Social Procurement is the practice of using existing government purchasing to promote social, environmental, and cultural goals. It is a growing international practice as it is an effective policy tool to achieve multiple economic and social outcomes, and a strong return on investment.
Returns can include reductions in crime, savings in health-care and emergency costs, reduced strain on social assistance systems, and higher employment in the community – all of which contributes to vibrant and sustainable communities with high quality of life.
For government, social procurement meets taxpayers’ expectations of financial prudence by leveraging procurement dollars already within the budget to simultaneously fulfill a procurement need as well as contribute to governmental social objectives.
A group of CCEDNet Manitoba social enterprise members, entitled the We Want to Work coalition, Buy Social Prairies, and partner organization Manitoba Building Trades have been leading conversations and advocacy with the City of Winnipeg, working all together to implement social procurement in our city.
Policy Tools – How Would it Work?
There are two policy tools for social procurement: one is through the social purchasing of goods and services and the other is through Community Benefits Agreements attached to infrastructure and development projects.
1. SOCIAL PURCHASING
- Social Purchasing acquires goods and services for operations directly from community social enterprises or co-operatives that are dedicated to serving their social, environmental, and economic purposes.
- Social enterprises are often focused on creating inclusive employment opportunities and stronger, healthier communities.
- Social Purchasing is the easiest and most effective means of supporting social enterprises through sole-source purchasing when permitted and using a set-aside program.
- Experienced jurisdictions have shown that social procurement works best when purchasers and suppliers collaborate to achieve the goal of providing successful employment opportunities for barriered individuals, and then collaboratively identify goods and services social enterprises can provide.
2. COMMUNITY BENEFITS AGREEMENTS
- Community Benefits Agreements (CBAs) have been a successful instrument for increasing the social impact of
- CBAs are pre-determined and defined social value outcomes that will be delivered as part of a significant infrastructure or land development project like building a bridge, a road, school, hospital, office tower, or transit system. Through a CBA, the community, government, and developer agree upon some social value deliverables. Examples of deliverables are job training, target hiring, prevailing wages, purchasing from local businesses and social enterprises, affordable housing requirements, street and neighborhood revitalization and inclusion of community infrastructure.
- CBAs expand the value considered in RFPs by broadening evaluation criteria to include social, environmental and economic outcomes. While not applicable to every tender, this practice would bring two critical benefits to the City of Winnipeg’s procurement:
- Strong private sector contribution to the community: CBAs encourage the private sector to consider and improve the social, environmental and economic outcomes of their practice, by rewarding businesses who provide added value to our community. Opportunities to incorporate community benefit are plentiful: subcontracting social enterprise, employing a community engagement process, employing local youth, partnering with local arts groups, etc.
- Better value for spending: Various analyses done on the social return on investment of social procurement have demonstrated positive financial returns to governments, primarily through reduced strain on social services. Accounting for and generating this value in RFPs through a CBA will improve the value of government purchasing.
Why Social Procurement?
By accounting for economic benefits of more local employment and procurement, more training and education opportunities for marginalized populations, neighbourhood revitalization, and economic opportunities and reconciliation with Indigenous peoples, the financial equation is more robust than the narrow consideration of individual projects.
Social procurement can support Winnipeg’s commitment to reconciliation and the Indigenous Accord. It helps fulfill Call to Action #92 of the Truth & Reconciliation Commission, ensuring equitable access to employment for Indigenous communities. This contributes to full social and economic reconciliation. Winnipeg’s social enterprise sector has proven success in Indigenous employment and retention.
Social procurement creates value and opportunities for people who don’t usually benefit from procurement spending. Community Employment Benefits help local communities leverage public investments to create employment and apprenticeship opportunities, grow social enterprises, build affordable housing, and support neighbourhood revitalization. By targeting jobs and training opportunities for those who have difficulty accessing the labour market, social procurement can help to contribute to other City of Winnipeg goals, including as an important aspect of a poverty reduction strategy or fulfilling a commitment to end homelessness.
Social Procurement is good economic policy, with a tremendous social impact. By accounting for economic benefits of more local employment and procurement, more training and education opportunities for marginalized populations, and neighbourhood revitalization, the financial equation is more robust than the narrow consideration of individual projects.
Social procurement does not diminish the economic value of fulfilling a purchasing need; instead, it increases the total value of the transaction. When we include a social value component in our supplier selection criteria, such as buying from a social enterprise, then the same market transaction creates additional value for the local community.
RETURN ON INVESTMENT
CBAs create win-win outcomes by generating long-term financial and social returns and elevate the return on public sector infrastructure investments. CBAs pay for themselves by generating long-term economic and social returns and raise the return on public sector infrastructure investments.
For example, Manitoba Housing procures $3.5M annually through social enterprise, while supporting over 220 jobs for individuals facing barriers to employment. Through a social return on investment analysis, they found that every $1 spent through social enterprise produced $2.23 in social and economic value.
Trade agreements allow for municipal social purchasing, with robust articles supporting the practice. For example, the Canada Free Trade Agreement (CFTA) between the provinces has articles that enable social procurement, particularly for legitimate objectives such as employment for disadvantaged groups or positive social outcomes.
CBAs do not mandate the selection of local companies. Instead, they ask all bidders to satisfy community benefits considerations like local employment, social benefits and supply chain impacts. These are identified at the outset, and all bidders have an equal and transparent opportunity to identify their community benefits contributions.
Recommendation to the City of Winnipeg:
It is our recommendation to the City of Winnipeg that within the constraints of existing budgets, a social procurement policy assign ten percent (10%) of the selection value to community benefits provisions for future projects undertaken by the City, and set aside direct placement with social enterprises when appropriate.
Take a deep dive into Community Benefits and the movement toward Social Procurement happening across Canada here