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Maximizing value through social procurement

April 29, 2021 | Bonfire Interactive

Procurement professionals discussing strategies for social procurement

COVID-19 wasn’t the only major event shaping the future of government over the past year. During social justice movements like Black Lives Matter and Stop Asian Hate, citizens have been demanding change from their governments.

As social, environmental, and economic movements continue to gain momentum, promoting social good is a growing priority for public agencies. Procurement teams have an opportunity to level the playing field for diverse suppliers and communities through social procurement.

In the United States, new policies emerging from the Biden administration will make those efforts more important than ever, with greater emphasis placed on awarding RFPs to disadvantaged business enterprises (DBEs).

With that in mind, let’s dive into the topic of social procurement – what it means for your organization and how it can drive meaningful change in your community.

Procurement for social good

As every public procurement professional knows, governments have a great deal of purchasing power. The U.S. federal government alone spends over $500 billion per year procuring goods and services, while the Canadian feds spend $18-20 billion annually. When you look at total spending across all levels of government in the United States, the number exceeds $7 trillion.

Historically, procurement’s main goal has been to stretch public dollars as far as possible by sourcing suppliers at the lowest possible prices, while achieving high quality and low risk. The movement toward social procurement, however, focuses on maximizing social, environmental, cultural, and economic value. By using government purchasing power to support local minority-owned businesses, agencies can achieve multiple valuable outcomes for communities.

As Buy Social Canada explains in their Guide to Social Procurement, “Every purchase has an economic, environmental, and social impact, whether intended or not. Social procurement is about capturing those impacts and seeking to make intentional positive contributions to both the local economy and the overall vibrancy of the community.”

By using public dollars to drive overarching goals like social equity and environmental sustainability, the positive impact on communities can be significant.

Social responsibility during the pandemic and beyond

At the same time that social justice movements have pushed governments to prioritize racial and social equity, the pandemic has increased awareness of public procurement’s important role.

For departments that, up until COVID-19, functioned mostly behind the scenes, this visibility created opportunities to rethink traditional purchasing decisions, relationships, and processes. In particular, procurement teams are making the shift toward more equitable and inclusive spending to address the social and economic disparities the pandemic has exacerbated.

Through social procurement, agencies can actively enable greater and more diverse participation in public contracts, for example, by prioritizing minority- and women-owned local and small businesses. 

As director of procurement Joel Neaveill explains, supply chain shortages during the pandemic actually created more opportunities for his organization, the Louisville Metro Government, to diversify their supplier base and bring on new local businesses.

“Our local economy, like everyone’s local economy, is just hurting so much,” Neaveill says. “Through this emergency, we’re turning to [local businesses] to help supply part of the response to the emergency… We also have a list of minority- and women-owned businesses that, as part of the incident management team, we look at through an equity lens—how are we equitably responding to this so we don’t have disparate outcomes?”

Shifting policy toward equity

Beyond the pandemic, public procurement policy has significant power to influence public services, create jobs, and drive healthy competition in the market. Recognizing this, the Biden administration in the United States has outlined intentions to “support small businesses and tackle inequities in the federal contracting system,” including tripling federal contracting goals for small, disadvantaged business enterprises (DBEs) by 2025.

The proposed policy directives would increase participation of small DBEs in business development programs and subcontracting opportunities, and minimize contract bundling that disadvantages minority-owned businesses in the bidding process.

Similar shifts toward social procurement are happening in governments around the world. Driving the evolution is a growing awareness that effective and equitable procurement systems can increase citizens’ faith in government, stimulate economic growth, and build more supportive and inclusive communities.

Are you ready for the future of public procurement? Download our eBook for more insights – The Rise of Procurement’s Next Normal.

About the author

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Bonfire Interactive

Bonfire helps public procurement teams reach better sourcing outcomes through an experience that’s blazingly fast, powered by peer insights, and so easy to use—vendors love it just as much as buyers do.