Laurence Pidcock had three children under six and a fourth on the way when he took a new job as head of government procurement. His task: to radically improve the way the government spends $51.5 billion a year of taxpayer money. Everyone said he was mad. He talked to business editor Nikki Mandow
In May, Newsroom examined the vexed issue of government procurement – and found it seriously wanting. “Opaque, inefficient, unfair”, was how we put it.
Instead of procurement being an exciting way to use tens of billions of dollars of taxpayer money each year to advance social, environmental and economic goals for New Zealand, the system was bureaucratic, often incompetent and based way too often on a cheapest first model.
In an age of conscious consumerism, where many people use their own shopping to buy stuff that does good (or at least avoids too much bad), government procurement felt like the equivalent of buying everything from Amazon.
Meanwhile, although change and transparency was gradually being mandated into the Crown’s procurement system, the way purchasing (and reporting on purchasing) was structured meant in some areas only a tiny proportion – like way under 10 percent – was transparently awarded and notified.
It was a pretty grim picture.
Soon after Newsroom’s story came out, we were contacted by the Ministry of Business, Innovation and Employment (MBIE). Would we like to talk to Laurence Pidcock, then newly-appointed and charged with leading a total reset of the role of government procurement, taking it from the back office into the forefront of policy?
We certainly would.
Pidcock’s official title is general manager of New Zealand Government Procurement, an organisation set up in 2012 as part of the MBIE. Its role is to improve the way government buys stuff, to lift the capability and performance of the 2000 or so procurement staff across government organisations, and to make sure procurement delivers not only on the government’s financial goals, but on its wider cultural, economic, environmental and social outcomes.
It hasn’t been entirely successful
I don’t know what I imagined a seasoned procurement professional would look like. Older, maybe, boring, balding. A pen pusher.
Pidcock is not like that, though he’s spent his career in procurement – a decade in the UK, followed by another decade in New Zealand, mostly in the Ministry of Education, where his last job was chief procurement officer.
He’s definitely losing a bit of hair, but the rest of the stereotype doesn’t play out. For a start, Pidcock is young, or youngish. He has four kids under seven, including a very new baby. His next child up, son Brodie, is playing in the garden while we talk; he hops on dad’s lap from time to time during our interview. The photo Pidcock sends (above) isn’t your normal corporate shot – it’s of the family out bike riding.
Why on earth did you do it?
The first question to ask someone in Pidcock’s position is obvious: Why? You are super busy already – why on earth would you want a massive new job leading change in a workforce of 2000 government buyers with a total spend of $51.5 billion?
“Frustration, I guess, if I’m going to be totally honest. We are spending all this money as government agencies, and yet we don’t play together and realise the benefit we could achieve through collaboration.”
It’s not about everyone buying pens from the same supplier – departments kinda of do that already. It’s about people working across government to make purchasing decisions which make a difference for the country.
Take school buildings – Pidcock’s most recent gig.
“At the Ministry of Education we’re dealing with those big construction companies, the Downers and the Southbases, and then you’ve got housing and justice and police and corrections, dealing with the same providers, and all of us are spending tens if not hundreds of millions of dollars with them.
“And yet, generally, we wouldn’t be saying to each other, “Hey, what are you doing? How might we sequence work so that it’s not all going to the market at the same time and potentially mean we are competing with each other?’
“Why are we not sequencing work and going to the market one after the other?”
Even better, could it be that ministries and agencies working together, and collaboratively with major suppliers, could actually produce the sort of broader social or environmental outcomes procurement should be achieving?
“You could have an agreement with one of those organisations that says, ‘We’re gonna have a contract with you for the next dozen years, so how do we work together to deliver the best outcomes – but also do the good stuff we should be doing?’
“How do we use our contracts to reduce recidivism [reoffending when people leave prison], and close social inequities, and bring people into supply chains? How do we use big businesses to work with small and medium businesses and Māori business, and potentially develop them into big businesses over time?”
“I guess I knew that sort of stuff should happen and it’s always been annoying. And then suddenly there was an opportunity to go into MBIE and have a go at trying to solve it myself. And, it’s like, ‘I probably won’t get it and then I can just carry on being frustrated, but from a justified position, because at least I had a go’.”
Sourcing is boring, no?
There are two ways of looking at government procurement – and the first is that it’s dull as ditchwater. You receive an order: school A wants a classroom or a heating system. You put out a tender, evaluate the bids, negotiate a contract, and step out of the process, shifting your attention to school B, which wants a classroom.
Your opposite number in the Ministry of Justice is doing the same with prisons, in Health it’s happening with clinics and hospitals.
It’s a lot of forms and pen pushing.
The second way of looking at procurement is it’s a critical part of achieving the strategic goals not only of an individual government department, but the wider society.
It’s innovative, and interesting.
Misunderstood and misunderstanding
The trouble is far more people in government ministries see procurement as dull not innovative – and that includes many of the people working those jobs, and their bosses.
“I think if you went and spoke to the top 15 chief executives in government, most of them couldn’t tell you who their chief procurement officer was. Or if they could, they definitely wouldn’t be picking up the phone to their procurement team when there’s a problem, or when they want to do something new.”
And one reason government people aren’t consulting their procurement officers, Pidcock says, is too often they aren’t going to come up with out-of-the-box solutions.
Every year there’s a survey which asks companies selling or wanting to sell stuff to government what they think of their experience with the process. Respondents get asked about things like transparency and the ease and opportunity to bid for contracts. And they get asked about the professionalism, innovation and communication skills of the people managing procurement.
Are they good at what they do?
The results are depressing.
In the most recent survey – 2019 – only four out of 10 procurement officials were rated innovative, only half were seen as good communicators, less than half were good at decision-making or at “timing”, whatever that is.
Just 53 percent were seen as “professional” – surely the most basic attribute someone should have to do their job.
Apparently not much has changed in the 2021 survey, due out in early 2022.
As long as our bit of the process is really compliance and fear-based, then why would anyone come knocking at our door and ask us for help?”
It’s kind of a Catch 22. If no one expects innovation from their procurement team, the job won’t attract innovators.
“We’ve got an image problem,” Pidcock says. “We’ve got to put our money where our mouth is; we’ve got to deliver some stuff.
“I’ve been talking to my team about how we get a [ministry] chief executive to say, ‘I cannot do without my procurement team’. But as long as our bit of the process is really compliance and fear-based, then why would anyone come knocking at our door and ask us for help?”
An all-of-government approach
The situation is even harder when you are asking procurement people to work on ‘all of government’-type projects. No one in the Ministry of Education or Justice or Health has ‘working with my counterparts in other departments to reform the procurement system and promote broader outcomes across the board’ in their job description; no one has it in their key performance indicators (KPIs).
“They want to do it, they know it’s the right thing to do, but no one is paid to do it,” Pidcock says. “And that is the bit that keeps coming up. Instead, someone’s job is to report to a chief executive through a distributed line to build some schools or to build some hospitals or some prisons. It isn’t to take a system solution approach.”
Of course, there are people tasked with that all-of-government reform – and that’s Laurence Pidcock and his team. That’s some 130 or so people tasked with bringing change and transparency to 2000 or so procurement people in their silos.
Some things are already happening. In December 2020, the government announced any new vehicle in its fleet has to be electric, or if that’s not possible, plug-in hybrid.
Then in November 2021 it announced that as from April 1 2022, all new non-residential governments buildings with a capital value over $25 million will have to meet a minimum Green Star rating of five (out of six). A year later (April 1 2023) new buildings over $9 million will have to meet the same standard.
That’s most government buildings, Pidcock says. He calls the Green Star move a “big and bold policy change” that will require a significant shift for procurement people all through government.
But it’s only the beginning.
The Auditor General’s report
In late 2019, Auditor General John Ryan published his findings on New Zealand Government Procurement – the organisation Pidcock now heads and which at that time had been going for seven years.
NZGP got a “could do better” report card.
“NZGP needs to be clearer about how it is going to influence public organisations to see procurement as a strategic activity focused on achieving public value, rather than as a set of requirements to comply with.
“Although cost savings are important, the public organisations we spoke to consider that NZGP has focused too much on making savings and not enough on improving public sector procurement capability. This is needed to improve the quality of procurement decision-making, promote more mature and streamlined procurement, and promote innovation among public organisations.
“NZGP has set clear goals for improving government procurement. It now needs to put in place the essential elements of good governance to provide transparency and accountability for improving government procurement, including monitoring and reporting of its planned national procurement strategy. Effective monitoring and reporting is needed to provide assurance that government procurement is continuing to improve.”
Learning from the private sector
Pidcock has spent almost all his career buying stuff for the public sector – here and in the UK. So it’s interesting that when he was asked to lead a big reset of procurement in New Zealand, one of the first things he did was turn to people in big private sector organisations for advice.
He says some companies have been making procurement a key part of their strategic focus for years. Think Icebreaker, which can trace the merino wool in its garments back to the sheep which produced it – and the paddock they were grazing on. The company’s procurement policies are at the heart of the success of its business.
On a global scale, companies like food giant Mars have realised the key role procurement plays in achieving the social and environmental goals they want – and avoiding the reputational disasters they want to avoid.
Mars talks about the aim of its ‘supplier programme’ (think ‘procurement’ under a sexier name) – being to “better engage and support our first-tier suppliers as they deliver greater positive impact in their workplaces”.
Talking to big international players has helped Pidcock with his task of developing a strategy to 2030.
“I must have done, I don’t know, 15 or 20 interviews with heads of procurement across big global multinationals,” Pidcock says. “Companies like Mars, Thomson Reuters, and Vodafone. And interestingly they don’t really care about being completely open with us because we’re not a threat because we’re government and we’re in New Zealand.
“At Mars, this wonderful guy in the procurement team spent something like 10 hours on the phone with my teams just going through how they’re solving the same problems as we have.”
Although it’s on a far bigger scale at Mars, Pidcock says the issues he’s got in getting a bunch of different ministry procurement teams to work together are similar to what Mars is facing with a widely distributed global network.
“How do you motivate them to work collaboratively?”
The critical role of IT
One of the key learnings Pidcock has taken from his discussions with international procurement teams has been the critical importance of high-quality, joined up computer systems. A lot of New Zealand’s procurement is still really manual, he says. Paper-based forms, Word documents or Excel spreadsheets – with many of the hundreds of agencies mandated or encouraged to buy through the government procurement systems using totally different processes.
“Which is crazy. But if you are investing in IT in an agency, the procurement team is pretty far down the line in terms of importance.
“There’s a big kind of value proposition sales pitch needed if we want to go from being the people at the bottom of a cliff signing and negotiating a contract and then forgotten, to the people who vitally need IT to be doing something more value add.”
“Policy people should be talking to us and saying, ‘Hey, I want to buy school lunches for 200,000 children. What does the supply market look like? How are we going to deliver this?’”
It’s not going to be easy.
In his most optimistic moments, Pidcock sees government procurement as a kind of membrane between the different parts of government and the market to achieve the government’s social, environmental and other goals.
“If we are genuinely that membrane, then policy people should be talking to us and saying, ‘Hey, I want to buy school lunches for 200,000 children. What does the supply market look like? How are we going to deliver this?’”
Having broader outcomes for government procurement isn’t new. The government has been talking about the importance of using procurement to achieve social, cultural, environmental and economic goals for a decade or more.
But Pidcock says it’s been hard to get the people in charge of departmental purse strings to take the government’s broader outcomes goals into account. It takes a massive shift in culture and mindset – and is much harder to do than bog-standard procurement.
Take Waka Kotahi – Ministry of Transport deciding to build a road. Company X will build it for $10m, using its existing staff. But company Y employs former prisoners, who are finding it hard to get work after being released. Company Y trains them up, provides counselling and budgeting advice, pays them the living wage, and helps them with housing. That road will cost more. Maybe quite a lot more.
But imagine if 70 percent of those former prisoners stayed out of jail for the rest of their lives, and instead worked and paid taxes. The savings for the whole of government could be enormous.
But how do you know? What if the road those former prisoners built is a disaster? And if you are a Ministry of Transport procurement officer, how can you calculate a hypothetical future benefit for the Ministry of Justice?
Why would you even try to calculate it? Much easier just to pick Company X.
Another big problem is establishing exactly what broader outcomes government wants to achieve.
At the moment, there are four main criteria. Increasing access for New Zealand businesses, particularly Māori, Pasifika and regional businesses to government contracts is the first one. Improving training and skills for construction workers is another. Improving conditions for workers is a third, and reducing emissions and waste is the fourth category.
For broader outcomes, are they not a bit narrow in scope, and don’t leave much potential for procurement people to be innovative?
Pidcock doesn’t disagree.
“Yes, they are narrow, this was the old guard, but I absolutely understand why they ended up where they did.”
Because basically, the priorities for broader outcomes will be different depending on who you talk to.
“If you sit down with a dozen people and you say ‘So, we’re spending $51.5 billion next year. What’s the one thing that you’d like to change?’ you are probably going to get 12 different answers. That’s kind of what happened with broader outcomes – the priority ones were those from people with the loudest voice, but also people trying to get something which was deliverable, where we could get some genuine change.”
The next step is to go wider and allow people more flexibility.
“We need to make broader outcomes or sustainable procurement the norm. Different organisations will have different priorities and different times will have different priorities, so it’s about how do we create a procurement system that can pull the lever on whatever the policy requirement of the day is? Or whatever the thing that we want to do at that time.”
Coming out of the shadows
You know what? That just sounds really hard. Overwhelmingly hard.
But Pidcock, sitting with his little son on his lap, his new baby in the next room, is more excited than fazed.
“There are so many people feeling sorry for me at the moment. And it’s like, well, it’s my own bed, I made it.
“And honestly, it’s such a privilege to have the job. Every time someone says ‘Oh my God, I feel for you’, I’m like ‘Well, I have a reasonably strong view about what government procurement needs to look like. And I’m really excited about it.
“I do constantly juggle my family versus the job – I mean I could have worked 120 hours a week every week for the last six months because there is so much to do. But I can’t, and the juggle is hard.
“But it’s full, it’s fun; it’s great
“Procurement is coming out of the shadows.”