The concept of Social Procurement is becoming more widely discussed in the Canadian public procurement field, with various jurisdictions adopting social procurement policies and frameworks to some degree.

Social Procurement is the idea that public sector agencies can use their procurement function to affect social and economic policies while also achieving value for money. Discussions are typically around encouraging the creation of local and community-level socio-economic benefits within the work resulting from a procurement. Organizations also talk about using a procurement process to engage so-called "social enterprises" -- that is, organizations that seek to maximize the social impact of their business, as well as making profits. In this case, it may be questionable if any new socio-economic benefit is being created: the “social enterprises” will be working as such independent of receiving any government contracts.  So while a government contract may support them, they are not helping to create anything new.

Alternatively, buying organizations may also seek to add requirements to their procurements; for example, to hire a specified number of local individuals for a part of the work, use local suppliers, or other such considerations.

In the broader Canadian context, many government procurement groups across jurisdictions may feel that trade agreement obligations prevent them from implementing a social procurement strategy with either of these two approaches. For example, the trade agreements have provisions that prohibit “offsets.” In the case of NAFTA, Article 1006 states:

Each Party shall ensure that its entities do not, in the qualification and selection of suppliers, goods or services, in the evaluation of bids or the award of contracts, consider, seek or impose offsets. For purposes of this Article, offsets means conditions imposed or considered by an entity prior to or in the course of its procurement process that encourage local development or improve its Party's balance of payments accounts, by means of requirements of local content, licensing of technology, investment, counter-trade or similar requirements.

Article IV, paragraphs 6 and 7 of the WTO Agreement on Government Procurement (WTO-AGP) have similar provisions.

There are specific exemptions in NAFTA, the WTO-AGP and other trade agreements for "set-asides for small and minority businesses" (NAFTA Annex 1001.2b General Notes of Canada, paragraph 1 (d); WTO-AGP, Annex 7 of Appendix I for Canada). However, this exemption has only been used to create the Procurement Strategy for Aboriginal Business (PSAB) program, launched in 1996 to encourage First Nation and other Aboriginal businesses to bid on Federal Government solicitations.

How, then, can one consider social procurement with prohibitions against local offsets (requiring local benefits in a procurement) and against limiting potential bidders to a certain subset of suppliers?

Project managers may have an opportunity to encourage another kind of implementation of social procurement through their evaluation processes. It is already a very common practice in a number of different types of procurements to have a criterion to evaluate the Bidder's proposed methodology and approach to various aspects of the work. This helps satisfy the Buyer that the process the Bidder will undertake is appropriate and meets their expectations.

With careful planning, consideration may be given to including evaluation factors to consider social issues. Examples could include:

  • approach to ensuring sustainable product delivery;
  • approach to reducing emissions;
  • points for a human resources practice that encourages an open hiring process;
  • description of the understanding of the local impact of the project delivery; or
  • any other factors that are important to the project delivery, project team, or the project environment.

When considering these ideas, thought should be given to any additional costs evaluation factors may introduce into your project. You may be willing to pay those extra costs--or, there may in fact not be any--however due consideration must be given to this aspect, especially when dealing with funds from the public purse.

Care should also be taken when considering such measures in order to ensure that trade agreement requirements are being met, reviewing the intended evaluation factors against the various trade agreement, policy and legal obligations that affect your procurement environment. This is a new area for government procurement, and these factors have not yet been tested by the Canadian International Trade Tribunal (CITT), or the Courts.

In the end, there may be opportunities for innovative procurement solutions to the social procurement question. By this I mean organisations need a flexible approach to determining the benefit of a bid’s social value. Buyers shouldn’t stifle innovations or contributions but need an effective way of evaluating different solutions on their own merit and determining which represents the best value to the Public purse.

Commerce Decisions provides various services and products that can assist Buyers in the analysis of criteria factors and their potential effect on an evaluation, with workshops covering Structured Criteria Development and Criteria Weighting. Our Real Value for Money (RVfM) methodology can also be used to assist Buyers in their analysis of the overall bid submission; helping to ensure that the bid selected is the most optimal, including any social procurement factors considered as well as the value for money the Bidder provides. If you are seeking to add social procurement considerations into your next procurement, our software solution, along with our expert consultants, can help analyse your approach and determine the best course of action.

 

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