Steven Williams
Partner
London
David Parton
Partner
London
Victoria Peckett
Partner
London
about the authors
Adrian Bell
Partner
London
11
Memorandum of (mis)understanding... - CONT.
BuildLaw | July 2019
Additional reporting obligations (rules 53, 70 and 71)
Greater reporting obligations have been implemented in the new Rules. Agencies are required to:
• Provide data and information to the Chief Executive of MBIE on procurement activity including the Broader Outcomes discussed above.
• Submit a completed Procurement Capability Index (PCI) self-assessment to MBIE annually as part of reviewing their own capability;
• Maintain a Significant Service Contracts Framework (SSCF) report, and update it every six months. This framework records contracts that are critically important to the business and pose a significant risk and / or impact in the event of supplier failure.
Uncertainty regarding permissible considerations and weighting
An issue our local authority clients often encounter is whether or not a local authority can favour local suppliers ahead of those outside the district or region in making procurement decisions. This issue can also arise for central Government agencies wanting to prefer local providers.
While the Rules forbid discrimination against international firms, they do not expressly address how a “local verses national” assessment should be approached, nor whether it is even a permissible consideration.
Different industries have different considerations in this area:
• The 2019 Defence Capability Plan contains a chapter on “Working with Industry” with a clear focus on favouring local suppliers and the bold statement “value for money is enhanced when New Zealand based suppliers are engaged in the supply and support of military capacity”. This is laudable, and not uncommon in defence procurement (the Australian submarine purchase programme appeared to have a significant focus where they should be built). However, in the CPTPPA environment foreign suppliers will no doubt watch our procurement processes carefully.
• Local authority approved activities funded by NZTA, and those provided by NZTA itself (such as State highways) must be procured using a procurement procedure approved by NZTA. NZTA has a 250 page manual of procurement procedures designed to meet the statutory objective of “best value for money”.
Being a statutory requirement, the NZTA Procurement Manual will prevail if there is inconsistency with the MBIE Rules.
The NZTA Procurement Manual unambiguously states (in a 2017 amendment) “Purchasers need to be careful not to favour a ‘local’ supplier over one from another district, region or county [sic “country”?] on the basis of a factor that is not relevant to delivery of the required outputs or outcome”.
If you would like advice on the application of these news rules or on updating your procurement practices, please get in touch with one of contacts below.
ABOUT THE AUTHORS
Partner
Special Counsel