Change on the horizon – what you need to know about the proposed new Government Procurement Rules
Travis Tomlinson
The Ministry of Business, Innovation and Employment (MBIE) recently released its proposed ‘Government Procurement Rules’ 4th Edition (the 4th Edition) for consultation. Once implemented, the 4th Edition will replace the ‘Government Rules of Sourcing’ 3rd edition (the 3rd Edition). On 31 January 2019 we released this article, introducing those changes that MBIE is particularly interested to receive feedback on, the timeframes for submissions and how submissions can be made. Submissions are now closed but it is still important for all participants in public sector procurement to be aware of what the proposed changes are and how these may affect them. This article now examines these key themes and provides our key observations and some suggestions on how the industry can front-foot the changes. In the first section of this article, we have summarised four key themes to the changes. Further on, we provide more context and our suggested approaches to those parties likely to be involved in public sector procurement.
Summary of Changes Theme One: a greater focus on achieving “public value”, including Broader Outcomes The most prevalent feature of the 4th Edition is MBIE’s drive to leverage procurement activities to achieve ‘Broader Outcomes’, which are the secondary benefits (such as environmental, social, economic or cultural) generated from a procurement activity. The term “value for money” no longer features in the 4th Edition – instead, the emphasis is now on “public value” which the Rules explain to mean “considerations that are not solely focused on price, for instance what benefit a procurement could bring to the local community or environment”. April 2013 and 31 March 2014) would only receive 1.6 ROCs per MWh for 20 years. A small difference in commissioning date could therefore have a significant impact on project revenues for the life of the project. Theme Two: setting clear Government expectations for ethical and sustainable procurement behaviour including the supply chain The 4th Edition introduces two new documents: the Government Procurement Charter (the Charter) and the Supplier Code of Conduct (the Code). The Charter and Code set out Government’s expectations of agencies’ and suppliers’ conduct in procurement activities. Agencies are required to have in place policies which incorporate the Charter. Suppliers are expected to use the Code as a minimum standard for its conduct generally. While the Code is not mandatory, agencies have the ability to remove suppliers who offend the Code.
Theme Three: a greater focus on risk allocation and standardisation The 4th Edition acknowledges that good procurement is about being “risk aware, not risk averse” and for the first time directly addresses risk allocation by requiring that agencies “manage risk