A Seed for Social Procurement

An established Queensland social enterprise offering jobs to the marginalised has found success – and experienced devastating setbacks – as a result of its push for social procurement, writes Nadia Boyce in this week’s Spotlight on Social Enterprise.

Sandgate Enterprise for Economic Development – Parks and Property Maintenance (SEED PPM), is the Not for Profit social enterprise arm of SANDBAG Inc, a citizen organisation working in the Sandgate area of Brisbane.

The organisation has been operating since 2009 and provides landscape maintenance, residential gardening, and commercial cleaning services to hundreds of customers in Brisbane, and aims to provide sustainable and supportive employment for people who are long term unemployed and excluded from the traditional labour market, such as those with mental illness, disabilities, Indigenous Australians and refugees.

To date SEED has created over 20,000 hours of employment and paid $500,000 in award wages to people who had previously been long term unemployed/marginalised.

The organisation also won the Small Social Enterprise Category at the 2014 Australian Social Enterprise Awards, run by Social Traders last June.

SEED’s Manager is Steve Williams has been elected twice by his peers to Chair the Queensland Social Enterprise Council (QSEC), the member driven peak body representing social enterprise in Queensland.

Pro Bono Australia News spoke to Williams about the potential of social procurement and how his organisation has overcome difficult times in recent months as it pursues regular contracts.

A start in procurement

While the focus of discussion on social procurement may now tend towards ways to improve readiness of social enterprises to bid for contracts, SEED began its journey in reverse – the organisation was the direct result of a council request to mother Not for Profit Sandbag to provide maintenance services.

“Sandbag kind of carried along doing its own thing but an opportunity came along in 2009 through Brisbane City Council to start a mowing business,” Williams says.

SEED began operating in October 2009 with a council contract worth $52,000 per annum to mow three parks and look after the main street of Sandgate.

“That piece of procurement was really groundbreaking and it kickstarted the organisation to say ‘ok, we can do this again’.”

“They started new projects and then at the same time, started applying for funding, which was fairly abundant at that time – in the end days of Anna Bligh in Queensland and “with the Federal Government jobs fund.”

Sandbag eventually scored $100,000 in funding to kickstart SEED.

“If I look back on the last five years, we definitely started by saying, we’ve got these jobs through social procurement frameworks, so let’s have a look at how else we can realise some social procurement opportunities, mainly with government and councils,” Williams reflects.

“We just picked some targets and went for them, and very, very fortunately, there was a big housing estate development, and there was a need to create some jobs for unemployed people in the area. We were the only ones who could step in and say, ‘we can do that through social procurement’…Eventually we did about $1 million worth of business just with that one customer.”

Scoping social impact  

In four years, SEED grew from a turnover of $50,000 to $500,000, in that time employing 56 people with 75 per cent of those coming from target groups.

The organisation has also been able to put a dollar figure on the value of their social impact relative to financial investment – bringing both benefits and problems, Williams says.

Social Ventures Australia independently conducted a Social Return on Investment Analysis (SROI) study in 2010, which found for every $1 invested in SEED, $2.45 is created in social value.

“I would love to have another SROI done but they’re so expensive and we don’t have the money to pay for one and we can get a funder to pay for one either – because they’re so expensive, and we have tried,” Williams says.

Despite the evidence base and legitimacy that quantitative analyses might provide, it also raises troublesome issues of comparison.

“I think the problem with SROI is that in human beings, we automatically compare one SROI result with another.

“You shouldn’t compare them but you can’t help it. When I speak to people in Government and tell them we got $2.45, I get people turning around to me saying ‘[A charity] got $16, so does that mean they are better at this than you?’ I find that a real problem.

“When we wanted to do some more impact measurement, we chose a really simple framework, Social Impact Assessment (SIA) which is actually used quite extensively in mining in Queensland through the impact statement companies have to write. They use SIA for the human stuff they do. We found the process really quite good.

“I want to do another one of those this year. At the moment I am thinking we will do one every two years, as we’re not really big enough to do one every year – we’d just be asking the staff the same questions.”

Overcoming setbacks

Williams concedes that the organisation has struggled since its earlier successes – a change which has forced him to rethink his strategic approach.

Steve Williams (right) is interviewed on radio following SEED's success at the 2014 Social Enterprise Awards

“We’ve gone backwards since we won the award. We had two major contracts go out to re-tender and both of those customers went out to the market to seek a best-price option and we lost the contracts. We lost the contracts because neither of those customers wanted to sit down and negotiate prices,” he says.

“We didn’t lose the contracts because of our existing price or our quality or our skills, we lost the contracts because they went out to a blind tender in the private market, and the private market can generally beat the price of a social enterprise.

“One of those customers that we lost was one of Australia’s largest Not for Profits. That was very hard.”  

Williams is now looking less to Government and council contracts to look more into the potential procurement opportunities within the Not for Profit sector.

“Over the last six months I’ve had a real strategy, speaking with some of these larger Not for Profits,” he says. “Being the Chair of the Social Enterprise Council is obviously a door opener that enables me to meet with CEOs of Not for Profits and advocate for the whole sector.

“I’ve had facilities managers, who have multimillion dollar budgets, say to me ‘we’d be be happy to pay up to an extra 10 per cent for a social enterprise to do the work, we just didn’t know that you were operating in this space’. That was really interesting to me – it says a bit about the awareness in the sector.

“When we think of Not for Profits, we think of the people on the ground, the CEOs…what we don’t think about are the procurement officers, the finance managers, the CFO – all of whom have generally come from the private sector. What they do, is they always look for best price.”

A social future

Williams is emphatic about the change that needs to occur for the growth of social enterprise in Australia.

“My kind of mantra is that what we’re lacking in Queensland – and I’m sure that it’s Australia-wide – is that we’re not lacking access to finance and funding but we’re lacking access to contracts.

“The only way that we can grow the market is through contracts. You can’t stimulate the market place just with dollars alone, you need to stimulate it with actual jobs for those social enterprises to go and do.”

A new partnership between the Queensland Social Enterprise Council and the Queensland Government will see QSEC members listed on the Queensland Government’s procurement intranet site. Any procurement officer looking to buy anything in Queensland can look on the intranet site and perform a search that specifically finds social enterprises.

“It’s probably the most exciting thing that’s happened in the last ten years,” Williams says.

“The problem is that the market is not big enough still to provide enough competition or to provide a full suite of services.

“It can look to Government and to big corporate players that we’re just these little tiny fish in a big pond. And we are – but we need to stimulate that market because we need more and more enterprises to come online.”

Williams says legitimacy for social enterprises stems from the definition issue.  

“[This] idea that every business is just going to be a social enterprise eventually, so why not just do away with the definition and talk about doing business…I think, if we jump into that too early, we’re going to have huge problems.

“We know that people like the Government are not going to  have a separate social procurement strand on their internet site because we don’t have the legitimacy to be on there [without a definition.]

“I think we’re a bit too early to open up that definition jack-in-the-box.”

Read more about SEED here.