Ākina reviews New Zealand Government Procurement Rules
As part of New Zealand Government Procurement’s Rules Review, Ākina submitted feedback directly to New Zealand Government Procurement (NZGP).
Ākina's feedback encompasses our perspective on updates and additions to the current rules and how the current rules are implemented across Government Agencies. Ākina believes that the Rules Review is an opportunity to set best practice from both Agencies who apply the rules and organisations affected by the application of the rules.
9 July 2024
Karen English
Director International Procurement and Trade
New Zealand Government Procurement
Ministry of Business, Innovation and Employment
Dear Karen,
Ākina has set out feedback in two areas, Rule specific: this incorporates feedback on Rule wording and additions and, Rule Implementation: this covers the intent and subsequent understanding of Agencies when applying the Rules and the comment boxes that may be related to the Rule. Further to these we have suggested some future additions to be considered.
In general we believe the Rules should have greater consideration of Te Tiriti o Waitangi and the obligations of the Crown with regards to procurement practice. There are a number of areas where Te Tiriti should be overlayed and considered. These areas will be noted in our feedback.
Ākina Feedback for the New Zealand Government Procurement Rules Review
Summary
The Ākina Foundation has provided feedback in this document for New Zealand Government Procurement (NZGP) to consider. Ākina has set out feedback in two areas, Rule specific: this incorporates feedback on Rule wording and additions and, Rule Implementation: this covers the intent and subsequent understanding of Agencies when applying the Rules and the comment boxes that may be related to the Rule. Further to these we have suggested some future additions to be considered.
In general we believe the Rules should have greater consideration of Te Tiriti ō Waitangi and the obligations of the Crown with regards to procurement practice. There are a number of areas where Te Tiriti should be overlayed and considered. These areas will be noted in our feedback.
We also believe there is an opportunity for the Rules to require greater consideration for Supplier Diversity. There is an opportunity to:
Define Supplier Diversity - to include Social Enterprise / Maori and Pacific businesses. Auckland Council defines supplier diversity as “a strategic and intentional business process that proactively supports and enables businesses owned by minority groups and social enterprises to be engaged in supply chains and business opportunities”.
Introduce Supplier Diversity as a Rule or priority area for procurement, linked to Broader Outcomes.
Consider setting a target for Supplier Diversity for Agencies to report on. This would require a clear definition.
Specific Rule Feedback
Rule 6 / Rule 13 – When the Rules apply / Requirement to openly advertise
The threshold of $100,000 is too low to be commensurate with the cost incurred by both agencies and suppliers in undertaking an open competitive process.
It is noted that $100,000 NZD is based on the value of the New Zealand dollar as at 1 October 2019. This threshold has not changed since the inception of the Procurement Rules in 2013 while inflation and CPI have moved significantly in that time.
In the future this value should be set to inflation or CPI.
Rule 12 – Opt-out Procurements
There is an opportunity to add the contracting of Social Enterprises/impact led organisations to this Rule, this could be similar to Rule 12.3.K – Public Services where it is defined what type of service this Rule applies to. This would allow for Government Agencies to consider the use of services provided by Social Enterprise/impact led organisations without applying the full set of Rules.
There is a further opportunity to add Te Tiriti obligations or requirements to allow for opting out to directly source or commission services when working with Tangata Whenua and/or cultural engagements.
Rule 14 - Exemption from open advertising
The Rule for exemption from open advertising does not go far enough to apply a cultural or Te Tiriti lens. Often agencies will need to try and apply 14.9.c – only one supplier - to these cultural engagements to seek an exemption. The need to consider how you might apply relational contracting or commissioning in a cultural or Te Tiriti space is not included in Rule 14 and it should be. It would be inappropriate for an agency to openly advertise and/or require an arms length tender response when undertaking relational contracting.
Rule 16 – 20 – Broader Outcomes
Incorporate Rules 17-20 into Rule 16 and list priority areas outside of the Rules.
While it is appropriate for the government to outline its priorities, listing them in the Rules in this way reduces flexibility and has meant that agencies have focussed on only these priority areas, to the detriment of delivering other Broader Outcomes.
The priority areas as noted in Rules 17-20 could be held on the NZGP website with a link in the Rules, this would allow for flexibility should priority areas be added or changed in the future without the need to change the Rules.
Place greater focus on impact when delivering Broader Outcomes. What is the social, environmental or cultural change that is created through this procurement process, and how is that evidenced? The Rules have an opportunity to focus government expenditure on delivering positive outcomes and measuring and reporting on those outcomes.
Rule 19 – Improving conditions for New Zealand workers
We suggest that Rule 19 could go further. Agencies ensuring that Employment and Health and Safety requirements are part of a contract should be considered standard practice for Government procurement as these areas are legislated. There is an opportunity to go further and ensure that Government procurement is leading the way by requiring best practice for employment outcomes, such as the living wage and employee diversity for example.
Rule 20 – Transitioning to a net zero emissions economy
We suggest that this Rule could go further by changing the language of point 1 from ‘should’ to ‘must’. This would place more requirement on agencies to weave sustainable procurement into their procurements and contracts.
Rule 31 and 34 – Minimum time periods
In short the minimum times as presented are too short, create incumbency bias and reduce innovation. The allowable reductions are too generous and do nothing to aid the supplier’s ability to respond more quickly.
If all allowable reductions are taken up on an RFP then the minimum response time becomes 15 working days, this amount of time does not allow for a full, comprehensive and well thought out response, it does not allow for innovation, partnership, collaboration or cultural realities.
There is no connection between minimum time periods and the value, complexity or risk of the procurement process.
Current reductions are not fit for purpose and are too generous:
Prior listing in Annual Procurement Plan – now Future Procurement Opportunities.
These listings are frequently a title only, or a very brief description of the good or service. These do not hold enough valuable or appropriate information for a supplier to have a meaningful head start on preparing for a future tender.
All documents available electronically
In 2024 this should be expected as normal practice and no reduction should apply. Paper based (non-digital) issuing of RFx documentation should not be allowed.
Responses accepted electronically
This is the same as the above, this is normal practice and good procurement, no reduction should apply.
New reductions that could replace the current reductions:
Buyers that hold supplier briefings either one on one with potential respondents or in a one off session with potential for follow up sessions. These should be held 4 weeks prior to the RFx release to allow suppliers to be prepared to respond.
Multi step processes that involve presentations with reduced written documentation could also have reductions as the burden sits less with the written document.
Advanced Notice that includes the Rfx specification, at least 10 Working Days before the RFx release. The current requirement for an Advanced Notice of 3 Working Days, with limited detail, does not allow a supplier to start work on their response in any meaningful way.
Specific Rule Implementation Feedback
Rule 58 – AoG Contracts
There is a need to clarify expected practice when agencies undertake a secondary procurement process via one of the AoG panels. Agencies will often undertake closed competitive tenders when awarding work from an AoG panel, which is not the intended purpose of the panels. These processes are often detailed and as time consuming open tender processes. This is adding high costs on all suppliers invited to complete full, rigorous tender documents when agencies could confidently either direct source or run a lite closed tender process.
This disproportionately affects small and medium sized businesses who do not have resources dedicated to responding to RFx documents.
There must be greater clarity provided in the Rules to empower agencies to use AoG Panel Contracts as they are intended. NZGP could consider creating Rules around proportionality of secondary procurement processes to ensure only high value, high risk procurements have the full rigor of a RFP or multi step process.
Application of The Rules
Rule 48 – Contract award notice
We would like to see greater application of the Rule 48 that requires agencies to announce on GETS successful parties - in our experience this is rare.
Timelines
There also needs to be greater accountability and consequences for delays in procurement processes. New Zealand Government Procurement and the Rules should be clear what the valid reasons for delay are. From experience there are a number of reasons provided for delays:
More responses received than expected
Evaluators away sick
More consideration is required of what is deemed appropriate in the context of a RFx respondent not being able to submit responses late due to the same reasons. These reasons should be comparable for both sides of the procurement process.
How can the Rules be used to increase accountability of agencies. Could there be minimum or maximum time for evaluations? How can technology be used to assist agencies to run quicker procurement evaluation processes?
Likewise when procurement processes get cancelled after suppliers have submitted their response. What is the consequence to agencies? There should at a minimum be a notice on GETS and MBIE should be notified. This data should be publicly reported via the NZGP website.
