Government Procurement -
What suppliers need to know
New Zealand Infrastructure Summit 1st-2nd April 2014
Shayne Gray
NZ Government Procurement - Context
• Very tight fiscal environment - reduce cost and risk
• Canterbury rebuild
• Culture of risk aversion in government procurement
• A need to professionalise procurement
• Shortfall in procurement capability (agency & individual)
• Support free trade negotiations
• Support economic growth
• A need to be fast, agile and flexible
Government Procurement
From
Reform…
…to
Functional
Leadership
Procurement Functional Leadership
Unlock cost
savings
Create
environment
for NZ
businesses to
succeed
Increase
performance,
add value,
maximise
results
• Integrate procurement strategies with
government’s objectives
• Establish what we buy, how much we spend &
with whom
• Aggregate areas of common spend
• Change buyer behaviour
• Develop procurement profession & leadership
• Build confidence in government as a trusted
partner
• Strengthen commercial acumen & build
sustainable outcomes
• Benchmark performance & improve results
• Simplify policy & standardise good practice
• Make it easy to do business with government
• Foster relationships responsive to business
• Stimulate supplier performance - drive efficiency
& productivity
• Seek innovation & increase competitiveness
• Improve access to international markets
�
�
• Capability development highest priority
• Centre-led, not centralisation
• Strong leadership and support – including commercial pool of procurers to help agencies and support for collaborative opportunities
• Recognises the value procurement can add
• We now strive to deliver great outcomes rather than just good process
PFL – what does it really mean?
• Meeting the needs of both government
+ suppliers
• Reducing costs for government +
suppliers: not a zero sum game
• Ensuring government procurers can
‘walk the talk’
• Changing a culture developed over
generations
The tightrope – Its never easy
An overview
Government Rules of Sourcing
Good process + good results
� Plain English format that is
easier to understand
� Move away from strict legal
interpretation
� Provide context for agencies to
apply sound judgment
� Help develop capability
What do the Rules cover?
� Focus mainly on sourcingstages of procurement lifecycle
� Include five Procurement Principles
� Consistent with Auditor General’s guidance on procurement
Procurement Principles
Rule 1
Who do the Rules apply to?
Required
Expected
Encouraged
Rule 6
Encouraged
When do the Rules apply?
$10 million
new construction works
$100,000
goods, services,
refurbishment works
• Principles always apply
• Rules should take them into account when using public
money for goods, services or construction works and
must apply them when value exceeds thresholds.
Rules 1, 7, 8
Estimating value
That includes:
� everything required for full delivery
� options to purchase more / to extend contract
� all contracts that may result from the procurement
� fees, commissions etc
� revenue streams for supplier (eg tolls)
Estimate the maximum total value over the whole life of the contract
Rule 9
Basic rule = open advertising
Rule 14
You must openly advertise on GETS ifthe maximum total estimated value
of your procurement is over the threshold
Rule 9
What’s in a Notice of Procurement?
� All relevant information – some new
requirements include:� Evaluation criteria & any weightings
� Make all related tender docs available on GETS if possible
� Panel contracts require additional information (see Rule 54)
� Use e-tendering if possible
� New timeframes for supplier responses
Rules 34, 35, 36
Suppliers must be given sufficient timeto respond
Tender deadlines
Rule 26
Things to consider:�nature and complexity of procurement� level of detail you need� level of risk�opportunities for subcontracting�minimum time requirements
Minimum times
Vary by process:
Agencies cannot go below minimum time
periods unless allowable reductions apply
Procurement process Minimum time period
• Request for Quote 13 business days
• Registration of Interest• Expression of Interest
20 business days
• Request for Tender• Request for Proposal
25 business days
Rule 27
Allowable reductions
� Minimum times can be reduced when:
�Procurement is listed in an agencies APP
�All documents are available electronically
�Suppliers’ responses accepted electronically
� Reductions vary by process
Rule 28
Procurement processes
� New options:
�E-auctions: shortlisted suppliers bid on price
or quality.
�Competitive Dialogue: shortlisted suppliers
work with buyer to develop solutions and
specifications before competitive round
�RFI is not a tender process
Rules 42
Choosing supplier(s)
� Award contract to supplier(s) that:
�demonstrates capability to deliver
�can meet contract conditions
�offers value for money (not always lowest price)
� Inform and debrief unsuccessful suppliers
� Publish contract award notice
Rules 43 - 47
Opt-outs and exemptions
Opt-out procurements
Agencies can opt out of all Rules in certain situations, eg:
� Health, education and welfare services
� Purchasing/renting land or buildings
� Conditional grants
� Essential security interests
� Principles and guidance still apply
� Agencies still expected to achieve best value for money
Rule 13
Open advertising exemptions
Agencies can opt out of open advertising
in some situations, eg:� Additional good services or works (criteria apply)
� Following unsuccessful open tender (eg no responses met
requirements)
� Only one supplier (eg for technical reasons)
� Prototype or design contest
� Emergency (includes small-scale urgent needs)
� Unsolicited unique proposal
Rule 15
� Use opt-outs and exemptions judiciously not automatically
� Verify and document rationale
� Get appropriate level of sign off
� If relying on an exemption, agencies still need to publish contract award notice
Opt-outs & exemptions cont’d
Rule 45Rule 15
� Identify the best way to meet needs & get value for
money…then consider how Rules apply
� Make the process proportionate to the value and complexity
of your procurement
� Keep good records of your process and decisions (rule 49)
Get the best results
Balance probity and commercial nous
Other rules you need to know
Collaborative contracts
� All-of-government contracts
o mandatory for Public Service and State Service
� Syndicated contracts
o agencies can use if they meet their requirements
� Common capability contracts (mainly ICT)
o agencies can use if they meet their requirements
Rules 55- 57
Planning
� Strategic procurement outlooks
� Annual procurement plans
� Extended procurement forecasts
� MBIE review of significant business cases:
� $5M+ and/or
� significant risk and/or
� potential for collaboration
Rules 16 - 19
Procurement related directives
Existing Cabinet directives incorporated in
Rules include:
�Web standards
�Geospatial information
� Intellectual property
�Public private partnerships
�Better business cases (capital projects)
�Gateway assurance
Rules 58, 60 - 67
Where to find help
Contacts
� Email questions to
� Find the Rules and procurement guidance,
tools and templates at:
www.procurement.government.nz
Procurement resources in the pipeline
� Coming soon:
� Rfx templates
� Model policy
� Recently published:
� Rules training modules
� Extended procurement forecasts guide
� Review of significant business cases guide
� Previously published:
� Mastering procurement (general guidance)
Questions?
