In 2018, Government formally recognised that its buying power could affect and improve cultural, economic, environmental and social outcomes for New Zealanders by changing its procurement rules.
Four years on we speak to Height Chief Executive Warner Cowin (Ngāti Porou) about why broader outcomes matter, how they’re not a new concept for Māori businesses, and the work he and his team do to increase opportunities for small and large businesses to deliver on them.
In a nutshell, what do you do at Height?
We do two things. Firstly, we help government agencies procure large pieces of infrastructure. Secondly, we help suppliers pitch and win government contracts.
Recently, we were engaged by Te Puni Kōkiri (with support from Amotai) to help Māori-owned businesses access government procurement contracts. This is off the back of the Government’s minimum 5 per cent target introduced in 2020 – to grow diversity of suppliers and provide more opportunities for Māori businesses.
Why do we exist? Procurement is fundamentally about bringing buyers and suppliers together to achieve a common goal – our purpose as a business is to build relationships and create mana.
So, not only do we build a purposeful working relationship between two parties, we also take a broader look beyond the build and maintenance of the asset. For example, we ask ourselves: Is this project creating jobs? Is it improving water quality? Does it have the potential to improve local businesses? Can it reduce carbon emissions?
Speaking of taking a broad perspective – what are broader outcomes?
It’s hard to strictly define broader outcomes as everyone has their own interpretation. They tend to fit within four broad categories – social, economic, cultural and environmental.
An example of a project where broader outcomes are being considered is the Kainga Ora Development in Porirua. The primary outcome for this housing subdivision is to address homelessness and housing quality within a community.
But through the delivery and maintenance of that asset, you can achieve broader, or secondary, outcomes. Initially, by engaging with mana whenua we recognise the te ao Māori perspective within the community and build stronger partnerships. Then, you might use urban design to make people feel safer in their community or encourage kids to go to school. And finally, by employing Māori-owned businesses and creating on-the-job training opportunities we improve the Māori economy and reduce unemployment.
Why is it important to embed broader outcomes into the procurement process?
The challenges faced by Māori and Pasifika are real and confronting – statistics show a clear over-representation in unemployment, poverty and homelessness, and an under-representation in education and training.
Updates to the Government’s procurement rules are a step towards addressing some of these issues. They remove barriers for businesses to bid for contracts and the 5 per cent clause, more specifically, provides new opportunities for Māori owned and registered businesses – which in turn supports better economic and social outcomes for all New Zealanders.
Creating supplier diversity makes sense on so many levels. Considering broader outcomes as part of the procurement process builds diversity and equity in organisations’ buying habits and creates benefits for the wider community.
Are broader outcomes in business a new concept?
It's certainly not new to Māori, Pasifika and First Nations businesses – in fact, it’s integral as part of your commitment and obligation to your family and community. For example, there is an obligation to employ and support your community, it’s expected and part of business as usual.
Through knowledge of mātauranga Māori, you also have an obligation in the built environment to consider the cultural, spiritual and environmental narrative within the design and during construction. This thinking is intrinsic in how many Māori businesses operate and part of a set of values, or tikanga, that sets them apart from others in terms of how profit is perceived.
Using corporate speak, our First Nations businesses have been operating business models with multiple bottom lines often without knowing it – incorporating social, cultural, environmental, spiritual and economic goals into implied mission statements and real outcomes.
When it comes to buying agencies, most are delivering on broader outcomes without even realising. Often people come to us at Height and say: “We’re not delivering on broader outcomes, how do we change that?”
But when we sit down and look at what they are doing, the opposite is true. They have engaged in good community consultation, they have employed trainees. There is usually room for improvement and that’s where we can help, by creating a deliberate and quantifiable plan.
This all seems to make perfect sense – why isn’t everyone doing it?
As far as I can tell, there are a few factors people perceive as roadblocks to actively building broader outcomes into their procurement processes.
Firstly, there is the perceived increase of cost and time to deliver a project. Particularly in the procurement space there’s the initial mindset of “this will slow us down”.
The opposite is in fact true – for example, our experience shows how good community consultation and genuine engagement with mana whenua make good business sense. It ends up enhancing projects and reducing delays around mobilising and resource consents, ultimately resulting in a better end-product that genuinely benefits the community it serves.
To understand the second factor, it’s worth delving into the engineer psyche (as an engineer I can say this). What we are proposing, we often refer to as a te ao Māori perspective – looking beyond the now and taking into consideration the four cultural, economic, environmental and social pillars.
It’s a values-based approach. Engineers of my generation are traditionally very stuck in the details – seeking a very objective answer. Whereas some of the concepts we are talking about are subjective, intangible. It requires a mindset shift to move away from concrete and sharp edges to a more holistic perspective. I can see it happening among younger engineers, who are taking a broader approach in general.
Thirdly, I think there is a lack of understanding around the reasoning behind it – Government could do a better job of explaining why broader outcomes and supplier diversity are so vital, and why certain groups require more support than others.
What are the opportunities and challenges for ACE New Zealand members when it comes to broader outcomes procurement?
The fundamental question for some of the larger professional services firms is how to partner with other smaller businesses, and develop targeted training and development opportunities for Māori, Pasifika, youth, women and other underrepresented members of our community.
The traditional model has always been the one-stop-shop solution, so for suppliers to government clients the challenge will be adopting a mindset around creating better economic prosperity within our broader community. Widening the diversity of the supply chain is a good place to start.
Here are three ways to create longer-lasting opportunities beyond the initial contract:
Buying local – either directly or via the prime/lead consultant set targets to look to procure from local suppliers, merchants, sub-consultants, contractors or subcontractors.
Unbundling projects – developing smaller targeted packages of work for small, local and Māori-owned businesses.
- Creating subcontract / sub consultancy packages – being open to subcontracting opportunities in big projects.
Supplier diversity makes economic sense beyond broader social outcomes. In the current market we have an immediate labour shortage caused by a building boom and a lack of skilled technical people. Why not fill those gaps with smaller companies?
Bear in mind that you’ll need to be easy to work with. The power base has shifted, smaller companies are less likely to do business with you if your processes are overcomplicated.
On the flipside, if you’re one of those small businesses considering bidding for a government contract, there's never been a better time. Agencies are thinking more about expanding their supplier base, so investing in building relationships and bringing your HSEQ compliance up to standard is time well spent.
When considering broader outcomes, it pays to narrow it down. In terms of procurement strategy, many agencies and companies come unstuck when they try to solve the world’s issues through the design and construction of a stormwater drain. That won’t happen, but it’s about taking the first step in the right direction. Choose three or four areas in which you think you can be most impactful – for example employment, local business, mana whenua engagement or water quality improvement. Our open-source Broader Outcomes Toolkit provides a framework.
Most of the emphasis around broader outcomes has been on physical works providers – as most Māori and Pasifika businesses work in that space. I would challenge professional service providers to engage smaller consultancies (whether Māori and Pasifika or not) to be part of the solution.
I would also encourage professional services providers to look inwards and ask how they are enacting broader outcomes within their businesses. There aren’t an overwhelming number of Māori and Pasifika engineers and technical people around, ask yourself if an engineer really needs to do the role in question.
If we look beyond the technical, we'll often find that there is a broader skillset that is critical to that job – whether it's community engagement, mana whenua consultation, supplier co-ordination or design management. Looking through a different lens creates opportunities for non-engineers from more varied backgrounds – Māori, Pasifika, women, veterans, refugees and other minority groups. Which ultimately creates better outcomes for your business as well as society in general.