1. Whole of government direction Government Rules of Sourcing January 2014

2. Cabinet has proposed: To extend the mandatory application of the Government Rules of Sourcing to cover Crown Entities.

3. Background / Context The world pre – better public services: Strong vertical accountability CEs having autonomy to manage Strong incentives to focus on agency delivery ×Weak incentives for system or sector approaches Department Chief Executive Minister

4. Functional leadership – a key pillar of Better Public Services Functional leaders mandated to drive performance in business functions across the state services Minister Chief Executive

5. Why extend the Rules to Crown Entities? Government spends about $30 billion per year That spend can shape the competitive landscape in New Zealand Used wisely, it can contribute to growth of the domestic economy The Rules set the standard and align New Zealand with best practice internationally They provide a clear and consistent framework: Builds supplier confidence Reduces duplicated effort Improves market performance Supports collaboration Ensures agencies get the most out of the procurement process

6. Process and timeline On 9 December, Cabinet initiated the process for issuing 3 directions (procurement, ICT and property) Proposed procurement direction would cover all Crown Entities except School Boards of Trustees Directed consultation with affected agencies Directed report back in March 2014 Consultation period will close 14 February

7. What next? What are your concerns? What support or assistance will your organisation want or need to implementation the proposed direction? Give us your views!

8. Government Rules of Sourcing

9. What do the Rules cover? Focus mainly on sourcing stages of procurement lifecycle Consistent with Auditor General’s guidance on procurement Include five Procurement Principles

10. Procurement Principles Rule 1

11. When do the Rules apply? $10 million new construction works $100,000 goods, services, refurbishment works Principles always apply. You should take other rules into account when using public money for goods, services or construction works. You must apply Rules when value exceeds thresholds. Rules 1, 7, 8

12. Estimating value Include: everything required for full delivery options to purchase more / to extend contract all contracts that may result from the procurement Fees, commissions etc Exclude GST Estimate the maximum total value over the whole life of the contract Rule 9

13. Open advertising

14. Basic rule: open advertising Publish ‘procurement notices’ on GETS Include all required information Apply required timeframes for responses Rule 14 You must openly advertise if the maximum total estimated value is over the threshold Rule 9

15. Notice of Procurement New requirements include:  Evaluation criteria & any weightings  Upload all related tender docs on GETS if possible  Panel contracts require additional information (see Rule 54) Electronic tendering encouraged Rules 34, 35, 36

16. Tender deadlines Suppliers must be given sufficient time to respond Rule 26 Consider: nature and complexity of procurement level of detail you need level of risk opportunities for subcontracting

17. Minimum times You cannot go below minimum time periods. These vary according to Rfx 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 Rule 27

18. Allowable reductions Minimum times can be reduced when:  Procured listed in APP  All documents available electronically  Suppliers’ responses accepted electronically Reductions vary by process Rule 28

19. Choosing supplier(s) Award contract to the supplier that:  demonstrates capability to deliver  can meet contract conditions  offers value for money (not always lowest price) Inform and debrief unsuccessful suppliers Publish contract award notice Rules 43 - 47

20. Other requirements

21. Procurement processes RFIs are not a tender process New options:  E-auctions: shortlisted suppliers bid on price or quality.  Competitive Dialogue: shortlisted suppliers work with buyer to develop solutions and specifications Rules 42

22. Collaboration All-of-government contracts  mandatory Syndicated contracts  use if they meet your requirements Common capability contracts  mainly ICT, use if they meet your requirements Rules 55- 57

23. Planning Strategic procurement outlooks Annual procurement plans Extended procurement forecasts MBIE review of significant business cases :  $5M+ and/or  significant risk and/or  potential for collaboration Rules 16 - 19

24. Opt-outs and exemptions

25. Opt-out procurements Agencies can opt out of all Rules in certain situations, eg:  Health, education and welfare services  Purchasing/renting land or buildings  Conditional grants  Essential security interests Principles and guidance still apply Agencies still expected to achieve best value for money Rule 13

26. Open advertising exemptions Examples: Additional good services or works (criteria apply) Following unsuccessful open tender (eg no responses met requirements) Only one supplier (eg for technical reasons) Prototype or design contest Emergency Unsolicited unique proposal Rule 15

27. Verify and document rationale Get senior manager endorsement for exemptions Publish contract award notice for exempt procurement, including reason for exemption Opt-outs & exemptions cont’d Rule 45Rule 15 Use opt-outs and exemptions judiciously not automatically

28. Other rules you need to know Existing Cabinet mandates are incorporated eg:  Web standards  Geospatial information  Intellectual property  Public private partnerships  Better business cases (capital projects)  Gateway assurance Rules 58, 60 - 67

29. Identify the best way to meet your needs & get value for money…then consider how Rules apply. Make the process proportionate to the value and complexity of your procurement. Keep good records of your process and decisions (rule 49) Get the best results Balance probity and commercial nous

30. Procurement resources Find the Rules and procurement guidance, tools and templates at: www.procurement.govt.nzwww.procurement.govt.nz Recently published:  Rules training modules  Constructive market engagement  Extended procurement forecasts  Review of significant business cases  Common capability contracts  Unsolicited unique proposals

31. Questions & feedback email: procurement@mbie.govt.nz procurement@mbie.govt.nz or contact: Jessica Allison-Batt Jessica.Allison-Batt@mbie.govt.nz 04 901 2437