Buyers and suppliers guide to Victoria’s Social Procurement Framework

A first for Australia, this is the first of five articles celebrating social and environmental advances for Victoria. 

Victoria’s Social Procurement Framework confirms that the State Government of Victoria is committing 275 government departments and agencies to ensure they value more than just price when they purchase goods and services. 

This article explains the Victoria’s Social Procurement Framework. I outline how the Framework will impact both government agencies, the not for profit sector and the companies that collectively purchased more than $16 billion from the Victorian Government last year.

The remaining series of articles will explore some challenges implementing the Framework and how Government, suppliers and the not for profit sector can respond and benefit from this new purchasing paradigm.

What is Victoria’s Social Procurement Framework?

Victoria’s Social Procurement Framework is not legislation. It is however an obligation that Victoria’s Department of Treasury and Finance has made for 275 Victorian Government departments and agencies. The agencies must now consider social and environmental outcomes for all their goods, services, and construction purchases from 1 September 2018. 

These agencies will now need to incorporate social procurement objectives and outcomes into annual purchasing plans that must be submitted to Government. Annual purchasing plans must highlight the agencies social and sustainable priorities for the coming 12 months.

For regional purchases over $1 million or $3 million for metropolitan and state-wide purchases, agencies and departments must apply evaluation criteria for all tenders. The evaluation criteria favours businesses whose practices support their social and environmentally sustainable procurement objectives.

Individual projects over $20 million require a Social Procurement Plan for that particular project. For suppliers, including those through supply chains, this means they will be asked to address one or more of these social and sustainable outcomes in your next bid for a government contract:

• Employ Victorian Aboriginal people, Victorians with disability or at-risk women;
• Employ long-term unemployed people, disengaged youth, single parents, migrants, refugees, workers in transition or people in regions with entrenched disadvantage;
• Purchase from suppliers that comply with industrial relations laws and promote secure employment;
• Subcontract procurement activities to social benefit suppliers;
• Adopt family violence leave;
• Use sustainable resources and recycle content;
• Manage waste and pollution; and
• Minimise greenhouse gas emissions.

Not all these objectives will apply to each contract but suppliers will need to start demonstrating in their bid responses how they will deliver on the applicable social and sustainable outcomes identified by that department.

For example, a ‘Social Procurement Compliance Plan’ may be required from all suppliers bidding on larger purchases. This will require suppliers to demonstrate their:

• Ability to deliver on the social and sustainable outcomes detailed in the bid documentation, and
• Strategies that will directly, or through the subcontractors, deliver on inclusive employment outcomes or targets; and/or social benefit supplier outcomes or targets.

Projects up to $20 million are likely to require a minimum weighting of 5 to 10 per cent for social procurement-related evaluation criteria. On recent projects greater than $20 million, we’ve seen the weighting increase to 20 per cent and a target of 3 per cent of the total contract spend must go to social enterprises.

Social and sustainable commitments then form part of the contract between the Government and the supplier.

These obligations came in force 1 September 2018 and by July 2019, all 275 government departments and agencies will be required to submit their first annual report against the Framework.

For suppliers on pr-qualification registers or on State Purchasing Contracts, you’ll be expected to adopted and embed the Framework’s objectives into existing contracts or when they are renewed.

The social procurement framework is in addition to the Local Jobs First – Victorian Industry Participation Policy and the Major Projects Skills Guarantee.

Want to understand more about how Victoria’s Sustainability Framework?

Part 2 explores the challenges in implementing Victoria’s Social Procurement Framework.

Part 3 I’ll explain how Government agencies can embrace Victoria’s Social Procurement Framework. 

Part 4 will focus on how suppliers can maximise their chances of winning Victorian Government tenders.

Part 5 will explore how the Not For Profit sector can prepare themselves for an increased interest in their operations from the private sector.