The COVID-19 situation is rapidly evolving which can create uncertainty for procurement professionals, as well as the supply chain. You should consider if there are new requirements to respond to COVID-19, as well as ongoing requirements and contracts to maintain business activities.
The procurement policy framework in New Zealand has flexibilities in an emergency situation, such as a pandemic. The Government Procurement Rules (specifically rule 14-9a) allows exemptions from open advertising for emergency procurements to enable this flexibility where required.
Our intention with this guidance is to ensure, where possible, that government does not overburden supply markets with non-essential procurement activity.
You may find that the COVID-19 pandemic affects your business as usual procurement activities. Each situation and agency will be different.
Things you should consider:
- Speak to your suppliers. Understand their pressure points.
- Do you need to delay procurement activities which are currently planned? For example, you should consider whether the market you operate in is adversely affected and may be limited in its ability to respond.
- Can your suppliers deliver? Your suppliers may have challenges delivering in this unforeseen environment – consider how you can support these suppliers to ensure a successful outcome or defer non-essential procurement activity.
- What is the impact, or potential impact, on your current supply chains? You should have a good understanding of your agencies supply chains and their risks.
- Who are your suppliers? Remember that small businesses will likely be impacted the hardest so ensure you can meet the 10 day payment target announced by the Prime Minister.
- Are you able to vary / extend current contracts to cover periods of uncertainty? For example, if a contract is due to expire you may not be in a position to re-tender this in time if the market is impacted.
- Do you understand your key contracts? Where you have key contracts required for business continuity make sure you have an understanding of how these operate and the obligations within them.
Flexibility to respond
You should be flexible in how you manage current contracts and procure the goods and services that are required for your agencies’ response.
You can forgo routine procurement procedures when your procurement activity is required for an emergency response. In adopting a more flexible procurement process you will still need to consider what is reasonable and justifiable given all of the facts and circumstances you have to hand.
You can purchase direct from a supplier if the delay involved in conducting a routine procurement (i.e. which involves advertising and competitive tendering) prevents you delivering the goods or services in time to bring effective relief to manage the emergency or to ensure critical supplies or ensure supplies that maintain important elements of your business continuity.
You should balance the need to act without delay (for example to preserve life) against meeting your agencies overarching public sector obligations (act lawfully, reasonably and with integrity).
Key considerations for sourcing
The following key considerations may help your agency source in an emergency:
- Clarify that the situation meets the criteria for treatment as an ‘emergency’ and that a flexible approach to procurement can be fully justified.
- Identify, specify and prioritise the immediate procurement activities that will bring relief or ensure supplies to maintain business continuity.
- Consider the operating environment and conditions ‘on the ground’.
- Find out what other government agencies and NGOs are doing and, where possible, collaborate – is your need the highest need for government?
- Consider your duty of care to suppliers and take appropriate measures to ensure their safety – i.e. don’t put others at risk.
Whilst you have flexibility on how to procure, you still need to maintain accountability of how public funds are being used and that your application of emergency provisions in justifiable. Whatever procurement process has been adopted it is still subject to audit. You should consider the following:
- Keep records! Clearly document that the purchase was an emergency procurement and record the facts and circumstances justifying this approach during or as soon as possible after the event.
- Be aware of the possibility of conflicts of interest and manage them appropriately.
- In emergencies there is a higher risk of inflated prices, fraud, bribery and corruption may also be a concern. Be aware of these possibilities and take action to guard against them.
- Consider how to govern these emergency procurements, which may involve utilising your current governance structures or establishing an incident response structure.
- For agencies subject to the Government Procurement Rules an exemption for emergencies is available under Rule 14. However, the award of a contract over the appropriate value threshold should be published later (on the Government Electronic Tenders Service); including a clear statement that it was an emergency procurement.
Further support and advice
We are here to help.
If you or your agency needs immediate support or advice, or is coming across supply challenges please let us know and we will help out where possible.