The public works industry is uniquely positioned to improve the lives of disadvantaged Australians – and it’s all down to buying power.

Mark Daniels, Executive Director of social enterprise marketplace Social Traders, says procurement presents a massive, largely untapped opportunity to create widespread social impact.

“If you’re going to build a road or a rail line you can you also incorporate other social benefits above and beyond the benefits that naturally accrue when you build infrastructure, by providing jobs for disadvantaged cohorts, indigenous businesses or other beneficiaries,” Daniels says.

“This is your opportunity to use your procurement spend to not only build a bridge, but change lives through its construction and maintenance.” 

Melbourne-based Social Traders matches corporate and government organisations with certified social enterprises, with a goal of creating 1500 jobs for disadvantaged Australians by 2021.

With Infrastructure Australia recently announcing that a $55 billion pipeline of infrastructure projects is needed, there’s a massive opportunity to transform people’s lives, Daniels says.

“In our world, $100,000 of work to a social enterprise equates to one and a half jobs on average for people who would otherwise be out of the workforce; you get a sense of the scale of the opportunity in terms of addressing unemployment and disadvantage,” he says. 

Presenting at IPWEA’s Sustainability in Public Works Conference next month, Daniels will explain how the public works industry can use its buying power to increase its social impact, providing jobs for groups like Indigenous Australians, people living with a disability, the long-term unemployed, asylum seekers, refugees and ex-offenders.

So, what kind of services do enterprise employees offer?

With industry bodies like the Infrastructure Sustainability Council of Australia (ISCA) now recognising the importance of social outcomes, Daniels is confident that social procurement “is the future”.

“We’ve been working with the ISCA on the new sustainability tool that they are rolling out that will require social procurement become an essential platform of delivering a triple bottom line outcome on full ISCA-rated projects,” Daniels says.

Government action has been key to the sector’s growth. In 2017 the Victorian Government launched Australia’s first Social Enterprise Strategy, which included the development of a procurement framework to allow government contracts to purchase goods and services from social enterprises. The Level Crossing Removal Authority, a Social Traders ‘buyer member’, was the first Victorian government organisation to adopt a Social Procurement Policy.

A 2017 report, developed as part of the Strategy, found that the state’s growing social enterprise sector contributed in excess of $5.2 billion to the economy and generated more than 60,000 jobs.
 
Daniels says there are many ways organisations can include social procurement into their supply chain.



“The jobs that are getting greatest engagement have been in the areas of waste management systems, labour hire and landscaping. Increasingly, we are seeing traffic control work as an area of opportunity. There’s also a lot of the indirect stuff that any company would have – things like printing, catering, cleaning, testing or tagging, digitisation, design, web-based content, photography – the list goes on and on, and different organisations have been engaging in different ways,” he says. 

Social traders currently has 23 buyer organisations on its books, including the likes of Fulton Hogan, Downer, Laing O'Rourke, CPB, Lendlease, John Holland and Broad Spectrum.

“There’s a whole lot of the companies that are already delivering to local government, to state government and to other entities,” Daniels says.

Myth busting

Daniels says that, without even knowing it, many tier one infrastructure organisations already include social enterprises as part of their supply chain, dispelling the myth that they’re “fluffy” businesses.

“Our experience has been that social enterprises are winning work and the buyers often don't know that they are buying from social enterprises,” Daniels explains.

“More often than not they discovered they are spending millions of dollars with social enterprise and they didn't even know. So I wanted to blow that misconception out of the water that they are all more expensive – they are not.”

Daniels was also eager to dispel the myth that social enterprises are not capable businesses.

“I think the last point validates that they are capable businesses,” he says.

“There's no expectation that the price will be any greater and there's no expectation that they won’t be able to deliver as they’ve said they would in their processes. They wouldn't exist if they couldn't meet those requirements at the end of the day.”  

So you want to engage with social procurement – what now?

Before anything else is done, Daniels says organisational buy-in from both management and operations is essential.

“We’ve had organisations who weren't ready for this; when they are not ready it's hard for us and it's hard for them,” he warns.

When working with buyer members, Social Traders develops a roadmap that sets out the partnership’s goals and how they’re going to be achieved.  

“We would then look at our social enterprises and run them against the procurement categories that are coming up in the next 12 months to look through where there's an opportunity,” Daniels explains.

“We start to see those matches and identify the contracts that will make sense then we look at the capacity of social enterprises. We start to understand if this is tier 1, tier 2, or tier 3-type opportunity. We then directly approach a social enterprise and figure out how this relationship is going to come to fruition. So it's relatively iterative process driven by opportunity.” 

Daniels says governments at all levels can support social enterprise, whether it’s through engaging directly with social enterprises in their procurement, or rewarding contracts to organisations that do.

The impacts of social procurement are far-reaching, and sometimes unexpected, Daniels says.

“One of our social enterprises employs ex-offenders. The rate of recidivism amongst ex-offenders is extremely high, and the cost of an ex-offender is in the region of $150,000 a year. You just think about taking 100 ex-offender out of the system – you will save $15 million every year. It's a huge social return on procurement." 

For more on how to use procurement to make a social impact, don’t miss Mark Daniels’ presentation at the IPWEA Sustainability in Public Works Conference, 14-15 May, Sydney.