Optimizing government procurement through social procurement policy innovation: insights from cross-sector collaboration at the Ministry of Health, Indonesia

Purpose Social procurement is an innovative policy tool that integrates social values in public procurement, while leveraging the power of public procurement to address complex social problems. This study aims to examine the implementation of social procurement within the Ministry of Health through cross-sector collaboration among public, private and third-sector organizations. Specifically, the objectives were to analyze how the procurement process contributes to social value creation, identify the main enablers of collaboration and analyze the potential for optimizing social value–based procurement policies. Design/methodology/approach This research used a descriptive qualitative approach, using a case study design. The data collection used was a thematic analysis, conducted through semistructured interviews, focus group interviews and participatory observation, involving 16 stakeholders from government, businesses, community organizations and universities. Data collection focused on cross-sector collaboration through in-house procurement (Swakelola) type III and procurement through suppliers that meet the criteria of Domestic Products and Micro and Small Enterprises (MSEs) and Cooperatives. These mechanisms were evaluated for their potential to create social value. Findings The results show that collaboration between the Ministry of Health and nonprofit social organizations in the procurement of health services through in-house procurement type III produces direct social value. Meanwhile, collaboration between the Ministry of Health and private sector organizations in the procurement of affirmative action policies for MSEs, as well as cooperatives that produce domestic products, creates indirect social value. Leadership, regulations, procurement systems and trust emerged as the primary factors supporting the implementation of social procurement. The strategy for optimizing social procurement is driven by collaborative leadership, which creates collaborative procurement governance and generates social value. Research limitations/implications The limitations of this study include the limited scope of data exploration, which only involved key stakeholders from the public sector, namely, the Ministry of Health and several partners from the nonprofit, private and higher education sectors, including the National Public Procurement Agency. The perspectives of beneficiaries of social programs or services have not been considered, despite their significant role in evaluating the resulting social impact. Similarly, other secondary stakeholders, such as academics, civil society organizations and donor agencies, as well as other key stakeholders, including oversight bodies, have not been adequately accommodated. These limitations in stakeholder exploration and analysis need to be addressed in further research involving multiple stakeholders in assessing social procurement. Practical implications This study recommends that leaders actively encourage cross-sector collaboration in procurement and integrate social values into procurement strategies. Procurement regulations promote collaborative governance in the early stages. Meanwhile, third-sector leaders focus on building internal capabilities, engaging sector dialogue, establishing trust and pursuing social goals. Social implications This study discusses broadening cross-sector stakeholders’ understanding of the importance of governments in developing countries creating social value through the procurement of goods and services. Originality/value This study bridges the gap in social procurement literature by examining its application in Indonesia, providing insight into cross-sector collaboration dynamics and offering policy recommendations. The result contributes to both theory and practice by demonstrating the potential for social procurement to achieve sustainable development goals through leadership.