Government slashes procurement rules in promised reboot

Economic Growth Minister Nicola Willis. Photo / RNZ, Samuel Rillstone

By Anneke Smith of RNZ

The Government has slashed its procurement rules by a third in an effort to make it easier for local companies to win contracts.

The coalition signalled it would scale back the rules that agencies have to follow when tendering contracts, worth an annual $50 billion, in March.

Cabinet has now agreed to cut the rules from 71 to 47, and introduce a new “economic benefit to New Zealand” test that measures any wider gains to the country.

The test requires 10% of the procurement decision to be based on how much a business proposal benefits the economy, giving extra weight to the use of local companies, job creation and training to upskill local workers.

Economic Growth Minister Nicola Willis said the coalition considered more than 900 submissions during its consultation on the new rules.

“Businesses shared that the lack of weighting for New Zealand’s interests in the evaluation criteria was holding them back.

“That’s why we’re introducing a new economic benefit to New Zealand test that will apply to every procurement to ensure we are creating value and jobs for Kiwis.”

Willis said the new test would also encourage international companies bidding for government contracts to demonstrate a commitment to creating value in New Zealand.

She said the purpose of the changes was to make it easier for local businesses to win government contracts, either directly, or as subcontractors in the supply chain.

“The new rules will apply to all goods, services, and refurbishment contracts worth more than $100,000 and all construction contracts over $9 million.

“Contracts below these thresholds are expected to be awarded to capable local businesses.”

The new rules will take effect on December 1.