What are they?
Some authorities set specific targets relating to how public procurement can deliver wider policy outcomes, including SPP. An authority might set a target - for instance - to award a certain number, or value, of contracts to SMEs, or minority-owned businesses. In some cases, an authority might reserve contracts for specific target outcomes or groups. This would involve reserving contracts for SMEs or minority-owned businesses.
Both tools, in different ways, help to deliver improved SPP outcomes, and provide incentives for authorities to pursue SPP.
How do they relate to SPP?
Procurement targets can be set nationally or locally (or, in some cases, internationally) and provide a clear signal for all stakeholders of an authority’s intent to pursue SPP. Targets are usually compliant with most overarching procurement frameworks, but it can be useful for authorities to identify any provisions relating to targets in their regulations, and develop a target strategy that is consistent with that.
When targets are developed, it is important to openly communicate this to all stakeholders, including why the target has been implemented, and how it will be measured. It is then important to provide timely updates on progress against targets, with information published openly on national or local portals.
Authorities sometimes go a step further in intervening to drive SPP outcomes, by actively reserving contracts for certain outcomes, projects or groups. This is most frequently done in the context of reserving contracts for certain types of businesses - such as SMEs, VCSEs, local businesses, or businesses owned by certain demographic groups.
Reserving contracts can present more of a compliance challenge, especially for authorities who are participating in an international procurement agreement, or who have other trade agreements in place that cover procurement. For reserving contracts for business groups types, this can be due to the fact that reserving might represent a restriction of the supplier market. And for reserving contracts for specific countries or regions, reserving may contravene an agreement for countries to be able access each other’s procurement markets.
However, if done in a compliant way, reserving contracts can be extremely powerful. Introducing a provision for reserving contracts below legally regulated value thresholds is often a simpler way of getting started.
As above, it is key to openly communicate any reserving policy as widely as possible, including why an authority has adopted this policy. It is then also important to publish data about these initiatives, including any ‘spill-over’ effects on contracts that have not been reserved (for instance, how reserving some below threshold contracts for minority-owned businesses may have an impact for procurement outcomes more generally).