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The Social Procurement Wave is Just Beginning to Form

April 5, 2017

Last updated on March 30, 2018

Over the past 18 months there has been a large increase in the announcement of national and state infrastructure projects. In Victoria, there are $30 billion in contracts that have been tendered or are in the pipeline, in NSW there is $60 billion in the pipeline and in Queensland there are a number of significant road projects underway or in development. Given the current economic climate, this trend also looks likely to continue into the foreseeable future.

Coinciding with this growth in volume, is the increasing requirement for these major infrastructure projects to deliver social impact in addition to the required contract works. The organisations winning these contracts are actively seeking to integrate social enterprises into their supply chain as part of the fulfilment process and this unique combination has created an unprecedented growth in opportunities for social enterprises with the right capabilities and appetite.

The Victorian State Government is leading by example in using infrastructure projects as a mechanism to generate employment for marginalised people, with a Social Procurement Policy for the Level Crossing Removals Program – the State’s largest ever infrastructure project.  This Policy includes a contractual obligation to include social enterprises into the supply chain and it has already been built into the $30 billion of rail and road works as part of the State’s infrastructure project.  As a result,  a wide range of social enterprises have won contracts in areas that include fit-out, catering, printing, traffic control, landscaping and plants.

Over the past eight months, Social Traders’ Connect certified construction enterprise, TRY Build, has won $80,000 of work after being engaged by two different ST Connect buyer members as part of the Level Crossing Removals Program.

“These two projects have provided 1,400 hours of work opportunities for our students” said Clint Webb from TRY Build, “Social Traders’ Connect has opened up leads with more potential buyers that we may not have had access to otherwise.”

Working as the link between corporate and government buyers and social enterprise suppliers, Social Traders’ Connect has had a unique perspective into this growing demand. There are currently 17 buyer members in Social Traders’ Connect, and since the start of 2017 this buyer group has collectively committed $12 million in spend with social enterprises.

There is also increasing interest in second tiering, or sub-contracting, from most Social Traders’ Connect buyer members, including Westpac, City of Melbourne, Mirvac and L’Oreal in areas as diverse as event management, security monitoring, stationary and grounds maintenance – which opens up more opportunities for regional and remote social enterprises.

Whilst these signs of growth are overwhelmingly positive in opening new opportunities, the risk for Connect is lack of supply resulting in unmet demand. There are currently over 180 Social Traders’ Connect certified social enterprises, but this number will need to grow substantially to cater for the pipeline of works.

“We are looking to certify around 500 social enterprises nationally in the next 2-3 years to be able to meet demand and maximise the opportunity for social impact. While we have been successful in linking social enterprises to many of these emerging infrastructure projects, buyers are constantly looking for new opportunities to incorporate social enterprise into their supply chain.  If there are no relevant certified social enterprises suppliers to fulfil required contracts, there is the possibility that we won’t realise the full potential for social enterprise growth,” said Mark Daniels, Head of Market and Sector Development at Social Traders.


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