Government Rules of Sourcing An overview for suppliers June 2013

Objectives To provide information on the new Rules – what they do and don’t do To increase understanding of Government’s expectations on procurement

Why is procurement important? Increasingly public services delivered by businesses $30b annual spend across government on goods and services Choosing right supplier is critical

Rules are part of procurement reform Encourage procurement professionals to upskill Simplify, streamline processes - tools, templates and model contracts Unlock savings for agencies Create an environment for business to succeed A cultural change is underway

Why do we have Rules Set the standard for procurement Promote open, competitive, transparent government procurement More consistent process Encourage commercial practice Strengthen accountability Help us to honour our agreements with trade partners

Why do you need to know about the Rules To compete successfully you need to understand the environment in which agencies operate To assist us with ensuring accountability

What are the Rules? Focus mainly on the sourcing stages of the procurement lifecycle Come into effect on 1 October 2013 rules

When do the Rules apply? Various levels of application  Departments/ministries must apply them  Other agencies such as Crown entities, universities, SOEs are encouraged to apply them as good practice Apply to contracts estimated to be over $100,000 Don’t apply to grants, employment contracts, investments, etc Sometimes closed competition or direct sourcing is okay

Rule #1 apply the Principles

Basic rule: advertise “Wherever possible an agency should use open competitive procurement processes to give all suppliers the opportunity to compete.” Government should openly advertise

GETS Government departments must advertise on GETS But there are other places where opportunities can be advertised (eg Tenderlink, trade journals, etc) Register on GETS!

Value for Money Take account of total cost of ownership, not just acquisition cost Consider wider benefits, including economic, environmental and social sustainability Value for money over whole of life

‘Sufficient time’ Agencies must allow suppliers sufficient time to respond Take into account: Nature and complexity of procurement Level of detail you need Opportunities for subcontracting Level of risk

Minimum time period “10 day” rule gone New minimum time periods by process Procurement processMinimum time period Request for Quote13 business days Registration of Interest Expression of Interest 20 business days Request for Tender Request for Proposal 25 business days

Allowable reductions Deductions for: Prior listing in APP All documents available electronically Suppliers’ responses accepted electronically Note: Different processes allow different numbers of days for reductions.

Evaluation Criteria Must include evaluation criteria Must include relative importance of the criteria Relative importance can be indicated in a number of ways, including weightings, ranking, or the amount of information requested

Panel contracts Notice of Procurement must include : the terms and conditions that will apply the method the agency will use to award contracts to suppliers on the Panel the period of time the Panel will be established for whether the Panel is ‘open’ or ‘closed’ any circumstances that may lead to a supplier being removed from the Panel..

Innovation IP rights – transparency + potential to negotiate Permit and encourage engagement with the market Encourage use of design contests in appropriate circumstances Unsolicited unique proposals – a structured approach to assessing truly unique ideas that deliver exceptional benefits Competitive dialogue – an open and competitive procurement process where suppliers work with the agency to develop a solution/s

Standards Standards are not prescribed by the Rules Gives agencies flexibility to prescribe standard fit for purpose Where standards are used, they are to be based on international standards where they exist, or national standards or building code ANZ standards are an international standard!

Use of standardised documents Required use of government model contracts for low value/low risk contracts Standardised RFP/RFT – under pilot now - coming soon And other standardised documents as these are developed

Prior government experience Not allowed as a condition of contract But request for relevant experience is allowed

What about local content? Cannot be a condition of contract But agencies can and should consider the advantages of local supply Example – in order to be awarded the contract, you must be a New Zealand company – NOT ALLOWED Example – in order to be awarded the contract, you must demonstrate that you can respond to faults within 30 minutes - OKAY

What’s next Success depends on good implementation MBIE to support agencies with: Training Information Guides

More information Or Call me, Karen English,

Questions? ?