Supply to Government? Price is not everything

Suppliers of goods and services to Victorian Government agencies need to think more than just price in their future tender bids.

It’s not new that suppliers to government are being asked to consider local, social and sustainable practices in their tenders and quotes. Latest OECD research indicates that 17.8 per cent of Australia’s GDP is already spent on social spending. Whilst a large component of this is spent on health and pensions, the total social spend as a component of GDP has consistently increased since the 1960’s.

Let’s face it though, most government tenders traditionally placed more focus on the bottom line rather than giving any added focus to additional, hard to measure, nice to have addon’s.

Has the Victorian Government taken a bold stance to lead a change?

What if I told you that 20 per cent of your next tender would be evaluated on how you provided for victims of family violence, how you have made your workplace accommodating to people with disabilities and what you are working towards to adapt to climate change? In the same submission you’ll be judged on how you intend on allocating 3 per cent of your total contract spend on employing single parents and people with disabilities as well as reaching challenging energy targets over the contracted period.

This is now an expectation of the Victorian Government’s Victoria’s Social Procurement Framework. Read more about the Framework here.

For large infrastructure projects, one Victorian Government agency weighted 20 per cent towards social and environmental practices in their tender evaluation criteria and set a 3 per cent target spend on social enterprises.

Not all suppliers will be required to go to such lengths in their proposals. If you intend on supplying or sub-contracting on any of Victoria’s multi-billion-dollar infrastructure boom, then it will pay to spend more time thinking more than just the lowest price.

For lower valued contracts, government agencies are being encouraged to factor in 5-10 per cent of their tender evaluation for social and environmental outcomes and favour more local suppliers.

At the lower end of purchasing contracts, government agencies must consider social and environmental practices of suppliers when assessing quotes and tenders. The higher the value of the contract, the more demanding government agencies will be on suppliers and their sub-contractors.

Incorporating social and environmental practices into your business could be the competitive edge your business needs to win future government work.

To help suppliers navigate their way through this new Framework, I’ve listed some suggestions to help you prepare for your next government tender.

• Promote any existing sponsorship or support you already provide your communities in the way of social or environmental practices. This can be anything from donating services or goods to a local fete through to sponsoring major events.  
• Dust off any awards or recognitions and consider nominating yourself for anything coming up.
• Look at what social and or environmental community groups you would like to team up with or support more.
• Familiarise yourself with Victoria’s Social Procurement Framework.
• Look to update your own policies around environment, family violence leave, diversity and employment practices.
• Train staff on new policies and make your business more socially and environmentally conscious.
• When looking for new staff consider taking on apprentices, long-term unemployed, migrants, refugees, single parents or workers in transition.
• Use more sustainable resources and recycled content, manage waste and pollution and minimise greenhouse gases.
• For larger suppliers, create a social and sustainable procurement strategy of your own.
• Prequalify where possible with a department or agency. I.e. consider the Victorian Government Purchasing Board, Construction Suppliers Register, Health Purchasing Victoria, State purchasing contracts and check individual agencies.
• Scan the government agency website that you have supplied to in the past or want to supply to. They need to start publishing their social procurement priorities for the coming 12-18 months so you can get an idea what they’ll expect in upcoming tenders.
• Check out Social Traders for certified social enterprises that government endorses to help partner with on your next submission. 
• Seek out social enterprises that are located close to where the contract spending will occur by checking out Map of Impact.
• Focus your tender responses in terms of benefits to the community and environment, not just lowest cost price.
• Get innovative about how your support for local communities and the environment will have ongoing benefits long after the project or contract has finished.
• Identify key community groups that you want to work with and mentor and support them to become capable of supporting your bid on bigger projects. If they are not already, help them become a certified social enterprise with Social Traders.
• Apply the same scrutiny to your sub-contractors as the government agency will on you.
• Help existing sub-contractors build their capacity in social and sustainable practices.
• Check that your sub-contractors are not associated with any industrial disputes or claims against them that will hamper your bid.  
• If you’re a sub-contractor, choose a niche (one area of the priorities) and be the best in the state.
• Acknowledge that the Local Jobs First and the Major Skills Guarantee policies are still required, this policy goes one step further.
• Prepare for government agencies to negotiate more during the contracting phase to include more social and environmental outcomes.

Responding to the new framework

Tier 1 construction companies know that social and sustainable practices can improve their reputation, social licence and win them more government contracts. 

The social procurement framework is new, but corporate social responsibility, sustainability and gaining social licence is not. Big companies sponsor events, volunteer their staff for great causes, participate in charities, set up community funds….

Regardless of whether their motive is profit, big companies acknowledge that people’s expectations are changing and that having a social and environmental conscious makes good business sense.

Big companies know that building a strategy around social and sustainable procurement may win them the next $billion job. Big companies know that they can’t do this alone. They need sub-contractors, social enterprises and environmentally sustainable companies to help them.

If you supply to Government, they will focus more on what your company already does and what you can deliver during the contract.

Identifying small actions that you can take now to make your business more community and environmentally friendly makes good business sense.

When bidding on work, check with the client how much emphasis they are placing on social and environmental initiatives. If this is new to you, start small and don’t over budget for additional social and sustainable activities. Aim to integrate and substitute activities and make sure your next submission focuses more on your commitment to a lasting legacy rather than lowest cost.

Useful links

Social traders linking social enterprises with government agencies

Buying for Victoria educating how to do business with government

Jobs Victoria matching jobseekers with employers

BuyAbility linking employers with disability enterprises

Disability Employment Services connecting employers with people with disabilities

Apprenticeships, traineeships and cadetships – promoting alternative employment pathways

Vocational Training and Employment Centres -targeting skills and education

Workplace Gender Equality Agency  – promoting workplace gender equality

Industry Capability Network – linking businesses with small and large projects

Kinaway – providing business advice and support for Aboriginal enterprises

Supply Nation – database for certified Aboriginal Enterprises

Map of impact – location of social enterprises in Victoria