Ben Kepes: Doing good through Government procurement

Sourcing locally can have some very real benefits. Photo / 123RF

Opinion

OPINION:

I have a helicopter-sized bee in my bonnet about government procurement and how it relates to local suppliers. I also have a huge disclosure to make that said bee has its origins in the fact that my businesses, Cactus Outdoors and Albion Clothing, both supply sewn products to a number of different government organisations.

From DoC to Corrections, from FENZ to the NZDF, from the police to local councils, it's a fair bet that in the past week you've interacted with someone wearing something our incredible team has made.

I'd like to think, however, that my interest in government procurement goes beyond self-interest. I'm also a trustee of The Ākina Foundation, a social enterprise that is working to build an economy that measures and values the powerful potential of enterprises and businesses to deliver positive change for people and the environment.

This change that I keep banging on about is called impact. The positive impact of enterprises, businesses and government can help address challenges like poverty, inequality, waste management, biodiversity loss and climate change. In other words, businesses can drive positive outcomes from the decisions they make.

Which is where procurement comes in. You see, each year the New Zealand public sector spends around $42 billion on goods, services and works from third-party suppliers to build infrastructure and provide public services. The size and nature of this spend means there is a real opportunity for government procurement to achieve better social and economic outcomes for New Zealanders.

I think of it as being really simple, and like to do so with a fictitious sourcing scenario:

The Ministry of Fluffy Things, my fictitious agency, is in the need of onesies to outfit all of its staff. The ministry has two clear choices: it can source all of its onesies from an offshore manufacturer, likely situated in China or Bangladesh, home of the international rag trade. Alternatively, it can source from a company such as mine, right here in New Zealand.

The flip side of sourcing locally revolves around price - the fact that we local suppliers have labour and environmental standards to comply with means that a product sourced from here will invariably be more expensive. But wait, it's not as simple as that. Sourcing locally can have some very real benefits:

• Reduced unemployment and, by extension, reduced social, criminal and health impacts that are well understood to be related to unemployment

• Generally, lower environmental impacts through reduced carbon footprint and, more broadly speaking, better supply-chain standards

• Economic flow-on benefits as the purchase price for those onesies flows down to businesses and employees and trickles on down through the economy

• As Covid-19 has shown us, greater resilience as we rely less on globally distributed supply chains

This is why the New Zealand Government actually has rules for government entities' procurement activities that are designed to give local organisations the ability to gain contracts that they otherwise wouldn't. The rules mean that, in theory, government organisations will take a broad lens to their decision making - they'll look at the public value that can be gained through the procurement. This value includes employment, environmental benefits, the longevity of the product in question etc.

Or that's the way it's meant to work. Unfortunately, what happens in practice is that government procurement staff are under huge pressure and have to work within very tight budgets. As we have seen firsthand, when this means that they can obtain (for example) a onesie from a low-wage economy at a lower price than from a domestic manufacturer, they do so.

It's not the way the policy was intended to work, but until tenders actually include a provision to articulate the social and environmental benefits of local procurement, it's the way things will remain. So my strident request is for the policy to actually include some teeth in terms of triple bottom-line measurement.

Absolutely I have a bias when it comes to this stuff, but so do our 100 staff, all of who quite enjoy earning a living and not depending on the state for welfare (which would, alas, be the case if we didn't exist.) They also quite enjoy knowing that their labour has a net-positive impact on social and environmental metrics for their community, their country and their world.