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What’s the story with NZ Government Procurement?

Victoria MacLennan. 10 November 2022, 9:51 pm

Before joining ITP one of my roles was Co-Chair of NZRise, a grass roots group of New Zealand owned businesses who formed over 10 years ago out of frustration with Government Procurement. In the 7 years I was co-chair my spare time was consumed with trying to effect change, to level the playing field for NZ owned companies, fighting for transparency, consistency and fairness across the procurement system. 

This was essentially an exercise in holding government to account and it was a long game - long. The first meeting I attended with DIA’s GCDO team on the Marketplace was over 6 years before that first security vulnerable fated platform was launched (8 years before the one we know now was launched). It involved exposing the flaws with the NZ Government procurement system to successive new Ministers in both a National and Labour government. 

NZRise scrapped it out on behalf of every business who isn’t a multi-national basically, recognising the symbiotic relationship between the local sector and the international platforms we need at the same time - but asking that the local sector are given a change to participate. The local sector will never have the deep pockets, sophisticated sales teams and significant resources of our competitors to bid for the giant government projects they tend to scope up so we need agencies to support us with smaller initiatives from time to time. 

‘Nobody’s cracked it’ - Govt struggles to fix poor procurement

Government Procurement is no longer my day job but it is certainly something I keep a watchful eye on. In recent months I have been beating a drum that government procurement could help stimulate investment in job creation if added to the broader outcomes. In Victoria (Australia) they have an initiative called “local jobs first” including a commissioner and supporting function, imagine if we incorporated creation of local jobs into the rules of sourcing?

I digress. This week Newsroom revisited the state of government procurement and found it hasn’t changed much in the last 2 years, and TLDR, things aren't great. In previous years I had been able to provide them with detailed insights and data, but there is very little data out there to report on. Why? In 10 years of NZRise asking the government has moved no closer to any form of transparency with regards how much they spend on digital technology services and whether it’s spending with NZ Owned companies or offshore headquartered ones?

Last week I asked Minister Clark again when we will see improved transparency and was told again - it's too hard!

I am a massive fan of Laurence Pidcock the General Manager of NZ Government Procurement. His LinkedIN profile tagline is “Making New Zealand public procurement brilliant”, but in the article he admits it’s going to take him until 2030 to turn this ship and effect change - yep that’s another 8 years!

Back in 2015 3 brave, enthusiastic men joined the R9 accelerator programme (stands for results 9, one of the government of the times broader outcomes) and designed a solution to democratise government procurement. Mike, Nigel and Ed were funded by MBIE to design and test their concept, I don’t recall the detail but do remember it was universally embraced by the private sector and equally emphatically ignored by MBIE’s All of Government procurement team of the time. Until Laurence took over 18 months ago there was no acknowledgement that the current system lacked transparency, rewards incumbents and is operated with no consistency across the government system. So I applaud him for recognising there is a problem in the first place.

Why does it matter? 

The New Zealand government as a collective is the largest procurer of digital technology goods and services, estimated to be $2.6B per annum. A fraction of this is awarded competitively through the GETS system or the Marketplace so it’s completely reasonable to ask how this significant tax payer funded expenditure is awarded and to whom. 

This expenditure can significantly shape our economy and growth of the sector, it creates resilience, enables companies to grow, creates local jobs, leads to proven solutions developed that can go on to be exported. Datacom our largest NZ digital technology company has been partially owned by a range of government vehicles over the years, the subsequent support from agencies significantly assisted them in growing to the formidable force they are today. The same can be said of Spark and Chorus who evolved out of Telecom of course. 

I am also a massive fan of the policy whereby “Mandated agencies now need to ensure that at least 5% of the total number of annual procurement contracts are awarded to Māori businesses.” There are mutterings that this target is being met at the low wage end of the market - in construction, roading, labour based roles - vs professional services end which includes digital technologies so it will be brilliant when the reporting on this policy gets released. 

Why does it matter again? In Minister Nash’s own words “Government procurement is about using our collective buying power to deliver better value for people, communities and the planet,” 

Have a read of the Newsroom article, its pretty interesting, especially the summary of survey results - dire springs to mind. Vic



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Tony Bray 15 November 2022, 8:41 am

How does this amalgamation effect future costs? Will the two Telcos become a Duopoly similar to the Supermarkets?

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