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Making a difference through government procurement

Government is committed to using procurement contracts as a lever to achieve broader cultural, economic, environmental and social outcomes for New Zealand.

The Government Procurement Rules 4th Edition came into effect on 1 October 2019. These rules mark a critical step on our journey to achieving greater public value from procurement spending, shifting the view from value for money and cost driven procurement to considering the broader outcomes that they can achieve. 

A panel of leaders from the public sector recently spoke to 180 procurement leaders and professionals from across government, and gave examples of how their agencies have included broader outcomes as part of procurement. Together government can achieve wider public value for New Zealanders.

Carolyn Tremain, the functional leader for government procurement, and Chief Executive of the Ministry of Business, Innovation and Employment said looking for broader outcomes is one of the most important things we’ll be doing in procurement over the next few years.

Procurement is one of the Government's key initiatives within the economic plan and we're looking at the opportunity to delivering above the value for money outcome. Improving labour skills, health and safety and growing Māori and small businesses are other outcomes that we can realise from government procurement activities.

Carolyn Tremain  Chief Executive, Ministry of Business, Innovation and Employment

“The government procurement function can achieve broader social outcomes to build a productive, sustainable and inclusive New Zealand. “

Naomi Ferguson, Commissioner of Inland Revenue, explained Inland Revenue spends $450 million annually and this can have a significant impact.

“There is a lot of value in social procurement for New Zealand, in terms of economic and social wellbeing. We’re looking to get public value by asking our suppliers to deliver on social, environmental and cultural outcomes at the same time as delivering contracted goods and services,” Naomi Ferguson said.

“It’s about aiming to get better public value by focusing on our suppliers and having that conversation with them as we go to market.”

Inland Revenue has found many of their suppliers are also thinking of what else they can do in this space as part of their normal business and with others in the community. Some of that is about the work that they’re doing to build up the technology skills in the wider community, hiring graduates or working with Māori businesses.

Lou Sanson, Director General of the Department of Conservation said they made a decision to stop using all-terrain vehicles (ATVs) with a view to improving health and safety for staff.

“Using procurement as a system to replacing our fleet of ATVs with light utility vehicles was a change that initially wasn’t well received but it was about improving health and safety outcomes. We’re also using procurement as a way to obligate companies that want to work with DOC, to our safety management system,” Lou Sanson said.

“The procurement system is one of the most powerful health and safety symbols a Chief Executive has for culture change,” he said.

Iona Holsted, Chief Executive of the Ministry of Education said there’s a huge opportunity through procurement and we can be very explicit of what we’re expecting as a government procurer. Suppliers are providing breakfast to school children and connecting builders, plumbers and gasfitters with kids so that they actually see the construction industry as a future pathway for them.

“We are interested in sourcing providers through our procurement practices who are able to demonstrate that they can give back to the community as part of contracts,” Iona Holsted said.

Gael Surgenor, Director Community and Social Innovation for The Southern Initiative said the council family purchases in excess of 3 billion dollars a year which makes our purchasing power the most controllable lever.

“We’re hunting for opportunities to include enterprises into our supply chain. The first major procurement opportunity was with Auckland Transport focused on generating employment outcomes for local people. The contractor worked with us to create opportunities for graduates from our Māori and Pasifika trades training initiative that have now gone on to have trades careers,” Gael Surgenor said

“We have now teamed up with our procurement team and got a strategy and targets in place that we’re really going to make a difference. Auckland Council is now setting targets around employment outcomes and supplier diversity,” she said.

In addition, Gael Surgenor said working with Māori and Pasifika owned businesses, can achieve more employment outcomes and it’s an untapped asset for social and economic transformation for Māori and Pasifika people.

John Ivil, General Manger New Zealand Government Procurement and Property, said these are all good examples to show how procurement is no longer about value for money alone. He said it’s also about how we use government spending to make a difference to all New Zealanders.

It's about leadership and showing how government spending can be used to achieve better outcomes for New Zealand. For agencies to deliver better public value through its procurement, authorisers and leaders need to set the direction for staff.

John Ivil  General Manger, New Zealand Government Procurement and Property