The art of modern procurement

Roads & Infrastructure speaks to industry representatives about changing expectations from governments and the public for sustainable and social procurement initiatives.

As the road construction sector advances, the industry is discovering countless opportunities to improve its service provision beyond the bottom line.

Social procurement is a broad term to define organisations using their buying power to generate social value above the value of goods and services being procured.

Not only can businesses provide vulnerable groups with access to employment, but they also have the ability to help solve the world’s complex social, economic and environmental problems.

While project timelines and budgets remain a prominent consideration, a host of other factors are now being looked at to determine the legacy a project will leave.

As a result, contractors are looking at the overarching effects of projects and how the works can provide positive community outcomes during construction and long afterwards.

For road construction, factors such as a project’s carbon footprint are holding more significance with decision makers in the tender process.

To embed these outcomes into decision making, governments around the country have set out social procurement guides. Many of these guides encourage businesses to incorporate a variety of initiatives into construction projects, including working with social enterprises, Indigenous businesses and employing disadvantaged jobseekers in the supply chain.

The Queensland Government has a social procurement guide, while South Australia and the Local Government Association for Western Australia have guides to sustainable procurement.

In 2018, the Victorian Government released its Social Procurement Framework, outlining a number of social and sustainable objectives for consideration to any businesses contracted to government projects.

Its social procurement framework states that for any contracts over $50 million dollars, the contractor must include targets and contractual requirements based on the framework that pursue social procurement objectives, including in sustainability.

Sustainable procurement

Recently, the country’s environment ministers signed off on a Council of Australian Governments (COAG) timeline to ban the export of waste glass, plastic, paper and tyres.

The phased approach to the ban will start with waste glass in July 2020 and mixed waste plastics will follow in July 2021. December 2021 will then see all whole tyres, including whole baled banned from export.

All remaining waste products, including mixed paper and cardboard will be subject to the export ban by 30 June 2022.

By repurposing these materials onshore, the country will need to identify viable end markets to consume the repurposed materials.

All ministers have committed to identifying any significant procurement opportunities over the coming months such as major road projects that could use considerable amounts of recycled material.

Recycled glass sand is already well used in roadbase and on infrastructure projects, specifically in Victoria. Trials are now being undertaken in various municipalities for the use of recycled plastic in asphalt and crumb rubber has long been used in spray seals, dating back to the 70s.

In light of developments like the export ban, the inclusion of recycled materials will be increasingly considered in the construction tender process.

The Victorian Government sets out three environmentally sustainable objectives in its Social Procurement Framework. In particular, the objective Environmentally Sustainable Outputs, strongly encourages the use of recycled materials in construction projects.

The other two: Environmentally Sustainable Business Practices and the Implementation of the Climate Change Policy Objectives focus on reducing the environmental impact of suppliers and project delivery.

The Infrastructure Sustainability Council of Australia (ISCA) rating scheme is also gaining traction across industry. The scheme ranks the planning, design, construction and operation of infrastructure projects against strict criteria for a project’s success in implementing sustainability objectives.

Sustainability Victoria is a statutory authority whose role in supporting the Social Procurement Framework is to advocate for the inclusion of environmentally sustainable practices across all government procurement activities.

Matt Genever, Sustainability Victoria’s Director of Resource Recovery says one of the organisation’s roles is to work with agencies, government and the industry to find opportunities for recycled products to be identified through the tendering process.

The organisation funds grants to support the private sector’s use of recycled materials such as recycled glass and plastic in a concrete footpath at Hoppers Crossing.

“We make sure there is consideration for recycled products particularly in larger infrastructure projects,” he says.

In Victoria, 14 million tonnes of waste was generated in 2017-18 and about 10 million tonnes of that is recycled.

The state government is the largest single procurer of infrastructure and goods or services in the state, which helps to shape industry trends.

“We need to make sure within our local economy we have the right products and markets to sustainably and economically turn those materials back into new products and new opportunities. Government procurement can really play a significant role there,” Mr. Genever says.

“The power of government spending can drive demand and innovation and new products that have recycled content in them, and we want to make sure we are supporting our local recycling industry.”

He says currently there are two stages of opportunity for the infrastructure sector. The first is the recycled materials that are already available for infrastructure projects such as using recycled glass sand or reclaimed asphalt pavement in construction projects.

“I think glass is a really good example of where Victoria has had some considerable wins in the last 12-24 months. With 120,000 to 150,000 tonnes of glass sand used in infrastructure projects annually in Victoria, we are way above most other jurisdictions not just in Australia but internationally,” Mr. Genever says.

Melbourne’s Richmond Station used recycled plastic in its railway sleepers.

The second opportunity, he says, is the emerging opportunity for recycled products such as plastics.

Earlier this year, the organisation helped to fund a project which saw recycled plastic railway sleepers installed at Richmond Train station in Melbourne.

Queensland are also testing plastic railway sleepers and Mr. Genever says ideally this will support greater and quicker uptake of those products in other states and territories.

The railway sleepers have also been replicated in a new storage yard for regional trains near Wyndham Vale train station.

The construction industry, however, can be apprehensive to use such materials as in many cases the responsibility for performance falls to the contractor. This is an issue that continues to be worked through.

Social Procurement

The Victorian Government’s Social Procurement Framework is split into 10 objectives comprising seven social and three sustainable.

Many of the social objectives include giving opportunities to minority groups such as Victorian Indigenous people, Victorians with disability or disadvantaged Victorians.

The Queensland Government also has a procurement policy with objectives to support disadvantaged Queenslanders and maximise opportunity for Queensland suppliers.

The West Gate Tunnel, Metro Tunnel Project and the Level Crossing Removal projects are some examples of major infrastructure initiatives taking on social procurement in Victoria.

Each of these projects works with a social enterprise, including Outlook Environmental, which delivers services for waste management and resource recovery.

The organisation employs primarily people with disabilities as well as other priority groups such as asylum seekers, refugees and long-term unemployed.

Outlook Environmental CEO Sam Sondhi says one of the obstacles for reaching social procurement outcomes can sometimes be a business’ ability to convey its capacity to deliver for larger infrastructure projects.

The organisation processes 100,000 tonnes of waste per annum and works across a range of commercial and government projects.

“Typically, procurement is based on trust relationships and an understanding of who is in the market, at no fault of the contractor. Social enterprises are sometimes still not seen as the organisations that can deliver these core services,” Mr. Sondhi says.

Outlook Environmental relies on a portfolio of projects, past and present to secure new work.

“We bring people out to site to show people the activities that we do and the staff that we employ as a result of the work we pick up,” Mr. Sondhi says.

He says one thing that some contractors do really well is engage widely in the sector.

There are also peak organisations contractors can engage with that exist to give a profile to some of these organisations and Mr. Sondhi says engaging with those is important.

“When you engage with a social enterprise that is employment driven then you are directly creating jobs for priority employment groups that would otherwise face barriers to sustainable employment,” Mr. Sondhi says.

“Today the most important thing for us through the social procurement framework is that it has been embedded in contracts and this has encouraged people to have that discussion which has been the real enabler.”

However, he says implementing social procurement requires an investment of time and understanding of what the market looks like.

“It’s not easy, but it is getting easier. What we find with a lot of our contractors is the first project is a learning curve for both of us. But the next time they win a contract, there is a ready-made formula and there is a relationship. It gets easier over time.”

With a growing number of infrastructure investment and projects across the country Mr. Sondhi says he still thinks there aren’t enough social enterprises delivering services to infrastructure.

“There are a small number of capable social enterprises and a much larger number of smaller enterprises out there, so I think visibility has been one of the issues,” he says.

Now with increasing pressure on contracts, the industry is seeing specialist roles within infrastructure organisations such as social inclusion managers whose job is to find social enterprises and educate internally about the importance of those contractual requirements.

“What we are seeing with the Victorian Government is a policy, it’s not legislation but it is moving towards that point where I think it will be legislation in time,” he says.

“This is becoming business as usual, so it’s important to embrace it and go on that learning journey because it will start to influence the contracts that are won. Those that are embracing it early and innovating with the changes are the ones that we’re finding are winning follow-on work,” Mr. Sondhi says.

Indigenous values in procurement

The walking track to the top of Uluru was officially closed on 25 October, 2019. For years, the Indigenous elders had been calling for the walk’s closure because of the spiritual significance of the site.

As more Indigenous voices are being heard, it is becoming increasingly important for infrastructure owners to consider Indigenous values and listen to people’s concerns before creating structures on land.

Recently, the Auckland Council in New Zealand introduced a new principle for its procurement strategy to recognise and respect the country’s Indigenous peoples, Māori values and commitments.

The council’s procurement principles provide direction for decisions made to procure goods, services or works to deliver objectives for Auckland Councils.

A second principle, Value te Ao Māori, ensures the procurement process supports the council’s commitments to Māori including responsibilities under the Treaty of Waitangi and broader legal obligations.

Brandi Hudson, Chief Executive Officer of the Independent Māori Statutory Board, tells Roads & Infrastructure that Indigenous people don’t differentiate between the sky, the human and the land.

“In the Māori culture we call the land our ‘whenua’, which is the same as the womb. Land is called earth mother, whaea whenua, and the sky is Ranginui, the sky father,” she says.

It is these types of values that contractors need to respect in procurement for Auckland Council projects. In a tender, contractors have to answer a question about how the project is going to give rise to Indigenous values.

“The unfortunate thing is that Indigenous component of the tender has a low ranking so if they give a substandard answer, it doesn’t really effect who wins the tender in the end,” Ms. Hudson says.

She says the board has been working with council to demonstrate when these factors must be mandatory.

This would require a tender to have a very strong explanatory component covering how the project would work in partnership with Indigenous people, what the partnership will look like, what the design will then look like and what will the mentoring or career opportunities will look like for Indigenous people.

“These partnerships can be used to build strong relationships and enhance the project overall,” Ms. Hudson says.

Ms. Hudson says that often people don’t have an appreciation of the suffering created in some of these places and they don’t have empathy with the history or are aware of the aspirations of the local tribe.

The most recent Victorian Government social procurement framework’s first objective is to provide opportunities for Victorian Indigenous people, giving weight to the importance of considering Indigenous values for infrastructure projects.

Most states and territories across Australia have Indigenous procurement strategies or policies to ensure all tenders take these aspects into account.

“I think that there is a such great opportunity for infrastructure in Australia given you can leverage off diversity, equality and youth. I would be really strongly encouraging anyone that is working in the infrastructure or planning space to have regard for cultural competency of their staff,” Ms. Hudson says.

Level Crossing Removal Project

The Kororoit Creek Road Level Crossing Removal Project was the first rail infrastructure project in Victoria to obtain approval to use recycled glass sand.

The recycled material, commonly used in road bases, was used as bedding material for the combined services route, which are underground pipes containing services such as telecommunications, on the project.

The Level Crossing Removal Project (LXRP) is delivering one of the largest rail infrastructure project in the state’s history, with 75 level crossings to be removed by 2025 alongside a range of other associated rail upgrades such as new train stations, track duplication and train stabling.

LXRP Program Director, Tony Hedley, says the large scale of the project provided more opportunities to innovate and share learnings across different worksites.

“We’re always encouraging new ideas and approaches to address certain challenges within the industry,” Mr. Hedley says.

“Using recycled glass sand is just one way we can make a difference. We also benchmark our projects against Green Star and ISCA rating tools to strive for more sustainable outcomes.”

The LXRP has embraced the Victorian Government’s social procurement framework and encourages its alliance partners to engage with suppliers that provide additional social benefit.

For the Kororoit Creek Road Level Crossing Removal Project, the LXRP and its alliance partners – McConnell Dowell, Arup, Mott MacDonald and Metro Trains Melbourne – examined where the works could have the greatest level of positive impact.

Rebecca Hendy, Senior Sustainability Advisor at McConnell Dowell, says the project team pursued initiatives to partner with social enterprises and sustainable materials suppliers, maximising positive social and environmental benefits.

The project team partnered with Outlook Environmental to manage the project’s construction and demolition waste and increase its recycling rates, while helping to provide opportunities for disadvantaged Victorians to work.

The pinnacle for procurement was the use of recycled glass sand, allowing the project to maximise its use of recycled products and reduce reliance on local quarries, which extract virgin resources.

The decision sparked a partnership with Metro and the glass sand supplier, with a risk assessment undertaken for the use of glass sand in rail corridors.

Following the assessment, Metro issued a formal ‘type-approval’ in October 2018 for its use in rail corridors, paving the way for the future use of glass sand in rail projects.

However, this approval was not a simple process, Ms. Hendy says rail specifications and standards ensure the safety of commuters. She says any change to standards must be risk-based to ensure the network is not compromised by new products introducing operation risk.

“Our team undertook a nine-month process of consultation and risk assessments which included the supplier Alex Fraser completing additional testing, to ease concerns about abrasiveness and conductivity of recycled glass sand,” Ms. Hendy says.

The project team then developed a new specification, highlighting how the performance standards of recycled glass sand meet existing standards.

“This was backed up by the clear evidence of successful outcomes achieved by VicRoads and Melbourne Water in other projects, which helped to present the sustainability benefits that contribute to the circular economy,” she says.

The resulting Metro ‘type-approval’ now enables the use of recycled glass sand and material for combined services routes and drainage applications, in any future rail project without further approval.

“This has resulted in over 2000 tonnes of glass particles – that were otherwise too fine to be recycled back into high value glass bottles – to be diverted from landfill through use in infrastructure,” Ms. Hendy says.

The Kororoit Creek Road project overall received a ‘leading’ As Built rating from ISCA for implementing many sustainable procurement outcomes, and Ms. Hendy earned ISCA’s Individual Leadership in Infrastructure Sustainability award for her role in championing the outcomes and sharing the learnings for future projects.

Building off this momentum, the project team continues to look at further opportunities to contribute to a circular economy.

Using innovative asphalt mixes that maximise recycled content, recycled plastic piping for underground services and looking for renewable energy opportunities through Indigenous businesses were other considerations the project team took into account.

“It has been important for our projects to increase the use of lower embodied energy materials, provide smart and sustainable solutions to Australia’s waste crisis and alleviating mounting pressure on Victoria’s quarries,” Ms. Hendy says.

Ms. Hendy says the rail infrastructure industry still needs to look to other industries, such as the roads sector, which have been changing specifications to maximise recycled content for years, to continue to develop initiatives that embrace sustainability and social procurement outcomes.

A Victorian Government spokesperson says the government is constantly looking for ways to improve the framework for businesses and suppliers. This includes updating guidance and communication for government buyers and suppliers on the Buying for Victoria website and providing tailored supports for businesses in regional Victoria.

“The government is eager to look at ways to work with small and medium businesses across the state to ensure they have the same opportunities as larger businesses,” the spokesperson says.

Repurpose It’s contribution to social procurement is embedded into its business model of industrial ecology, which focuses on shifting industrial processes from linear systems to a closed loop process. But the company decided to take its social procurement offering a step further by providing employment to disadvantaged communities.

To date, Repurpose It has employed about a dozen employees facilitated by the Brotherhood St Laurence’s Given the Chance program. The program aims to build social and business networks and lower market risk for employers and job seekers.

The model is highly specialised to multicultural groups, including more than 70 per cent from refugee backgrounds, with 91 per cent of those participants completing the program.

Repurpose It’s George Hatzimanolis says that as a result of major infrastructure contracts issued by the state government, including the level crossing removals, Metro Tunnel and Westgate Tunnel projects, demand for social procurement is growing.

“For Repurpose It, we’ve seen a growing demand for social procurement outcomes for our customers,” Mr. Hatzimanolis says.