Local Government Magazine

The worthy procurement policy most have never heard of

Unless you are close to the area of Local or Central Government Procurement Contracts, it’s most likely you’ve never heard of the Progressive Procurement Policy, which the Government established in September 2020. By Vaughan Winiata from Totika Ltd.

Article updated 19 December 2022.

It applies to central government procurement with an objective to achieve a mandated target that five percent of all government procurement contracts are awarded to ‘Maori businesses’.

This ‘five percent’ procurement policy is now over two years old, and jointly managed between Te Puni Kokiri (the Government’s principal policy advisor on Maori cultural and business development) and the MBIE yet, unfortunately, it’s a policy that most people outside of the government procurement space have never heard of.

This procurement target does not in any way “lower the bar” for Maori owned businesses pursuing a procurement contract. Exactly the same measurement criteria apply to a Maori business as they would to any other business in pursuit of a procurement contract.

The five percent procurement target is exactly that, a target, not a guarantee. On a daily basis, I’m closer than most to the coalface of the Maori business community and therefore qualified to pass comment on this procurement target.

In terms of the performance of the policy over its first two years, I would summarise it as a mix of the ‘good, the bad, and the ugly’.

There are two good points: The first is hard evidence that shows the procurement target has been very effective at raising the bar of Maori-owned business capability. There are numerous businesses nationwide that made the commitment to improve their “match fitness” in all aspects of operations and subsequently went on to secure a procurement contract.

That alone is a good thing, not only for the Maori businesses but also for our wider economy, and has occurred directly because of the procurement target laying down a challenge to ‘raise the bar’.

The second good point is the procurement target mandates local and central government procurement practices to be more diverse and inclusive.

I think this is healthy because some areas of the government procurement game are dominated by businesses that hold almost monopoly or duopoly positions, with some even referred to as “glorified government departments”. The five percent procurement target certainly helps foster competition and that is also a good thing.

The first bad point is that very few Maori businesses actually secure government procurement contracts because the sad reality is that most are way off the pace in terms of the capability (match fitness) required to be legally compliant to meet contractual obligations.

The silver lining in this cloud is due to the procurement target bringing attention to this area. We now have a better understanding of the capability gap that exists in the Maori business community, and we can now focus on closing those gaps.

The second bad point is the lack of measurement.

It’s all very well to set an aspirational procurement target without asking the question; “how are we tracking against that target?”.

And I’m not kidding when I claim you will have a better chance of cracking the hieroglyphs of ancient Egypt than finding out how we are performing under this policy. Surely, after two years following the policy launch, there’s someone among our circa 60,000 bureaucrats who can answer this question? SEE COMMENT FROM MINISTRY OF MAORI DEVELOPMENT BELOW – ED.

The five percent procurement target is a great policy that has been poorly driven, and it needs an evangelist, a champion and good leadership. As of now, that doesn’t exist and, as the saying goes, “what gets measured gets done”. Unfortunately, the current measurement optics fail to paint a clear picture of actual performance against the procurement target.

And, in short, that’s a leadership issue.

The ‘ugly’ bit is a single simple point; if we see a change in government in 2023, the procurement target could be buried where it will never again see the light of day. A change in government would most likely be a National/ACT coalition. The ACT Party has made it very clear there will be no differentiation at all for Maori in any of its policies, this is a non-negotiable for ACT in any coalition deal.

The National Party is not much better with taking its usual position of ‘sitting on the fence’ over such issues. This potentially leaves the five percent procurement target on very thin ice and something for Maori business owners to consider heading into next year’s elections.

While it’s unfortunate that two years after its launch the procurement target cannot report tangible performance, there’s no doubt in my mind this is easily solvable with improved leadership that is mandated to drive the policy.

The policy team at Te Puni Kokiri – Te Kupenga Hao Pauaua – translates as “cast the fishing net wide and be enterprising”. Its objective is to provide opportunity for both a creative and productive section of our business economy and its ability to contribute to our broader economy.

A diverse and enterprising economy is a healthy goal; to take this policy away would be a big step backwards in terms of achieving that goal.

Comment from the Ministry of

Maori Development – Te Puni Kokiri.

The ministry’s Progressive Procurement Policy mentioned in this story that was published in the December issue is only for mandated government agencies, and not local government.

It is through mandated government agency reporting that we can see, “How we are tracking against the target”.

So, it is not correct to say we have a “lack of measurement” on how we are performing as we’re checking this data every six months.

We are really pleased with the positive impact progressive procurement is already having with supporting Maori businesses and to change government buying practices. In the last published reporting, we exceeded the five percent target with 5.7 percent of government contracts being awarded to Maori businesses worth an approximate total value of $871 million.

Almost 97 percent of mandated government agencies submitted reporting for this 1 July – 31 Dec 2021 period. You can see some other Progressive Procurement data from this reporting such as the top sectors and regions for Maori business contracts. We agree measurement is critical, and we will also publish the 2021/22 reporting by early 2023.

Going forward we will keep delivering targeted Maori business support, scale up local networks and work with mandated government agencies to make government procurement more inclusive.

Vaughan Winiata replies

It is great news to hear that Te Puni Kokiri says it has achieved 5.7 percent (the target was five percent) of Government projects procurement for Maori business, and I look forward to following the progress – now that we are aware data is being collated and a team has been set up at the Dept of Statistics to focus specifically on Maori business.

I have spoken to both Te Puni Kokiri and Dept Statistics about this and pleased to report there is genuine intent to produce more regular and publicly available data, this will most likely be in the form of a quarterly an infographic style dashboard.

With the above in mind the current data available for the Maori small business sector is not good, and there is not a lot of information to work with.

Some of the numbers bandied about, such as the 23,000 Maori Small businesses in our economy, are only estimates. This is due in part to the difficulty around understanding how you identify a ‘Maori business’? This is not a criticism, it is a reality and the good news is there is genuine intent at government level to resolve this.

Te Puni Kokiri says local government, as I stated in my article, is not included in the procurement scheme. While it is true local government procurement is not mandated, as it is with Central Government agencies, local body procurement teams nationwide are using the five percent Maori business target to improve supplier diversity in their rohe (regions).

And, this makes complete sense, because many of the contractors and suppliers (particularly in civil construction) who deal with central government are the same companies dealing with local government.

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