Applying Social Procurement Principles to Infrastructure Investments Will Achieve the Greatest Possible Value for Canadian Communities

*This post originally appeared on Accelerating Social Impact, a CCC founded by David LePage with the mission to accelerate blended value business and investment opportunities to build healthy communities.

Submitted to the Government of Canada Consultation Request for Comments on Infrastructure Investments

Submitted by Buy Social Canada – www.buysocialcanada.ca

David LePage, CEO

August 31, 2016

We commend the government’s very significant $120 Billion commitment to infrastructure investment over the next ten years; particularly the attention to the critical needs of Aboriginal communities and seriously needed social infrastructure. We welcome the opportunity to participate in the consultation process on how the government investment in infrastructure can serve Canadian communities most effectively.

Along with our praise for the infrastructure investment decision our advice is that government can achieve significantly greater return on investment for the taxpayers and attain significant economic, employment and social impact in communities across Canada by applying a social procurement lens across the entire infrastructure contracting and delivery process.

Applying social value principles to the tendering and implementation of the infrastructure investment will also avoid the social value leakage and unintentional socio-economic damage that may occur using the current price-driven procurement policy.

Leakage is commonly understood as not getting greatest value when purchasing or investing because a value “escapes” somewhere in the process. Or as it is often colloquially referred to as ‘leaving money or value on the table’ when making a decision. In the history of infrastructure procurement government leakage has been not capturing the potential additional social impact that could have been leveraged from the same financial investment.

We believe that the federal government is able to effectively use the planned infrastructure investment to help tackle several complex social issues in our communities, including: enhance the training and employment for persons with barriers; expand SME suppliers market opportunities, especially focusing on the social enterprise sector; and empower Aboriginal community economic development initiatives. The infrastructure investment will require setting priorities and making choices, whether related to congestion in our cities, reducing the impacts of climate change, or building a more inclusive society, but in every case we believe a social value impact lens will maximize the potential whole-value creation.

Recommendation #1:Utilize a Cross Ministerial Collaboration Approach to Infrastructure Goals

Cross-ministerial collaboration will be step one to achieve the potential leveraging of greater value from the infrastructure investment.

If we examine the overlap of Ministerial mandates across government focused on social and economic development, it becomes imperative that the Ministry of Infrastructure and Communities include in the infrastructure implementation process the Ministries of Employment and Social Development; Innovation, Science, and Economic Development; Indigenous and Northern Affairs; and Public Services & Procurement.

As Tony Dean of University of Toronto’s School of Public Policy points out in his recent book Building Better Public Services “A comprehensive approach to tackling big policy challenges requires deep collaboration and joint working among several ministries as well as non-governmental organizations…”[1]

Recommendation #2: Apply Social Procurement Policy to Infrastructure Contracts

“Social procurement combines the instrumental activity of procurement with the strategic intent of generating social value in response to identified societal needs, such as local employment creation and development of the third sector.” [2]

Social Procurement has many forms; most common on major infrastructure programs are Community Benefit Agreements. “Community Benefit Agreements (CBAs) are a strategic tool used in the process of building community wealth. CBAs are negotiated agreements between a private or public development agent and a coalition of community- based groups.” [3] In Canada CBA’s were used effectively to leverage jobs and local procurement in the 2010 Winter Olympics, and are now an active component of Metrolinx construction in Toronto.

Other applications can be utilized as well, [4] such as:

  • Request for Proposal (RFP) social value evaluation criteria
  • Unbundling of large contracts
  • Selective contracting through use of established financial thresholds
  • Use of trade agreement exemptions to contract with Aboriginal suppliers, non-profit social enterprises and employers of persons with disabilities.[5]

Recommendation #3: Achieve Social Innovation through Infrastructure Purchasing Demand

The government mandates in several ministries are exploring and working toward greater social innovation learnings and outcomes. The infrastructure investment is an excellent opportunity to use this demand opportunity to achieve social innovation learnings and impact.

$120 billion over ten years is a very significant ‘demand’ for goods and services.

In the same manor that Canada has achieved technology breakthroughs using the demand power of government purchasing, we can now also use that same mechanism to achieve innovation in social impact outcomes.

Government procurement has been the source of technological and supply chain innovation over the past 60 years. Multiple Government purchasing programs specifically encourage and reward innovation. [6]

Government procurement is shifting internationally, “…contemporary social procurement is no longer an add-on element: it is a strategic and integral part of the social policy and service delivery armory.” [7]

“With regard to stimulating social innovation, Edler and Georghiou (2007, p. 949) suggest, “Public demand, when oriented towards innovative solutions and products, has the potential to improve delivery of public policy and services, often generating improved innovative dynamics and benefits from the associated spillovers”. They particularly explore the demand-side as a driver to fuel innovation.”[8]

Recommendation #4 Establish a Cross-sectoral Roundtable Implementation Design and Monitor Process

Successful implementation of the recommendations above will take more than the traditional top-down, government alone process. Multiple reports and analysis indicate that government alone will not solve the complex issues.

“When government are dealing with complex issues…they should start by declaring their inability to solve them on their own.” [9] And as Dean stated, big policy challenges require “collaboration and joint working among several ministries as well as non-governmental organizations…[10]

We recommend that a multi-sector Infrastructure Implementation Roundtable representing government ministries, private sector developers, social enterprises, SME’s, and community service providers be established. The roundtable advice and recommendations will support successful implementation, and be mandated to capture and share learnings for the larger social procurement community of practice.

Recommendation #5 Partner with Buy Social Canada, a Social Procurement Intermediary Service

We recommend that government engage with Buy Social Canada as an external intermediary service that shares their infrastructure investment goals.

Buy Social Canada, a Community Contribution Company, is excellently positioned to work with the necessary multi-sector partners to connect and coordinate the multiple partners: government purchasing, major contractors, social enterprises, multiple suppliers and community based social interests.

As recognized by Barraket et al, “Intermediaries are primarily focused on networking, advocacy and disseminating information and thus play a significant role in navigating institutional boundaries.”[11]

In addition, evidence from Scotland indicates the value and increased potential for success of social procurement through the use of a Social Purchasing Intermediary. Ready for Business[12], is a community-private-government partnership model that connects the sectors, provides training, and creates relationships.

Buy Social Canada, a partner in the Social Enterprise Ecosystem Project, can provide analogous Canadian services.

We look forward to collaborating with the Ministry of Infrastructure and Community to create the infrastructure investment model that will create the greatest possible value for all Canadian communities.

[1] Building Better Public Services, Tony Dean, Friesen Press, 2015, page 31; Professor University of Toronto School of Public Policy and Former Secretary of the Cabinet and Head of the Ontario Public Service

[2] Social Procurement and New Public Governance, Barraket, Keast, Furneaux, Routledge, Taylor and Francis Group.

[3] http://atkinsonfoundation.ca/wp-content/uploads/2015/08/Mowat.AF_CBA_82415.pdf

[4] http://buysocialcanada.ca/files/2014/05/Exploring-Social-Procurement_ASI-CCC-Report.pdf

[5] https://ccednet-rcdec.ca/en/new-in-ced/2015/04/10/new-ccednet-report-primer-trade-agreements-social

[6] Examples: “The Government of Canada’s Multi-sectoral Partnerships to Promote Healthy Living and Prevent Chronic Disease program, which invests $20 million per year in innovative projects and partnerships that focus on addressing common risk factors, such as unhealthy eating, physical inactivity, and smoking, to prevent chronic disease” http://news.gc.ca/web/article-en.do?nid=1037789Accessed August 20, 2016

“Are you looking to finance your innovation activities? Whether you’re working on products or services at the research and development phase, or looking to market your innovation at the commercialization stage, there are a number of government programs available to help you.” http://www.canadabusiness.ca/eng/page/2772/Accessed August 20, 2016

[7] ibid, Barraket et al

[8] ibid, Barraket et al

[9] OECD Studies on Public Engagement Focus on Citizens Public Engagement for Better Policy and Services, page 221

[10] Building Better Public Services, Tony Dean, Friesen Press, 2015, page 31

[11] ibid Barraket et al

[12] http://readyforbusiness.org: “The public sector in Scotland spends £10 billion annually on goods and services and Ready for Business works with commissioners and buyers to encourage the adoption of social value in public procurement and to increase the share of these services that the third sector delivers. We do this in a number of ways including promotion of the Public Social Partnership modelCommunity Benefit Clauses and the delivery of social value through the Commissioning process.”