The government has cut $12 million a year from its mobile phone bill after tying up the three major players in a public sector-wide deal.

Telecom's Gen-I, Vodafone New Zealand and Two Degrees Mobile have signed up to an all-of-government procurement contract that will reduce bill for mobile voice and data services by $60 million over the next five years, said Economic Development Minister Steven Joyce.

"We are continuing to show the substantial negotiating power of government when procuring for all-of-government services," Joyce said. "Mobile voice and data services are a significant cost for government so these new contacts are a great result."

The new procurement agreements across the entire public sector have achieved annual cost reductions of some $23 million for the office equipment and passenger vehicle procurement, $18 million from the legal advice, and $10 million from air travel.


Joyce said the latest contract will take total savings to some $350 million.

The Government Procurement Reform Programme, managed by the Ministry of Economic Development with the Department of Internal Affairs, is also developing contracts for banking services, energy management, advertising, travel management and recruitment.

The recruitment tender is looking to trim $69 million a year from the government's annual $230 million spend on recruitment agencies.