This time last year we wrote “2020, COVID-19, annus horribilis”. 2021? – actually it seemed kind of similar but felt like we knew what to do this time…
Last year we predicted:
That infrastructure investment would remain one of the most likely ‘go-to’ outlets for economic stimulatory spend – for many years to come, and that the big spenders would be central Government, Local Authorities (hopefully, increasingly supported by Central Government) and Crown Agencies.
It felt like there was a lack of coordinated planning or direction – including with major infrastructure projects pulled, changed or generally ‘moved around’, labour shortages, global and domestic materials supply constraints, massive escalations in shipping costs – oh, and reduced budgets in an already tight Local Government sector.
Last year we also talked about watching for ‘Broader Outcomes’ to become a real influencer of procurement. We noted:
“suppliers must make ‘Broader Outcomes’ a strategic pillar in their operating model. This requires serious consideration, long-term planning and commitment. To win – business strategy, policies, systems, supply chain and commitment to local community must all be aligned, encapsulated and communicated through coherent win themes”
As anyone involved in Central or Local Government procurement now knows – this requirement has become a ‘hygiene factor’ for suppliers. It is no longer a ‘must do’, it is a ‘must have done’…
The cost burden of central and local government aspirations around generating Broader Outcomes, addressing climate change and promoting opportunities for SMEs, Māori and Pasifika businesses in government procurement continues to largely fall on the private sector, and ironically often smaller service providers struggle against larger supplier’s ability to manage the associated costs across broader operational platforms.
New Zealand is no outlier in using the Government procurement dollar to leverage such worthy social outcomes – but one wonders when the private sector’s inability to fund these initiatives without Government agency tenders including a schedule line item in their pricing for Broader Outcomes commitments will see significant changes to the supplier base across New Zealand.
Winning tenders will continue to be critical to winning business, and all businesses in New Zealand wishing to access Central or Local Government contracts must be competent to develop and submit winning proposals.