New ideas and approaches are needed to prepare for what is to come. Maybe it is time to utilise social procurement as a tool to deliver against these challenges?
By Sean Barnes, Social Procurement Lead/Venture Manager at The Ākina Foundation
Social procurement is a process whereby organisations meet their needs for goods or services in a way that achieves value for money, as well as delivering benefits to society and the environment (CIPS, 2009). When a business buys from a social enterprise, they get the goods/services and they also get the impact the organisation delivers.
It has eloquently been described as "spending the same dollar twice". Sounds good huh! So why is it not happening at scale in New Zealand?
I have recently received a great article exploring social procurement in construction projects (Loosemore, 2016) and found it a fascinating summary of the potential of, and barriers to, social procurement in infrastructure.
Loosemore describes a range of external barriers that prevent social enterprises from engaging with the infrastructure sector:
· Organisational Barriers - traditional thinking and resistance to change keeps things being done the same way.
· Market Barriers - a mature, resistant and competitive market with small margins means that price becomes the dominant factor in decision making.
· Formal Institutions - contracts, systems and processes can be prohibitive and daunting to new players, and require experience to navigate.
· Informal Institutions - habits, norms and culture bring preconceived ideas and perspectives.
It can be seen that social procurement, and the social enterprises that deliver these services, face a broadly conservative industry.
In NZ, the absence of policy and legislation present in other countries also means that social procurement is dependent on a willingness to change, rather than a mandate to change.
This is also a two-way street. That is, social enterprises also need to establish, evolve and improve to meet the needs of the infrastructure sector. Loosemore described these as internal barriers:
· Sector Experience - social enterprises are often formed outside the industry and therefore are unaware of processes, norms and 'how things are done around here'.
· Commerciality - the highly commercial nature of the infrastructure sector makes it necessary for small social enterprises to thrive and deliver the equivalent price, quality and reliability.
· Maintaining a Point of Difference - Despite all the references to commercial attributes, Social enterprises need to define, measure and clearly communicate their value as their strategic advantage, and to ensure social procurement delivers real value to the buying organisation.
So what can be done to move this forward? Our Market Connect procurement programme at Ākina is focussed on some core initiatives that were also identified by Loosemore:
1 - Making supplier networks visible – we are building a database of certified social enterprise suppliers across a range of services, and are looking for social enterprises that can do the things the infrastructure sector need (labour hire, traffic management, design, nursery supplies, visualisation)
2 - Building capacity to engage in procurement and using buyer-supplier partnerships to enable this – we are training and mentoring social enterprises at the procurement interface.
3 - Building the business case for impact – you can’t manage what you don’t measure. Social enterprises present a different definition of value and success for projects and tender and project evaluation needs to consider this. We are advocating this thinking with local and central government agencies, and social enterprises need robust impact frameworks to meet the needs of buyers.
A recent report by AECOM (2018) described that ""there is a unique sustainability role facing the industry" and "new ideas and approaches are needed to prepare for what is to come".
Maybe it is time to utilise social procurement as a tool to deliver against these challenges?