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Smart Contractor VS Dumb Contractor

We can't take credit for the great title and theme of this korero, for that we need to acknowledge Heath Nelson, from Fortescue Metals Group Australia.

Smart contractors win work, dumb contractors don’t. In 2019, we had a contingent of Australians come over to NZ to share some of their learnings around supplier diversity. This was because Australia is way ahead of Aotearoa when it comes to supplier diversity and indigenous procurement.

They’ve had an indigenous procurement target for 6 years, so we have a bit to learn. One of the learnings shared was the observation of a “Smart Contractor vs Dumb Contractor” which described non-indigenous contractors and their reactions to supplier diversity requirements.

Some contractors saw supplier diversity as a value add to their business and are winning contracts (smart), and others did not see the value and are not winning contracts (dumb).

What’s a Smart Contractor vs Dumb Contractor?

Here in Aotearoa, we have worked with over 100 ‘Buying’ organisations (organisations that procure services like government agencies, councils and corporate organisations) and we are starting to see the real life behaviours of those Australian observations.

When there are supplier diversity targets in contracts that state things like: “5% of the total value of this contract must be awarded to Māori and/or Pasifika businesses” This can have different responses from non-Māori and non-Pasifika contractors.

A smart contractor is a contractor that recognises that if supplier diversity is something that their Client values, it is something that they should value (if they don’t already). They will do their homework and go above and beyond to connect and buy from Māori and Pasifika businesses. Although sometimes the stimulus may initially be opportunity driven, they’ll lean into the practice and genuinely try to embed supplier diversity across the organisation.

A dumb contractor will ignore the supplier diversity target and not take it seriously. They will push back and express how ‘unfair’ it is and question why they are being forced to use a different subcontractor. They will offer some waffley response about how they have some Māori staff and have been to a Marae. They may make underhanded comments to Māori and Pasifika businesses and only use them as a tick box activity.

How to move from a dumb contractor to a smart contractor?

We have already seen ‘Dumb Contractors’ lose out on contracts because they have not taken social outcomes and supplier diversity seriously. It will become increasingly prevalent as government agencies embed this practice, as Iwi and Māori land trusts expectations rise, and as corporate Aotearoa makes a stand.

Here is how we suggest organisations pivot to be the smart contractor of choice:

Smart Contractor

Smart Contractor

Believes there are no Māori and Pasifika businesses

Builds relationships with Māori and Pasifika businesses

Thinks there are no large or capable Māori and Pasifika businesses

Connects with Māori and Pasifika businesses and supports capability development if needed

Ignores the need for supplier diversity

Has dedicated resource to support supplier diversity

Thinks all subcontractors should jump through their hoops

Looks for ways to break down barriers in their procurement and onboarding systems

Complains about supplier diversity targets and says things like “that's not fair”, “that’s reverse racism”

Embeds supplier diversity targets in projects even when there are no targets

Says things like “we’ve always done things this way and that’s never going to change”

Has a diverse supply chain

Doesn’t win contracts

Wins contracts

We’ve been very fortunate to have great insights from our whanaunga over the ditch. Now we need to leapfrog those learnings and ‘be smart’. Now is the time to act.

Don’t be a dumb contractor.