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

procurement@mbie.govt.nz

� 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?