and whether there are any specific barriers to entry for social benefit suppliers;
- whether government buyers have encountered compliance issues in the market in relation to other Government procurement policies (for example, Local Jobs First - Victorian Industry Participation Policy and the Major Projects Skills Guarantee) and how compliance risks in relation to requirements to deliver social and sustainable outcomes may be appropriately managed;
- whether any suppliers are currently delivering social and sustainable outcomes and, if so, which strategies have been effective or ineffective;
- the extent to which business drivers of mainstream suppliers in the market align with social and sustainable procurement objectives and outcomes; and
- the availability of intermediaries, organisations and support services that may assist in the delivery of social and sustainable outcomes.
This market intelligence empowers government buyers to identify, and subsequently pursue, opportunities to deliver social and sustainable outcomes.
In relation to some social and sustainable outcomes, it is recommended in the model approaches outlined in the that government buyers undertake preliminary assessments in consultation with suitably qualified professionals prior to developing procurement specifications and the market approach. For example, where government buyers plan to incorporate project-specific requirements to use sustainable resources and to manage waste and pollution, the model approach outlined in recommends that an environmental impact risk assessment and environmentally sustainable design opportunities assessment be completed.
Government buyers should also familiarise themselves with resources (such as supplier registers, services and programs) that suppliers may be expected to demonstrate knowledge of, or connection with, in their responses to expressions of interest or invitations to supply.
Requirements to deliver social and sustainable outcomes
The ‘market approach’ is the process undertaken by an organisation to inform the market of an organisation’s procurement requirements, to obtain offers from potential suppliers that meet those requirements. There are a range of market approaches, such as expression of interest, quotation, tender and registers.
Once the optimal market approach has been determined, it is critical that any requirements to deliver social and sustainable outcomes are clearly communicated to potential suppliers from the outset of the market approach.
The invitation to supply and/or specification details the mandatory requirements of the individual procurement activity. A supplier must meet these requirements for their response to an invitation to supply to be considered as part of the evaluation process. The evaluation process should only consider offers that meet the mandatory requirements of the procurement process. Non-conforming offers may be eliminated, for example, through a shortlisting process.
Government buyers should provide a clear and accurate description of any social and sustainable outcomes to be delivered through the individual procurement activity.
Requirements to deliver social and sustainable outcomes should be functional and performance-based – that is, they should define ‘what’ outcome is required, rather than ‘how’ the outcome is to be delivered by suppliers. Framing these requirements in this way provides suppliers with the opportunity to innovate because the requirements are outcome-orientated. This will also simplify the evaluation process by making it easier to directly compare social procurement commitments made in suppliers’ responses. These requirements should also establish measurable performance indicators that enable progress against to be monitored and verified.
It is essential that requirements to deliver social and sustainable outcomes are determined on a case-by-case basis, to ensure that the outcomes sought are proportionate to the circumstances (including scale and complexity) of the individual procurement activity. Requirements that are unduly onerous or inflexible may be unachievable or unnecessarily deter potential suppliers.
In response to invitations to supply, potential suppliers will have an opportunity to make social procurement commitments and explain how they will comply with, report on and verify compliance with those commitments. When the preferred supplier has been selected, any social procurement commitments will form part of the contract between Government and the preferred supplier.
Incorporating social and sustainable outcomes into the sourcing phase
Selecting social and sustainable outcomes
Every individual procurement activity is not expected to deliver all social and sustainable outcomes. Importantly, the social and sustainable outcomes that can be delivered, as well as the degree to which they can be delivered, will depend on the specific circumstances of the activity. For that reason, a fundamental feature of the Social Procurement Framework is its scalable and flexible approach to selecting social and sustainable outcomes and setting requirements to deliver them.
Government buyers – who are closest to and best positioned to judge the circumstances of the individual procurement activity – are responsible for deciding which Social Procurement Framework objectives and outcomes are most relevant with a view to maximising social value. The purpose is to identify where the greatest opportunity lies to deliver social and sustainable outcomes in the specific circumstances, and to pursue and prioritise those outcomes accordingly.
The selection of social and sustainable outcomes should be informed by, among other things:
- the organisation’s overall Social Procurement Strategy;
- a social procurement opportunity analysis (at the category or individual procurement activity level, as appropriate);
- the value, scale, complexity and location of the individual procurement activity.
As noted in Sourcing phase of the procurement lifecycle, any requirements to deliver social and sustainable outcomes incorporated in the market approach should be determined on a case-by-case basis, to ensure that the outcomes sought are proportionate and achievable in the circumstances.
Key focus areas
Each key focus area recognises the different social and sustainable outcomes that can be delivered and should help government buyers understand how social and sustainable outcomes can be incorporated into invitations to supply and subsequent contracts between Government and the preferred supplier(s).
Scalable approach – Four value thresholds
- the Social Procurement Framework adopts a scalable approach to setting individual procurement activity requirements, based on the ; and
- there are four value thresholds.
Described approaches and recommended actions
Corresponding to each of the four value thresholds, Table 3 of the Social Procurement Framework) sets out a ‘described approach’ and several ‘recommended actions’.
The described approaches and recommended actions establish Government’s minimum expectations for undertaking social procurement in relation to each value threshold. As minimum expectations, they are not intended to be prescriptive or exhaustive; instead, they are designed to guide government buyers in considering available opportunities to deliver social and sustainable outcomes based on the value of an individual procurement activity. As noted above, the value of an activity is only one of several factors that should be actively considered by government buyers in selecting social and sustainable outcomes. This equally applies to the approach taken to incorporating selected outcomes into invitations to supply and subsequent contracts.
In practice, to ensure that government buyers can maximise social value in each individual procurement activity, the Social Procurement Framework provides flexibility in two ways:
- Government buyers are responsible for deciding which social and sustainable outcomes are to be pursued and prioritised in each individual procurement activity. In relation to the layout of ), this might be described as vertical flexibility – that is, the government buyer can move up and down the rows of recommended actions.
- Although the described approach that corresponds to each value threshold is expected to be suitable in many individual procurement activities, government buyers are responsible for deciding which approach is appropriate in the circumstances. For example, it may be appropriate to apply the ‘proportionate’ approach to ‘below threshold’ activities or apply the ‘targeted’ or ‘strategic’ approach to activities valued under $20 million. In relation to the layout of , this might be described as horizontal flexibility – that is, the government buyer can move across the columns of described approaches.
The following hypothetical applies the minimum expectations and (vertical and horizontal) flexibility:
A social procurement opportunity analysis of a construction project valued at $2.5 million in the Melbourne metropolitan area (i.e. a ‘below threshold’ activity) reveals that there are significant opportunities to advance women’s equality and safety. This is also an objective prioritised in the agency’s Social Procurement Strategy.
Based on a market analysis and the nature of the construction involved, the government buyer determines that it is appropriate to adopt a ‘proportionate’ approach and includes a 10% weighted evaluation criterion in the request for tender that will favour tenderers that:
- offer family violence leave; and
- involve ‘women in non-traditional trades or professions’ in the construction project.
The Social Procurement Framework defines ‘women in non-traditional trades or professions’ to mean ‘women working in technical or operational fields such as mining, construction, or utilities, with trade or higher education qualities in the areas of building and construction, architecture, engineering, surveying, business, economics, and law’
Where an individual procurement activity involves multiple, discrete packages of work, it is important that any requirements to deliver social and sustainable outcomes are proportionate to the circumstances of each package of work. It is therefore appropriate to set requirements by reference to the value of each package of work, rather than the combined value of all packages of work.
For example, if an individual procurement activity is valued at $60 million, which comprises four $15 million packages of work, the minimum expectation would be to adopt a ‘proportionate’ approach to each package of work (i.e. rather than a ‘strategic’ approach that would ordinarily be the minimum expectation for an individual procurement activity valued at $60 million which only involved one contract).
Transition of key focus areas based on scalable approach
- For individual procurement activities valued at under $20 million, the key focus areas are supplier attributes and social or sustainable business practices.
- For individual procurement activities valued at or above $20 million, the key focus areas extend to include social or sustainable outputs.
This transition in key focus areas is demonstrated in the table below.
|Below threshold||Lower band||Middle band||Upper band|
Regional under $1 million
Metro or State-wide under $3 million
Regional $1 to $20 million
Metro or State-wide $3 to $20 million
|$20 to $50 million||Over $50 million|
|Recommended actions for government buyers|
|Key focus area(s)||Supplier attributes|| |
Social or sustainable business practices
Social or sustainable business practices
Social or sustainable outputs
Social or sustainable business practices
Social or sustainable outputs
also includes recommended actions for government buyers in relation to a number of social and sustainable procurement objectives and outcomes. As explained above, the list of recommended actions in Table 3 of the Social Procurement Framework set minimum expectations and are not intended to be prescriptive or exhaustive – the list canvasses a range of options available to government buyers that is designed to guide government buyers in considering available opportunities to deliver social and sustainable outcomes based on the value of an individual procurement activity.
Model approaches for each social and sustainable procurement objective and outcome
The categorisation of social and sustainable outcomes into key focus areas, the transition of key focus areas across the four value thresholds, and the list of recommended actions in help demonstrate the scalability and flexibility of the Social Procurement Framework. However, they do not limit the government buyer’s discretion to:
decide which social and sustainable outcomes are to be pursued and prioritised in each individual procurement activity; and
set requirements to deliver social and sustainable outcomes that are proportionate and achievable in the circumstances of the individual procurement activity, with a view to maximising social value and achieving optimal value for money.
- the relevant social or sustainable procurement objective;
- the social or sustainable outcome(s) corresponding to that objective;
- the model approach(es) to achieving each outcome; and
- further information for government buyers in relation to each outcome.
Model clauses for invitations to supply and subsequent contracts
Model clauses have been prepared to assist with including Social Procurement Framework-related content in invitations to supply and subsequent contracts between Government and the preferred supplier(s). Specifically:
- Social procurement model clauses for invitations to supply; and
- Social procurement model clauses for contract, consistent with the content in the Social procurement model clauses for invitations to supply.
When incorporating Social Procurement Framework -related content into invitations to supply and subsequent contracts, it is important to note that:
- Social Procurement Framework -related content should be proportionate to the circumstances (including scale and complexity) of the individual procurement activity. The level of detail provided in these model clauses is likely to be suitable for requests for tender and subsequent contracts. Where an invitation to supply involves simplified documentation, such as a request for quotation to a limited number of suppliers, it may be preferable to streamline and simplify the content in the model clauses accordingly;
- these model clauses should be used in accordance with any organisational processes or procedures that apply to preparing invitations to supply and contracts. For example, organisational templates for preparing request for quotations and request for tenders may need to be amended to incorporate Social Procurement Framework -related content and approved by the organisation’s legal team;
- model clauses should be amended or removed as appropriate to reflect the context of the individual procurement activity and any specific terms used in the invitation to supply or contract (see, for example, ‘Department/Agency’, ‘Tenderer’, ‘Contractor’, ‘Construction’ and ‘Social Procurement Response Schedule’); and
- the outcomes included in clause 1.3(b) of the Social Procurement Framework Model Clauses – Invitations to supply should reflect the social and/or sustainable outcomes that the government buyer has decided to pursue and prioritise in the individual procurement activity.
Tools and support
Reviewed 09 October 2019