Case Study – Social Procurement and Broader Outcomes
Social procurement is known by many names.
Sometimes it’s referred to as wellbeing procurement, community buying, sustainable procurement or progressive procurement. It’s often referred to in the context of ‘broader outcome spending’.
Whatever the label, the fundamental principle remains the same – using spending power to drive economic growth and deliver environmentally-sustainable, socially-beneficial outcomes in targeted communities and parts of the country.
At its core, social procurement is about using smaller, local businesses to deliver projects for the communities in which they are based.
Aspects of this can be challenging for project managers though. Especially those working for organisations with process-orientated procurement policies that provide limited flexibility and discourage smaller businesses from engaging.
Adding to the challenge are limitations in smaller, regional centres where there are a limited number of suppliers that are ready, willing and able to meet pre-qualification requirements and complex evaluation criteria.
Northern Edge has first-hand experience dealing with these challenges from both a buyer and supplier perspective. In late 2020 we were contracted by the Far North District Council to provide professional procurement support across a range of MBIE-funded Economic Development and COVID Recovery projects in the Far North.
One of these projects was the Te Hiku Revitalisation Project, a collection of 81 urban improvement, restoration and revitalisation projects designed to create employment in, and restore the vibrancy and mana of, the towns of Kaitaia, Awanui and Ahipara.
Development, enablement and empowerment of local and Māori businesses was a priority for this $7 million project. MBIE specified that work equating to 70 percent of the project value should be contracted to locally-owned businesses, with at least 25 percent being awarded specifically to Māori-owned businesses.
This presented a two significant challenges:
‘Agile’ procurement – working with Council to modify processes
The Council’s ‘Business as Usual’ procurement regime would have precluded a large number of local suppliers from participating in the Te Hiku o te Ika Revitalisation Project.
Northern Edge was involved with proposing and negotiating with Council to adapt these processes to achieve the social procurement objectives while still working to strict and clear parameters around such non-negotiable factors as transparency, accountability and health and safety.
What emerged from this process was an entirely new ‘agile’ procurement strategy within Council that applied to all externally-funded projects with tight delivery timeframes.
This has proved that procurement agility does not mean a reduction in transparency or an increase in procurement risk.
It means leveraging recent market experience, taking advantage of work already completed and taking a fit-for-purpose but robust approach.
Supplier engagement
Contractors not pre-qualified to work for Council were a hard-to-reach group. A contractor forum was arranged early in the project to give locally-based civil contractors the confidence that we had a significant program of works to offer them, an intent to partner locally where we could, and to outline the education and training support available to get them to the point where they could qualify as Council-approved contractors.
The approach proved successful; 28 companies attended the forum and 25 registered for our assistance to coach them through the pre-qualification requirements. The relationships that were created gave these smaller businesses the opportunity to participate in projects that would normally be beyond their capabilities. And they are now able to bid for other Council contracts on an ongoing basis. This in turn helps Council to meet its own goals of working with locally-based suppliers wherever possible.
The Te Hiku Revitalisation Project was an unqualified success. It won the premier award at the 2022 LGFA Taituarā Local Government Excellence Awards, and a clutch of prizes at the 2022 IAP2 Australasia Conference – including top prize in the Community Development category, Australasia Project of the Year and International Project of the Year.
It exceeded MBIE’s targets for local community and Māori involvement; 77 percent of the project value was contracted to locally-owned businesses, with 33 percent of this awarded specifically to Māori-owned businesses.
Northern Edge is proud to have played an important role in the success of this project and eager to help other organisations benefit from all the lessons involved.
