Former Christchurch rebuild infrastructure engineer Sean Barnes was working for social enterprise organisation Äkina when his Road to Damascus moment happened.
It was November 24, 2016 (Barnes still remembers the date) and the environmental engineer was attending a seminar given by an Australian, Mark Daniels, pioneer founder of Social Traders.
Daniels told a story about a group of Melbourne social housing apartment blocks full of migrants and refugees.
âThe unemployment rates were ridiculous,â Barnes remembers Daniels telling the audience. âYou know, maybe three quarters of the people living there didnât have a job. And at the same time all the people working on the towers were from outside. The people who mowed the lawns came in, mowed the lawns and left. The people who cleaned came in, cleaned and left. Same with the people who did security on the towers. It was crazy.â
Daniels made some inquiries, and found out the service contracts for the towers were coming up for renewal. He tendered to the local government, proposing to award the contract for all the jobs to a group of people living in the buildings.
The new enterprise won the bid, and not only did the service provide jobs for unemployed people in the towers, but many of them used the experience to move on and get other employment.
âAnd the government starts going âWell, thatâs a good thingâ and it kicked off a whole lot of stuff happening in Australia,â Barnes says.
The state of Victoria is now one of the leading proponents in the world of whatâs come to be known as social procurement â government and corporates using their purchasing power to award contracts to businesses â often SMEs â with a social or environmental purpose. These are companies which likely wouldnât get a look in with the traditional way of buying â on experience and price.
âItâs a fundamental shift, and it can be deeply terrifying for lots of people, especially when you are in a risk-averse environment, in a bureaucratic environment.â Sean Barnes, Äkina
Barnes says until that day he knew very little about procurement, let alone social procurement. Certainly he hadnât heard of it happening in New Zealand.
âI can remember it very vividly as one of those moments where I was like âThatâs what I think I can do here. Like thereâs a role for me here.ââ
Barnes went back to his boss at Äkina and said âWe should be doing thisâ and his boss said âYes we shouldâ and Barnes created himself a new job as director of social procurement.
He also created for himself the Herculean task of trying to persuade people in the purchasing teams of government departments and big corporates that procurement wasnât just about buying stuff and trying to save money for the finance department.
It could, maybe, make a difference in the world.
âItâs a fundamental shift, and it can be deeply terrifying for lots of people, especially when you are in a risk-averse environment, in a bureaucratic environment.
âAll the time you are bumping into people who say âOh, we canât really do that â itâs too hard.ââ
$26 million for progressive procurement
How much has changed in five years. Budget 2022 has a $26 million allocation over two years for âProgressive Procurementâ â $14.5 million this year and $11.5 million next â allocated through the MÄori Development budget.
Announcing the initiative this week, Ministers Stuart Nash (Economic and Regional Development) and Willie Jackson (MÄori Development) said the money was to help âdiversify government spending on goods and services and increase MÄori business engagement with government procurementâ.
The Government spends about $51 billion buying stuff each year â from tarmac for the roads to toilet paper for the Beehive.
Its goal is to have five percent of every government agencyâs annual procurement spend going to MÄori businesses. But both the businesses and the agencies need help gearing up, Jackson says.
âAchieving better economic outcomes by helping small to medium businesses be tender ready is a game changer in that regard. This is creating positive regional outcomes in other areas such as employment and training.â
Itâs not just MÄori businesses that should benefit from the governmentâs changed priorities around procurement, although itâs here where the governmentâs thinking is most developed. Under âbroader outcomesâ procurement rules âeach agency must consider, and incorporate where appropriate, broader outcomes when purchasing goods, services or worksâ.
âBroader outcomes are the secondary benefits that are generated from the procurement activity. They can be environmental, social, economic or cultural benefits,â the rules say.
However, as the new-ish head of government procurement Laurence Pidcock told Newsroom in an interview earlier this year (see âThe man trying to spend your $51 billion betterâ), the broader outcomes criteria in the rules are both strangely narrow and rather vague.
Itâs been hard to get the people in charge of departmental purse strings to take the governmentâs broader outcomes goals into account, Pidcock said. Social procurement requires a massive shift in culture and mindset â and is much harder to do than bog-standard procurement.
True, Barnes says; still the Progressive Procurement announcement is âgreatâ, he says because it is an investment into the necessary support to help social procurement actually happen.
âWhile it is a focus on MÄori business as a subset of social procurement/Broader Outcomes, the same enablers are required to make this and social procurement more broadly a reality. Government agencies need that support and guidance to implement the changes to how procurement is done.
Some people âjust get itâ
Until now, Barnes says, moves towards outcomes-led procurement have mostly been driven by individual procurement people who just âgot itâ.
The first was Matt Parsons at NZ Post â see Newsroomâs Two Cents Worth podcast on the topic here.
Then there was a team at Auckland Council. Meanwhile, the first true government department to get on board, Inland Revenue, did so largely because the then head of commercial and procurement, Juliet Glass and her team were committed to thinking on a government-wide, not a department-wide scale.
âI remember a workshop at Inland Revenue and someone said âFor us, itâs about employment. Because when people are employed, they pay tax. So if we can help drive people into employment, the cynical person would say, we get more tax.
âWe also save money for the people who pay for the people who arenât in employment.â
For social or environment-based procurement to work â whether itâs using a cleaning company that pays the living wage, or a construction firm which uses green materials or employs ex-prisoners â individual parts of government have to think collectively.
âIf you are myopic, and you are just trying to save cents or dollars on a contract, then youâre going to miss the opportunity,â Barnes says.
All three early adopter organisations â NZ Post, Auckland Council and IRD â all partnered with Barnes and Äkina to push through the changes.
Hard graft
It hasnât been easy, Barnes says. In fact, he describes it as âfive years of hard graftâ, although he reckons these days âby and large itâs an easier message to get acrossâ.
âIt ebbs and flows â even within individual organisations it ebbs and flows because you are talking about human beings and change.
âSo someone could bang their head against a door for three months and suddenly the door opens and things start to snowball.â
âThere are people who arenât just sitting there going âOoh, I love saving money for this entityâ. They want something more.â Sean Barnes, Äkina
At the most recent New Zealand Procurement Excellence Awards (who knew there was such a thing?) Sean Barnes won Professional Procurement Specialist of the year, as well as the supreme award. And thatâs someone who just a few years ago didnât even know there was such a thing as a professional procurement specialist.
In the award video, Barnes talked about âongoing challengesâ, ârunning against the tideâ, and there being âa lot of work to doâ. Still, âsocial procurement is starting to get some real tractionâ, he said.
âThere are people in every organisation who are not just sitting there going âOoh, I love saving money for this entityâ,â he told Newsroom. âThey want something more.â
Meanwhile, more young people are actively choosing procurement as a career path, he says, when in the past many people just drifted into the field.
âAnd they donât want to sit behind a desk and just crank the handle on some contracts. They want to be looking at what the governmentâs doing about the climate or social issues. Because the government is a massive influence on how procurement is done.
âIf the Government isnât doing it, no one else is going to follow.â