New Government Procurement rules announced (4th edition)
Michael Weatherall and Lisa Curran
The 4th edition of the Government Procurement Rules (Rules) were published this month. They are the good practice standards for government procurement, and were last substantially revised in March 2015.
The Rules apply to all public service departments, police, defence force and state services agencies, with a number of other central and local government agencies expected or encouraged to have regard to the Rules. Government agencies spend approximately $41 billion dollars (around 18 percent of New Zealand’s GDP) annually on goods and services from external suppliers. The Rules are key to the Government’s effort to deliver better public value and public services. Government agencies have until 1 October this year to prepare for the new Rules, although they are able to adopt the Rules immediately. Material changes include: • A wider range of factors to be taken into account during the process of sourcing. •Changes to construction procurement. •Increased reporting obligations. In this FYI, we highlight some of the key changes. Using procurement to achieve broader social and economic outcomes The 3rd edition of the Rules broadly referenced the need for agencies to make balanced decisions which considered the social, environmental and economic effects of deals made. The new Rules are more prescriptive, expressly encouraging and in some cases requiring agencies to consider secondary benefits, including environmental, social, economic and cultural outcomes when making sourcing decisions. Implementing Priority Outcomes The Rules identify four Priority Outcomes, that few would dispute: • Increase New Zealand businesses’ access to government procurement. • Increase the size and skill level of the domestic construction sector workforce. • Improve conditions for workers and future-proof the ability of New Zealand businesses to trade. • Support the transition to a net zero emissions economy and assist the Government to meet its goal of significant reduction in waste by 2020 and beyond. The priority outcomes are not mandatory for all agencies. The Government will designate particular contracts or sectors where one or more of these priority outcomes must be implemented. Increasing access for New Zealand businesses When procuring construction contracts, agencies must consider how they can create opportunities for New Zealand businesses. This recognises that domestic firms may have lower work capacity and are less able to utilise economies of scale than international competitors. Following sourcing, agencies are required to monitor the commitments made by contracted parties relating to increasing access for NZ businesses.