Toronto is sourcing more purchases from suppliers of diverse backgrounds, as part of its attempt to use its purchasing power to combat poverty and economic disadvantage. Under a new Social Procurement Policy the city is required to seek a proportion of tenders from underrepresented communities, and suppliers that win big deals need to develop plans to include and empower economically disadvantaged groups. The city believes this will direct some $30 million annually to disadvantaged communities.
Results & Impact
The project is currently moving beyond its pilot phase, and is beginning to incorporate its social procurement requirements into its buying. Within the city’s current procurement practices, minorities are significantly underrepresented. A voluntary survey of all vendors in the city’s database showed that only 14% identified as owned by women, 9% as owned by visible minorities and 1% as by people with disabilities
City of Toronto, Canadian Aboriginal Minority Supply Council, Women's Business Enterprises Canada, the Canadian Gay and Lesbian Chamber of Commerce, the Social Purchasing Project
The city has teamed up with groups representing the trade interests of LGBT people, women, ethnic minorities and disabled people and drawn up a strategy that requires at least one tender from a diverse supplier to be considered for new procurements. When larger procurements are selected, the system for awarding contracts will take into account points awarded for planning for social benefits, employing a diverse range of workers and developing their skills and opportunities
Cost & Value
The city purchases an average of $1.8 billion worth of goods and services every year, and calculates that if 2% of this sum were directed to diverse suppliers then $30 million would be directed to economically depressed communities
Pilot running since 2013
Ontario’s Human Rights Code prevents public or private employers from collecting information about employers on areas such as race, orientation or disability, so the city uses a certification process that included representative organisations to define which suppliers were diverse
Toronto is additionally part of AnchorTO, a consortium of 18 public institutions seeking to pool their buying power to support diverse suppliers and disadvantaged groups
Toronto is addressing poverty and boosting business for underrepresented communities by prioritising diverse suppliers when buying goods and services.
The city’s Social Procurement Policy has the aim of encouraging suppliers from diverse backgrounds to tender and win local government contracts. The framework requires the city to actively seek tenders from minority suppliers and asks winning contractors to encourage economically disadvantaged groups in their work.
“The basic thinking is that for every dollar we spend on procurement as a government, we can spend it on several bottom lines,” said Denise Campbell, an architect of the policy and City Hall’s Director for Social Policy, Analysis and Research. “The first is the goods and services that we’re trying to procure. But we can then also achieve a social objective, which in the case of the city of Toronto is to provide training and opportunities for historically marginalised people, and ensure that equity seeking people have access to the contracts.”
Within the city’s current procurement practices, minorities are significantly underrepresented. A voluntary survey of all vendors in the city’s database showed that only 14% identified as owned by women, 9% as owned by visible minorities and 1% as by people with disabilities.
These groups tend to face a range of barriers to winning contracts. They may struggle to know about procurement opportunities in the first place. The bidding process brings further challenges, as larger and more established contractors can access much more in the way of networks, resources and knowledge to seal the deal.
The social purchasing policy enforces simple guidelines that ensure the city’s procurement serves other objectives. City divisions are required to get at least one quotation from a diverse supplier for projects under $50,000. For larger projects, suppliers are encouraged to create their own diversity plans and in the selection process points are awarded for good practice. For very large projects, over $5million, selected suppliers will be required to invest in workforce development, targeting training, apprenticeships and work experience opportunities to groups that are economically disadvantaged.
Instituting the policy has been a long process. Campbell first had the idea for social procurement in 2005, but found bureaucratic obstacles made it difficult to get momentum behind the policy. The pilot that now guides procurement was developed in 2014, after several attempts including a small scale initiative, when Campbell persuaded a funder to write into its agreement that young people should be employed in the building of a youth centre. “Little did I know that good ideas sometimes take ten years to happen,” she said.
While the program is now institutionalised in Toronto, there’s still learning to be done. There’s a mutual lack of knowledge, as government and small suppliers often don’t know a great deal about what the other offers. And while the program has had success in cultivating support for the initiative among businesses, that doesn’t mean it’s been a gradual process.
“I would say that businesses fall into two camps,” Campbell said. “One are businesses that understand that doing this makes good business sense… Other businesses they aren’t there yet, they think it’ll add extra work and extra costs.
“For these, we need to make things simple, to make it easy for them to comply,” she explained. At present, the city is trialling different ways it can support businesses to become better at making strategies for workplace development and diversity. “Maybe we can give potential vendors a menu, perhaps of things you could pick from to make your plan. We want them to succeed. These are not punitive measures.”
For the projects, the council has partnered with several groups that represent the business interests of diverse communities, such as Women’s Business Enterprise, the Canadian Gay and Lesbian Chamber of Commerce, the Canadian Aboriginal and Minority Supplier Council, and the Social Purchasing Project. The certification for diverse suppliers is decided by one of the representative groups partnering on the project.
Diverse suppliers are classified as organisations that are at least 50% owned by members of “equity seeking communities“, such as aboriginal, LGBTQ and racialised people, people with disabilities, newcomers and women. Social enterprises that employ people who are economically disadvantaged and have a social mission are also considered under the category.
The project is one of the major components of Toronto’s poverty reduction strategy. Some 19% of Toronto residents are now considered low income, and 27% of children are thought to live in poverty. Social procurement hopes to address that by boosting the business opportunities of people more likely to live in poverty: it estimates that if 2% of the city’s yearly procurement spend were directed to diverse suppliers, it would result in $30 million directed to economically depressed communities.
(Picture: Flickr/Ian Muttoo)