The New Zealand government market
This section covers the following topics:
- Overview of the NZ government market
- How government agencies buy goods and services
- Collaborative contracts
The New Zealand government’s procurement programme is a multibillion-dollar operation. The NZ State sector spends approximately $30 billion on goods and services, including infrastructure, each year.
As you can imagine, the government’s ‘shopping list’ is varied. It ranges from simple, one-off purchases to multi-million-dollar technology projects and construction programmes.
The New Zealand government is made up of nearly 200 separate government agencies.
Each agency is responsible for its own day-to-day operations, including business decisions about buying goods and services. Sometimes, agencies come together to buy goods or services through collaborative contracts. State sector agencies aim to spend taxpayers’ money responsibly by making sure they get value for money and high quality in everything they buy. They also aim to treat their suppliers fairly and consistently.
All agencies have procurement standards they must meet. The Office of the Auditor-General and the Ministry of Business, Innovation and Employment have issued several policies that inform government procurement. In addition to these government-wide policies, each agency has its own procurement policy that governs its day-to-day operations.
The Principles of Government Procurement, the Government Rules of Sourcing (where they apply) and good practice guidance provide a broad framework to help agencies to get the best out of suppliers and achieve better procurement outcomes.
The Rules apply to contracts with the following values:
- Goods and services – $100,000 or more
- Construction services – $10 million or more
Collaboration by government in buying goods and services generates benefits for both government agencies and businesses. Combining procurement needs and leveraging the resulting volume and spend provides:
For government agencies
- favourable contract terms – not just pricing, but also high quality and innovative offerings that may not otherwise be able to a government agency;
- productivity gains through reduced procurement effort, as no need for a full tendering process to purchase under a collaborative contract; and
- cost savings are retained by a government agency and able to be applied to its other activities, including frontline services.
- performance information across government in a standardised and comprehensive format;
- reduced tendering costs due to larger and fewer tenders from government; and
- process efficiencies due to standardised terms of engagement and ordering processes with government, and consolidated contract management with only one lead government agency.
There are three types of collaborative contract that take advantage of these benefits:
- All-of-Government contracts
- Syndicated contracts
- Common capability contracts
AoG contracts are for selected common goods or services purchased widely across government. There are 14 categories of AoG contract in place to date. For more information, visit our page on Current All-of-Government contracts.
Syndicated contracts are for common goods or services required by a group of government agencies who combine their needs and contract on that basis to meet only those needs (a closed cluster contract). They are established and managed by a lead government agency, and are not centre-led by GPB (unlike AoG contracts). Participation in syndicated contracts is voluntary. For more information, visit our page on Syndicated procurement.
Common capability contracts are for selected common goods or services that align with key strategic areas for government (such as ICT and property management). For more information, visit our page on Common capability contracts.