Social Procurement and New Public Governance

Josephine Barraket, Robyn Keast, Craig Furneaux

• Publisher: Routledge
• Year: 2015
• ISBN:
  9781135100384
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

In recent years, the search for innovative, locally relevant and engaging public service has become the new philosophers' stone. Social procurement represents one approach to maximising public spending and social value through the purchase of goods and services. It has gained increasing attention in recent years as a way that governments and corporations can amplify the benefits of their purchasing power, and as a mechanism by which markets for social enterprise and other third sector organisations can be grown.

Despite growing policy and practitioner interest in social procurement, there has been relatively little conceptual or empirical thinking published on the issue. Taking a critically informed approach, this innovative text examines emerging approaches to social procurement within the context of New Public Governance (NPG), and examines the practices of social procurement across Europe, North America, and Australia.

Considering both the possibilities and limitations of social procurement, and the types of value it can generate, it also provides empirically-driven insights into the practicalities of 'triple bottom line' procurement, the related challenges of measuring social value and the management of both the strategic and operational dimensions of procurement processes. As such it will be invaluable reading for all those interested in social services, public governance and social enterprise.

1 Introduction

In 1844, a group of weavers in Rochdale, England, realised the power of collective purchasing to improve social equity for their families and communities by establishing the first modern consumer cooperative (Birchall, 1994). As well as giving rise to the international cooperative movement, this act shed light on the politics of purchasing and the capacity of civil society to effect social change through economic action, which has resonated in subsequent fair trade and ethical consumption movements. The socio-political power of purchasing is not confined to civil society or individual consumers; it has historically been employed in public programs across a number of jurisdictions (McCrudden, 2004) and is experiencing renewed attention in contemporary approaches to public governance (Bovaird, 2006; Erridge, 2007). Developments in corporate behaviour are also drawing attention to the social effects – both regressive and progressive – of purchasing and supply chains of private for-profit firms and the function of double or triple bottom line value creation in future approaches to global growth (Porter & Kramer, 2011). Despite their different starting points, each of these discussions seeks to address the nature of value that is produced through purchasing decisions and supply chain relationships that operate across boundaries within and between sectors.

Commissioning, purchasing and procurement are often treated as interchangeable in practitioner and policy texts about social procurement (Furneaux & Barraket, 2014). In broad terms, commissioning may be understood as the processes by which needs are assessed and then services provided, whereas purchasing focuses on the more technical aspects of how particular goods or services are acquired (Murray, 2009). Procurement is related to purchasing, but further involves higher order decisions regarding the inclusion and use of third-party suppliers (Furneaux & Barraket, 2014). Throughout this volume, we are variously concerned with commissioning, purchasing and procurement practices because each of these forms part of common understandings of social procurement.

From the actions of individual consumers and citizen collectives through to the practices of political and corporate institutions, interest in the effects of commissioning, purchasing and procurement in stimulating social value creation is growing. This volume examines current developments in social-purpose purchasing, with a particular focus on institutional and organisational approaches to procurement. As part of emerging repertoires of new public governance, social procurement practices are both constituted in and reflective of the changing landscape of public value and accountabilities in complex multi-actor operating environments. We are thus primarily concerned in this book with the relationship between current interests in social procurement and developments in theories and practice of public governing. Collective actors from all sectors form part of the mosaic of new public governance (NPG) and are thus considered throughout our discussion in relation to their roles in social procurement discourses, frameworks and practices.

Through different lenses, the value produced through social procurement is variously understood to be “public” (Jørgensen & Bozeman, 2007), “shared” (Porter and Kramer, 2011) or “social” (Nicholls, Sacks, & Walsham, 2006). Each demands attention not just to the transactional consequences of new procurement processes, but also to the spaces produced through these processes to leverage resources that increase systems-wide change (Mendel & Brudney, 2014). For clarity, we refer throughout this book to “public value” as resources and actions that combine enriching the public sphere with delivery of “what the public values” (Benington & Moore, 2011, p. 43). Social value is an underdeveloped concept, which has been linked in popular debates to the value created by the third sector and social programs (Mulgan, 2010; Wood & Leighton, 2010). While we consider the amorphous nature of social value and the possibilities and challenges this creates for procuring it in Chapter 7, our discussion of social value and social impacts generally refers to the creation of public value that is particularly concerned with social and environmental equity. Of course, what constitutes public and social value is contingent rather than fixed and thus subject to contestation. This is reflected in both the literatures and social procurement practices canvassed in this book.

Emerging discourses of social procurement reflect currently popular sentiments evident across multiple domains – including public policy and administration, commerce and third-sector management – about the perceived inherent ideals of aligning routine actions and processes with the creation of positive social impacts. In practice, social procurement also represents one approach to maximising public spending benefits in an era of NPG (Osborne, 2006, 2010). In seeking to deliver social impacts, social procurement activities also raise new questions about the nature and measurement of public value. This volume introduces the concept of social procurement and examines social procurement practice across multiple jurisdictions in Europe, North America, and Australia. Taking a critically informed approach, we consider the possibilities and limitations of social procurement, what is driving new inflections of these practices, and the types of value they generate in different contexts. We further consider the challenges of contemporary social procurement in terms of the new approaches, skill sets and relationships these demand. This text makes theoretical contributions to policy studies and third-sector management, increasing knowledge of the complexities of governing through networks and, more specifically, managing the hybrid organisations emerging from NPG and its network emphasis. It provides empirically driven insights into the practicalities of double or “triple bottom line” procurement, as well as the related challenges of measuring social value and managing both the strategic and operational dimensions of new procurement processes. The book will be of interest to scholars and advanced students in public sector and third-sector management, social entrepreneurship, and policy studies. It will also be of use to public and private sector professionals engaged in the design, implementation, management and evaluation of social procurement activities.

Public policy trends stimulated by new public management (Hood, 1995) and more recent developments in network governance (Considine, 2005; Kickert, Klijn, & Koppenjan, 1997; Sørensen & Torfing, 2005) have placed increasing importance on the role of non-government actors in delivering policy outcomes. Within this context, the potential policy functions of civil society in general and third-sector organisations – such as social enterprises, charities and mutuals – in particular, have gained increasing attention in many developed economies over the past 15 years. Growing government reliance on third-sector providers to devise innovative responses to complex societal needs has demanded that attention be paid across all sectors to how best to stimulate markets in which the third sector is active. At the same time, dwindling tax bases, the changing needs of ageing populations, and increased public reliance on government interventions during economically tumultuous times have illuminated the importance of making the most out of public sector spending, encouraging a shift towards procurement based on achieving multiple outcomes in addition to maximising financial value. This reflects a related trend towards recognising that procurement has a strategic, as well as an operational, function to play in new governance regimes. This expanded role includes understanding the potential for procurement to stimulate social and environmental value creation, while simultaneously meeting financial bottom lines.

This text seeks to examine emerging approaches to social procurement within the context of NPG. In recent years, the search for innovative yet locally relevant and engaging public service delivery forms has become the new philosophers’ stone. Consequently, a myriad of models has emerged as mechanisms facilitating the design, and implement direct service delivery through for example, the prime provider model (O’Flynn et al., 2014), collaborative models (Huxham, 1996; Keast, Brown, Mandell, & Woolcock, 2004), systems of care (Winters & Terrell, 2003), consortia and collective impact models (Kania & Kramer, 2011), and the growing emphasis on co-produced, value-added approaches (Bovaird, 2007; Osborne & Strokosch, 2013; Pestoff, 2006), as well as those which leverage the consumer-/market focus such as quasi commercial ventures, social enterprises and community-business partnerships (2003). While these models are diverse in function and form, many are located at the intersection between public and citizen (or civil society) co-engagement. Emerging models have also been accompanied by new mechanisms – including financing instruments such as social impact bonds and outcomes-based grants and contracts – each with its own operating logics and demanding new skills and competencies for successful execution. The proliferation of new models and their associated instruments has created new opportunities to tailor responses to social and economic problems. They have, on the one hand, provided operating spaces for greater deliberation and, on the other, raised challenges of coordination and action amongst actors who speak different operational languages.

NPG encompasses multi-actor settings, as mechanisms for realising integrated and committed public service delivery (Bovaird, 2007; Osborne & Strokosch, 2013). Further, NPG acknowledges the residual presence, interplay and therefore, influence of multiple governance modes. NPG scholars thus argue not for recognition of a purely “new” governance regime, but rather that a more encompassing hybrid assemblage is necessary to both explain and enable the current operating context (Koppenjan, 2012). NPG offers practitioners an alternative perspective to shape public governance and service delivery in a post-New Public Management (NPM) era. It builds on the “interpretive turn” in policy studies (Rhodes, 2007) in which public policy design and delivery has been recognised as a relational process involving multiple government and non-government actors (Kooiman, 2003). In this book, we suggest that current approaches to social procurement are both constituted in these relational arrangements and produce “boundary objects” (Star & Griesemer, 1989), or integrative devices through which multiple and diverse actors make sense of new shared practice.

As a domain in which practice appears to be exceeding theory, emerging approaches to social procurement also raise new questions about the role of private actors in the legitimation of and accountability for public value creation. While there is a rich vein of literature of the effects on public policy and public management of privatisation consistent with NPM (Brignall & Modell, 2000; Christensen & Lægreid, 2001; Considine, 2001), these analyses typically position government institutions and professionals at the centre of the equation. We know less about the implications for public value creation where accountability and legitimation functions are stretched and governmental institutions are decentred in policy arrangements. Social procurement presents one interesting field of practice in which to examine these issues. While current discussions of social procurement focus on public service delivery, social procurement activities are also taking place in private production, in areas such as new housing estate developments and ethical consumer goods. Beyond public policy, emerging practices by private – third-sector and for-profit – actors not stimulated by governments suggest that the boundaries of the public sphere are changing.

What is social procurement?

In its broadest sense, social procurement refers to generating social value through the purchase of goods and services. It has gained increasing attention from policy makers and third-sector leaders in recent years as a way that governments can amplify the benefits of their purchasing power, and as a mechanism by which markets for social enterprise and other “for benefit” organisations can be expanded. Attention to social procurement through purchasing from such organisations by the corporate sector is at an embryonic stage. However, corporations playing a role in affirmative action through “minority supplier” initiatives has a long history in North America (McCrudden, 2004), while sustainable development imperatives of the 1990s provided a precursor for business practices meeting double (environmental and financial) bottom line objectives (Salzmann, Ionescu-Somers, & Steger, 2005). As we explore later in this text, some corporate entities have recently identified social procurement as a mechanism for increasing their corporate social responsibility, recognising that there is a business case to be made for purposefully stimulating diverse supply chains.

Despite growing interest in social procurement across all sectors, relatively little has been written on the topic (for exceptions, see Bovaird, 2006; Erridge, 2007; Erridge & Greer, 2002; Munoz, 2009) and limited attempts to define the term (Arrowsmith, 2010; Furneaux & Barraket, 2014). In this volume, we recognise that social procurement occurs through a variety of discrete activities, including those that seek to produce social value through direct and indirect means.

In addition to the types of activities that are constitutive of social procurement, current interests in social procurement form part of a wider discursive shift towards both taming and claiming intangible value for the public sphere. Drawing on Newman & McKee’s (2005) analysis of new governance in a different policy setting, we observe that emergent discourses of social procurement construc...