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Government Rules of Sourcing Training Presentation

New Rules training module This presentation provides information about: 1. Rules and Principles 7. Existing Cabinet directives now part of the Rules 6. Other new Rules 5. Notice of Procurement 4. Response times, minimum time periods and allowable reductions 3. Non-procurement activities, opt-out procurement and exemptions from open advertising 2. Application of the Rules

Section One Rules and Principles

The Rules set out the standards we work to The Principles represent our values

Why do we have Rules? To strengthen accountability To promote our values To encourage commercial practice To support economic development The Rules set out the government standards for all of the sourcing stages of the procurement lifecycle

What are the values that underpin the Rules? The five principles of procurement A new rule sets out the five principles of procurement: Youll learn more about these over the next few screens. Rule 1

Principle 1 Rule 1

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Principle 2 Rule 1

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Principle 3 Rule 1

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Principle 4 Rule 1

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Principle 5 Rule 1

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The Principles Each agency must have in place policies that incorporate the five Principles The Principles apply to all procurements, even if the Rules dont apply Each agency must make sure that: o all procurement staff have been trained in the Principles o its procurement practices reflect the Principles o for each procurement, it is able to show good planning and an appropriate market strategy Rule 1

Section Two Application of the Rules

Who do the Rules apply to? Government in New Zealand is made up of four tiers, each of which has different levels of responsibility and oversight by central government Some agencies are required to apply the Rules Other agencies are expected or encouraged to apply the Rules

Who do the Rules apply to? continued Tier 1: Public Service Must apply the Rules} Ministries and Departments (includes NZ Police and NZ Defence Force)

Who do the Rules apply to? continued Tier 2: State Services Expected to have regard for the Rules as good practice guidance eg ACC, DHBs, Crown Research Institute

Who do the Rules apply to? continued eg universities, State Owned Enterprises, Regional Councils, local government Tiers 3 & 4: Encouraged to regard the Rules as good practice guidance

Section Three Non-procurement activities, opt-out procurement and exemptions from open advertising

When the Rules dont apply The Rules dont apply in two broad areas: Opt-out procurements Non-procurement activities In addition, there are exemptions from open advertising Rule 15 Rule 13 Rule 12

For the Rules, these activities are not considered to be procurement activities: a. Non-procurement activities employing staff (excluding contractors and consultants) Category 1 Legal Services Ministerial appointments statutory appointments gifts, donations and any form of unconditional grants investments, loans and guarantees disposals and sales by tender Rule 12

What is an opt-out procurement? b. Opt-out procurements These circumstances are called opt-out procurements Rule 13 If a procurement is covered by the Rules, in some circumstances an agency can opt-out of applying the Rules

b. Opt-out procurements continued The circumstances in which an agency can opt out of the Rules: government offices overseas purchased overseas / for use overseas non-contractual arrangement purchasing or renting land and buildings conditional grant some forms of international development assistance between government departments, NZ Police or NZ Defence Continued on the next screen Rule 13.3

b. Opt-out procurements continued The circumstances in which an agency can opt out of the Rules: international agreements between countries public services, eg, certain types of health service governments central financial control functions military and essential security interests international funding that is subject to another process international organisations procurement processes Rule 13.3

Exemptions from open advertising An agency does not need to openly advertise a contract opportunity on GETS if an exemption from open advertising applies following an open tender if there is only one supplier, for example: in an emergency Where a procurement can be exempt from open advertising all other Rules still apply in the case of an unsolicited proposal Rule 15.9

Exemption to open advertising continued All other Rules still apply, even when an exemption to open advertising has been claimed These Rules include: Rule 45.2.h Rule 46 Rule 45.1 an agency must offer each unsuccessful supplier a de-brief the circumstances of the exemption must justify the exemption the agency must publish a Contract Award Notice when it has awarded the contract the Contract Award Notice must state the reasons for the exemption to open advertising

Section Four Response Times, Minimum Time Periods and Allowable Reductions

Sufficient time How much time should I give suppliers to respond? Unrealistic time periods introduce unnecessary risk Dont jeopardise your results with a rushed process Put yourself in the suppliers shoes to work out how much time is Sufficient Time Rule 26 An agency must allow Sufficient Time for suppliers to respond to a Notice of Procurement

Sufficient time continued Ask yourself: how long it will take to: ask questions to clarify the requirements and get answers? prepare a meaningful response including accurate pricing information? develop, check and submit a response including delivering it on time? Rule 26 obtain, read and analyse all tender documents?

Sufficient time continued An agency must act in good faith and use sound judgement when calculating Sufficient Time What is considered to be Sufficient time will always vary, depending on the nature and complexity of the procurement Rule 26

Sufficient time continued The key factors to take into account when calculating Sufficient Time include: the nature and complexity of the procurement the amount of information and level of detail that suppliers must provide in their responses the type of goods, services or works how simple or hard it is to describe deliverables the level of risk the extent of any possible subcontracting how critical the procurement is to the agencys success the time it takes for domestic and foreign suppliers to submit tenders Rule 26

Sufficient time continued Example 1: Simple one-step Request for Quote The request is for a large quantity of an off-the-shelf product at short notice You need a fixed price and a guaranteed delivery date Rule 26

Sufficient time continued Example 2: One-step Request for Proposal You need a review of a social policy programme This requires experts who will provide their own methodology, work plan, budget quote and timeline for delivery Rule 26

Minimum time periods Minimum Time Periods The Sufficient Time that an agency sets for a procurement must not be less than: Rule 31 Rule 26 Rule 27 o the Minimum Time Period, or The ten-day rule no longer applies! The Rules set Minimum Time Periods for different procurement processes o the new Minimum Time Period, after Allowable Reductions

Minimum time periods continued Rule 31 The following Minimum Time Periods apply: One-step processes: Multi-step processes: ProcessMinimum time period RFQ13 business days RFT or RFP25 business days Step / processMinimum time period Step one: ROI, EOI, ITP20 business days Step two: RFT, RFP25 business days

Allowable Reductions In some circumstances reductions to the Minimum Time Period are allowable If any of these Allowable Reductions apply, you can deduct them from the Minimum Time Period The result is the new Minimum Time Period Rule 28

Allowable Reductions continued An agency can claim Allowable Reductions if it complies with the requirements in any of the following circumstances: a prior listing in Annual Procurement Plan all documents are made available electronically responses are accepted electronically Rule 28

Minimum time period and allowable reductions for a one-step process: Allowable Reductions continued Business Days One-step processRFQRFT / RFP Minimum time period (Rule 27)1325 Allowable Reductions (Rule 28): Prior listing in an Annual Procurement Plan-3 All tender documents available electronically on GETS-3-4 Suppliers tenders or proposals accepted electronically-3 Minimum time period allowed, if allowable reductions apply815 Rule 28

Minimum time period and allowable reductions for step one of a multi-step process: Allowable Reductions continued Step one of a multi-step processBusiness Days Minimum time period (Rule 27)20 Allowable Reductions (Rule 28): Prior listing in an Annual Procurement Plan-3 All tender documents available electronically on GETS-4 Suppliers tenders or proposals accepted electronically-3 Minimum time period allowed, if allowable reductions apply10 Rule 27 Rule 28

Minimum time period and allowable reductions for step two of a multi-step process: Allowable Reductions continued Step two of a multi-step processBusiness Days Minimum time period (Rule 27)25 Allowable Reductions (Rule 28): All tender documents available electronically on GETS-5 Suppliers tenders or proposals accepted electronically-5 Minimum time period allowed, if allowable reductions apply15 Rule 28

Section Five Notice of Procurement

Notice of procurement What is a Notice of Procurement? It includes all the information that suppliers need to know in order to prepare and submit a meaningful response Rule 34 A notice published on GETS that advertises a new contract opportunity, eg, a Registration of Interest or a Request for Tender

Notice of procurement continued Everything to help suppliers prepare meaningful responses Which procurement process is being used, eg, RFQ or RFP Contact details and descriptions of the goods / services Any conditions, including any pre-conditions or standards Any limits on the number of shortlisted suppliers The evaluation criteria and their importance / ranking The deadline and address for submitting responses Rule 34 What should I include in my Notice of Procurement?

Notice of procurement continued What should I include in my Notice of Procurement? Any limits on how suppliers can send responses Any other conditions relating to the procurement process The proposed contract conditions If procurement will be done electronically, all information suppliers will need to participate electronically The rules of an e-auction and info suppliers need to participate, if applicable Rule 34

Delivery date how complex the procurement is how much sub-contracting there might be how long it will take to produce and transport goods how long it will take to deliver services Rule 23 When identifying a delivery date take into account:

E-auction An e-auction is an online reverse auction - it gives suppliers the opportunity to bid against each other to improve their offers This advance notice must be in the Notice of Procurement which must include: o a summary of the rules that will apply to the e-auction o the specific criteria that will be used in the e-auction Rule 42 An agency must notify suppliers in advance if it intends to run an e-auction

Types of supply lists Rule 54Rule 53 Rule 52 If an agency regularly purchases a specific type of product, service or works it may establish a list of suppliers Panel of Suppliers Pre-qualified Suppliers List Common types of lists include: Registered Suppliers List

Types of supply lists continued Rule 54Rule 53 Rule 52 Registered Suppliers List: A list of suppliers who have been preapproved by an agency as capable of delivering specific types of goods, services or works Panel of Suppliers: A list of suppliers who have registered an interest in supplying specific types of goods, services or works Pre-qualified Suppliers List: A list of suppliers who have been preapproved by an agency, and who have agreed to the terms and conditions for supply

Section Six Other new Rules

New Rules Several Rules have been added since the Procurement Rules were last released The new Rules include: o Rule 18: Extended Procurement Forecast o Rule 19: Significant Business Cases o Rule 57: Common Capability contracts Rule 57Rule 19Rule 18

Extended Procurement Forecast An Extended Procurement Forecast (EPF) is a list of forecast contract opportunities over the next 5 years Agencies must give an EPF to MBIE for review, for all procurements that: o have a value of $5million or more, or o pose significant risk, or o have the potential for collaboration EPFs are for cross-government planning purposes only Agencies must update their EPF at least once a year Updated EPFs are due by 1 October each year Rule 18

Significant Business Cases An agency must give to MBIE for review its Business Case for any procurements that fall into one or more of these categories: Rule 19 This is a supportive peer review An agency should take note of MBIEs advice o have a value of $5million or more, or o pose significant risk, or o have the potential for collaboration

Significant Business Cases continued This requirement doesnt apply where a Business Case is subject to review under another governance process Rule 57 Rule 63 Rule 56 o the Syndicated Contract process, or o the Common Capability contract process Rule 19, for example: o the Better Business Cases process

Common Capability contracts Common Capability contracts (CCs) are a type of approved collaborative contracts between government and approved suppliers Rule 57

Common Capability contracts continued Rule 57 There are two types of CC contracts: Mandatory CC contracts o an agency must purchase from these contracts where the contract reasonably meets the agencys needs Voluntary CC contracts o an agency should purchase from these contracts where the contract meets the agencys needs o an agency that wants to opt-out of purchasing from this type of contract must seek the approval of the relevant Functional Leader

Common Capability contracts continued CC contracts differ from other contracts: The lead agency may charge a participating agency an admin fee A supplier acting for an agency may purchase from a CC contract Rule 57 Before approaching the market for goods, services or works an agency should check if there is an existing CC contract that meets its needs

Section Seven Existing Cabinet directives now included in the Rules

Existing Cabinet directives now included There are several cabinet directives that are now included in the Rules The Rules provide links to other websites where details can be found

Prompt payment Each agency should ensure prompt payment of suppliers invoices At a minimum, invoices must be paid in accordance with their contract terms and conditions - or earlier if possible Rule 48

All-of-Government Contracts (AoGs) An All-of-Government contract (AoG) is a type of approved collaborative contract Rule 55 Examples of the types of common goods and services are office consumables, vehicles and travel AoGs establish a single supply agreement between the Crown and approved suppliers for the supply of selected common goods, services and works purchased across government

All-of-Government Contracts (AoGs) continued Before approaching the market an agency should check if there is an existing AoG which meets their needs All agencies must purchase from the AoGs, unless there is a good reason not to Rule 55

Syndicated Contracts Syndicated Contracts typically involve a cluster of agencies combining their needs and going to market together They typically include a Common Use Provision (CUP) clause in the contract, to allow other agencies to join the contract later Agencies wishing to establish a Syndicated Contract with a CUP clause must get approval from MBIE before publishing a Notice of Procurement Before approaching the market an agency should check if there is already a Syndicated Contract that meets their needs Rule 56

Web Standards If an agency outsources web development work, it must include a requirement in its Notice of Procurement, and contract for the work to comply with the latest version of the New Zealand Government Web Standards Rule 58

Approved Government Model Templates From time to time, the Chief Executive of MBIE, as the Procurement Functional Leader, issues Approved Government Model Templates (A-GMTs) Rule 59 Agencies must use these templates in their procurement activities, regardless of whether or not the Rules apply to the procurement An example of an A-GMT is the Government Model Contract (GMC)

Geospatial Information and Services If an agency intends to procure geospatial information or services it must first contact the New Zealand Geospatial Office (NZGO) ( before: o approaching the market or o publishing a Notice of Procurement Rule 60

Intellectual Property If a procurement involves creation by the supplier of new Intellectual Property, the agency should advise its intentions about: o ownership, o licensing, and o future commercialisation of that Intellectual Property Rule 61 Agencies should take these guidelines into account

Public Private Partnerships (PPPs) The PPP Team in the Treasury oversees all Public Private Partnership (PPP) arrangements Rule 62 All capital projects of $25 million or more must consider PPP

Public Private Partnerships (PPPs) continued If an agency wishes to do a Public Private Partnership (PPP): Rule 62 o the PPP Team should be involved in the economic and financial assessment and advice on the PPP o the agency should give the PPP Team the chance to make an experienced officer available to the project steering and working groups, and o the agency must consult the PPP Team early in the development of the PPP proposal

Capital Business Cases Cabinet approval is required for some capital expenditure, lease or asset disposal proposals from Departments, Crown agents or other Crown entities Rule 63 A capital asset project that meets one of more of the criteria shown on the next slide must: o consult with the Treasury, and o use the Treasurys Better Business Cases (BBC) methodology

Capital Business Cases continued The criteria are: o any project that requires new Crown funding Rule 63 o any project that is a potential PPP o any project with a whole-of-life cost of $25 million or more o any project identified as high risk in the Gateway Risk Profile Assessment o any programme / project involving asset disposals with significant policy decisions

Gateway assurance Gateway is an assurance review process for major investments Rule 64 It examines programmes and projects at key decision points in their lifecycle to provide assurance that they can proceed successfully to the next stage Gateway assurance is part of Treasurys Capital Asset Management regime and is managed by the State Services Commission

Timber and wood products When procuring timber and wood products, agencies must apply the New Zealand Timber and Wood Products Procurement Policy Rule 65

Employee transfer costs In certain situations an agency must disclose the costs relating to the transfer of employees due to a restructuring Rule 66 The circumstances are contained in the the Employment Relations Act 2000, Part 6A and Schedule 1A In relation to a procurement activity the disclosure costs must be made available to prospective suppliers (new employers) who ask for them if: o the restructuring is the subject of a tender, and o the type of employees affected falls within a category listed in the Act

Property Services Industry Agencies must recognise the Principles for a Sustainable Property Services Industry in their procurement of property services Rule 67

For further information about procurement, go to:

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