Recommendations Spotlight: Government Procurement
NOTE: This article is an extract from the report A Roadmap for Impact (pages 20-24)
Recent changes to the Government Procurement Rules have paved the way for the Government to deliberately buy wellbeing outcomes (1). This change should now drive impact-led procurement practice across all of government.
Government procurement is a strategic activity that seeks to achieve public value such as the promotion of jobs, sustainability and Māori and Pacifica businesses. Social, community and impact-led enterprises are also providing public value for their communities, often in line with government priorities. Government procurement was expanded in 2019 to include consideration of broader outcomes, the environmental, social, economic or cultural benefits that go beyond the immediate purchase of the goods and/or services.
There is an opportunity to enable and embed social procurement practices to more effectively grow positive outcomes from government expenditure. Through clear leadership, coordinated cross-government action and effective connection with the market, social procurement can become best-practice across all of government. Leadership from central government will also help drive social procurement in the regions through local government, building economic resilience and development.
Why is change needed?
Inconsistent setting and passing through priorities
Currently there is mixed engagement with procurement at the executive leadership level in agencies. In some agencies strategic procurement priorities are set by the Minister and passed on to the individual agencies and through them to their procurement teams, while others are not.
Mixed market engagement
Social procurement activity within agencies depends on prioritisation, leadership and the engagement of the procurement function. There are pockets of social procurement activity with engaged buyers who are working closely with social procurement initiatives, partners and intermediaries, but the variable level of market engagement means practice is inconsistent, or sometimes non-existent, in and across government agencies.
Inconsistent reporting of outcomes
Reporting on progress is qualitative and highly dependent on agency capability. Reporting has been focused at an ‘activity’ level, rather than on capturing the outcomes achieved by social procurement initiatives at an agency level or in a consolidated way across government.
“IF government, as a buyer, uses its procurement spend to stimulate demand for suppliers who deliver positive impact AND government interacts with the market effectively, THEN the market, including impact-led suppliers like social, Māori and Pacific enterprises, will grow and evolve to respond to increased demand RESULTING in more positive social, environmental, cultural, and economic impact”
Recommendation (1.1)
Develop clear cross-government leadership of social procurement to build momentum in key agencies.
What this means
Government has a leadership role in procurement, setting the 'tone at the top' for both the public service and the market. It also has an opportunity to deliver more value for all New Zealanders’ by strategically purchasing in line with its priorities, for example, reducing inequality, inclusive employment or zero-carbon public service. There is an opportunity for the Government to:
Strengthen the leadership of social procurement across government by designating accountability for government procurement to a Cabinet-level minister, and engaging executive leaders in priority key agencies, the Treasury and the Public Service Commission; and
Encourage key agency ownership of procurement by mandating agency-specific social procurement plans, using a consistent approach.
What change will enable
Cross-government leadership will mobilise and empower the key layers of the executive, enabling government procurement to drive positive change and improved outcomes for Aotearoa New Zealand. Clear leadership and ownership would create coordinated momentum within key agencies and equip agencies with the freedom to focus on priorities within their unique operating context.
Recommendation (1.2)
Coordinate action across government agencies and support their procurement teams with the development and implementation of broader outcomes within procurement.
What this means
The task of embedding change in procurement across government is significant due to a wide range of agency contexts and the typically risk-averse approach to public procurement. Government's existing procurement structure—the Procurement Functional Lead (PFL) (2) —needs to coordinate social procurement across government and to be resourced to activate the required step-change in practice and outcomes. The goal is that social procurement is simply how the Government undertakes all procurement. There is an opportunity for government to:
Form a central coordinating body for social procurement with dedicated resources and funding as part of the PFL; and
Implement a targeted social procurement capability initiative for procurement professionals in key agencies.
What change will enable
A coordination body will act as a strategic partner to agencies and a social procurement centre of expertise across government. It would work with key agency teams to collate practice, build targeted capability, measurement and reporting and so provide a single point of government contact to market organisations and stakeholders.
Recommendation (1.3)
Put in place effective market connection with social procurement intermediaries to connect with the private/community sector and to grow the market of impact-driven suppliers.
What this means
Effective market connections are essential to government as the outcomes sought in social procurement are delivered via the market. There is an opportunity to build upon existing activity and initiatives such as supplier certification schemes and capability development that would accelerate social procurement within government procurement. The next step requires a consistent approach to outcome measurement across government and development of a common language for outcome areas, indicators and impact reporting.
Put in place effective connections between government and the market by leveraging existing initiatives, partnerships and intermediaries. (3)
Develop and implement a set of consistent outcome indicators that can be used to measure and improve social procurement. (4)
What change will enable
Social procurement intermediaries provide an internationally proven model to connect supply and demand and to connect with local and global best-practice. Strong connections between the market and government will provide important engagement and feedback mechanisms for government to drive successful wellbeing outcomes in Aotearoa New Zealand through social procurement.
FOOTNOTES
(1) https://www.procurement.govt.nz/broader-outcomes/
(2) https://www.procurement.govt.nz/about-us/functional-leadership/
(3) Amotai and Ākina (Fwd programme) are intermediaries working in the social procurement space. Both are working with buyer organisations to implement social procurement by providing support such as strategy, capability building, and connection with impact-led suppliers. Amotai is focused on supplier diversity and Māori and Pacific owned businesses. Fwd (Ākina) is focussed on growing market access and deal flow for social enterprises.
(4) This recommendation is connected to recommendation 2.2, as it represents a timely and a targeted opportunity for the Government to measure the value of wellbeing outcomes delivered through social procurement.
Further reading
For more detail on the social procurement recommendations to Government, see the White Paper: Strengthening Government Procurement.
For the full set of recommendations from The Impact Initiative programme, see the recommendations summary report A Roadmap for Impact.