George Hulbert is a director of The Clarity Business. We talked to him about why businesses should place a greater focus on improving your procurement outcomes.
How are Government agencies approaching procurement?
The current approach is virtually the same as it has been since mid-2018. However, we are seeing what I am calling the 'wellbeing agenda' coming through more strongly than ever. Wellbeing is now a strong requirement when you are completing tender documents and RFPs at all levels, from Government ministries and their agencies right through to district, local and regional councilsHowever, there has been a significant change in how procurement is being used as a lever to support the Government's broader agenda for the delivery of social, economic, cultural and environmental outcomes. It goes beyond the immediate purchase of goods and services, in that companies aren't expected to be just good at their job if they want to win work. Businesses must be able to show that they are capable of completing the contract to a high standard AND demonstrate that they are already supporting the community.
How important is it for businesses to adopt a new way of thinking about procurement?
What we are trying to encourage organisations to do is to take the old CSR plan out of the drawer where it has been buried for years and give it a serious refresh.
Businesses need to re-examine what they are doing and how they are doing it through the lens of current Government thinking, i.e. social, economic, cultural and environmental benefit. You also need to think carefully about what legacy your company wants to leave for the community.
Does the social area of the Government's approach carry more weight than the other parts?
In terms of weightings in RFPs, the answer is no, they all come under the same headings. However, specific organisations do put higher weightings in some areas than others. Kāinga Ora tends to place a higher weighting in the social, cultural and economic areas, for example.
When it comes to completing procurement documents, businesses response to questions that seek to understand your work in the social sphere is critical. Businesses must provide in-depth information on how they are supporting targeted groups and how they are helping develop skills for people who are either unemployed, just entering the workforce or are already in the workforce. They want to see that organisations are playing an active role in the community and this doesn't mean merely providing support for the local rugby team. It is about involving the community in decision making and providing opportunities for jobs, careers, and the development of new skills.
How can businesses begin to make the change?
There are two ways.
What the Government is increasingly asking is "do you have a structure in place across your business that is more than the chairman's choice sponsorships."
They are looking for a company-wide structure that engages with the four outcomes, and the language they are using is "are you already doing it, locally." No longer is it good enough to say 'we have a CSR policy, and we will work with you (the tenderer) to develop a management system that looks after this stuff'. They are a bunch of nice woolly words that realistically were never good enough and generally meant very little. Now, companies must show that they have completed or are completing actions that support the community in the region where they are tendering for work. You must demonstrate that you are employing people from the local workforce, and using local products. Recently, a Ministry of Education tender document requested that bidders show how they are meeting the local criteria in each region where they were bidding for work.
The second thing I am saying to organisations is you can't wait till tender time to make these changes. Tender documents regularly ask for evidence of actions that you have already completed, so you need to get ahead of the tender processes.
Where do companies vision and values fit into this process?
Many organisations have already developed their vision and values documents. They may also have policies and procedures around things like wellbeing or have developed initiatives to help with issues like waste reduction or gender diversity. It is true that many of these initiatives reach out and touch the community, but I am suggesting to businesses that they need to widen their boundaries and thinking. You must find new ways of drawing the community further into your world because that is what the Government now requires from those who are seeking to win work.
What are the risks if you don't change your approach?
It's not a theoretical exercise. The overarching objective is jobs, and this is seen very clearly when you scrutinise recent Government wellbeing budgets. There are numerous metrics around improving the quality of life for all New Zealanders, improving outcomes for Māori and Pasifika and increasing the involvement of communities in decision making. To achieve these outcomes, the Government is asking organisations to provide evidence that they are working with the community in these areas. It has never been satisfactory just to have your vision and values written up on the wall. Right now, to win contract work, you need to show tangible actions and outcomes.
What’s happening regarding engagement with Māori and Pasifika?
Many tender documents now include questions about how businesses are involved with Māori and Pasifika communities and organisations. As an example, the formation of the new Māori Construction Consortium was detailed in a news release on the 16 July 2020. The group was formed through a partnership between Ngāi Tai ki Tāmaki Iwi and Downer/Hawkins and is an illustration of how the dial is being moved in this area.
Will Government give this even more focus in the future?
I am not a crystal ball-gazer, but I can't help but feel this is an approach that will be around for a minimum of at least the next three and a half years. My personal view is that, in these difficult economic times and with the current Government emphasis on wellbeing, we are almost certainly going see an increase in the focus on these areas of wellbeing
Why should businesses care about this?
The current economic climate will present the biggest opportunity for work that we have seen for a long time, and this is likely to continue for the next few years. Organisations should care about these four criteria if they are serious about winning central and local Government work. In a commercially stifled environment, the Government is the core source of projects and will be for some time to come. Therefore it makes sense for organisations to align and adapt if they want to win.
Register for George Hulbert's webinar How to align with the government's wellbeing agenda