Social procurement

If this push gets to the right outcome, it will only be by coincidence. 

They're doing it the wrong way round. 

The Government's now into social procurement: working social objectives into government procurement. 

Done properly, you get better social outcomes and a maintained tight discipline on procurement. 

Done the way they're pitching it, it's going to be less likely.

The Government spends about $51 billion buying stuff each year - from tarmac for the roads to toilet paper for the Beehive.

Its goal is to have five percent of every government agency’s annual procurement spend going to Māori businesses. But both the businesses and the agencies need help gearing up, Jackson says.

“Achieving 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.”  

It’s not just Māori businesses that should benefit from the government’s changed priorities around procurement, although it’s here where the government’s thinking is most developed. Under  “broader outcomes” procurement rules “each agency must consider, and incorporate where appropriate, broader outcomes when purchasing goods, services or works".

"Broader outcomes are the secondary benefits that are generated from the procurement activity. They can be environmental, social, economic or cultural benefits," the rules say.

However, as the new-ish head of government procurement Laurence Pidcock  told Newsroom in an interview earlier this year (see “The man trying to spend your $51 billion better"), the broader outcomes criteria in the rules are both strangely narrow and rather vague.

The better way of doing this is by keeping social investment separate from procurement. 

Run a very hard line government procurement process that only cares about value-for-money in a very strict sense. 

At the same time, run the social investment approach work in the way that Minister English envisioned it. If an organisation is able to deliver social ends because of the way that it's run, it should be able to pitch to government for payment for those outcomes - with rigorous evaluation to make sure that outcomes are delivered. 

If both are done properly, you could wind up with cases where the company delivering social ends is the one that wins government procurement contracts, potentially because it's also getting returns from a different part of government for those ends. 

And maybe, if you're really lucky, that's the same outcome as you get out of what the government's pitched. But it would just be coincidence. Why? There could be tons of other ways of delivering the desired social objective, and who knows whether bundling it into a procurement deal is the best way of doing it. If employment of the long-term unemployed is the desired outcome, government can't tell whether that's best done by putting a thumb on procurement scales to award contracts to companies that make a point of hiring from among the long-term unemployed, or through tons of other ways of doing that.

And heck, if employment in providing the kinds of things that government contracts for really is the best way of doing it, then the government's approach is far too limited - it restricts those firms to dealing with government, instead of paying for the outcome regardless of whether the company is contracting to government or to others.  

This government keeps picking less effective but more showy ways of trying to do stuff, while maintaining a terrible track record on delivering anything.