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Background to the Rules

The Rules set good practice standards that support accountability for spending and the delivery of public value.

Foreword from the Procurement System Lead

Introducing the fifth edition of the Government Procurement Rules

Government spends tens of billions of dollars on goods, services and works from business and third parties. It is important that procurement is done well, good outcomes are achieved, and trust in the system is maintained. Procurement teams are the stewards of this expenditure.

As the Procurement System Leader, I am pleased to introduce the fifth edition of the Government Procurement Rules: Responsible expenditure of public funds. The Government Procurement Rules (the Rules) ensure that system settings are clear and support agencies to achieve the best possible public value while also ensuring integrity, transparency and accountability throughout their procurement activities.

The Rules have been updated with a focus on economic growth, more transparency and strengthened accountability. The changes enable a stronger, more cohesive procurement system and respond to feedback from key stakeholders.

Government agencies will be expected to engage with businesses that deliver public value to New Zealand, including through increased employment, skills and training and economic growth for local communities. This will create greater opportunities for New Zealand’s small and medium sized enterprises, including regional businesses

The new Rules put stronger requirements around reporting for better transparency of government spending and better insights for everyone. They support economic growth through government procurement, and they tighten the rules of engagement on panel contracts. Government agencies must consider how they can create opportunities for New Zealand businesses.

The procurement function is an agency’s key market interface, providing intelligence and insights on market dynamics and emerging trends, as well as external feedback on investment projects. Procurement can also add value to an organisation beyond the acquisition of the goods and services needed to conduct business. This potential is realised through a focus on good procurement practice and robust processes.

This edition supports these aspirations. It aims to meet the challenge of simplifying and streamlining processes and requirements to help realise the promise of better value for New Zealand.

Carolyn Tremain
Procurement System Lead
Secretary for Business, Innovation and Employment and Chief Executive
Te Tumu Whakarae mō Hīkina Whakatutuki

What is procurement?

‘Procurement’ covers all aspects of acquiring and delivering goods, services and works (refurbishment and new construction).

A diagram of the procurement lifecycle, showing the four steps of planning, two of sourcing, and two of managing.

Procurement starts with identifying the need and finishes with a review at the end of a service contract, or the end of the useful life and disposal of the asset. This review informs the next procurement. This is the procurement lifecycle.

Procurement activities can be relatively simple and low risk, or more complex and high risk.

Taking a strategic approach to procurement will usually result in better outcomes for high risk or high value procurements.

A strategic approach involves:

  • understanding the importance of the procurement to the agency in achieving its outcomes
  • undertaking adequate planning, including market research and engagement, and identifying other suitable outcomes that can be achieved through the procurement activity
  • using procurement approaches that are proportionate to the value, risk, and complexity of the procurement. This could mean making the most of approaches outside of traditional tendering, such as lean agile procurement, outcomes-based contracting, competitive dialogue, or working with the market to innovate the best solutions.
  • managing relationships to successfully deliver against public policy objectives and business needs, while delivering public value.  

The Rules address all parts of the procurement lifecycle. They cover:

  • planning your procurement
  • market research
  • approaching the market
  • evaluating responses
  • negotiating and awarding the contract
  • contract management. 

More information about what procurement is, and a detailed guide to each stage of the lifecycle, is available.

What is procurement?

Guide to procurement

What is public value?

Public value means getting the best possible result from your procurement, using resources effectively, economically and responsibly. It means taking into account:

  • procurement’s contribution to the results you’re trying to achieve, including economic benefits
  • the total costs and benefits of a procurement (also known as ‘total cost of ownership’)

Delivering better public value through government procurement should include securing economic benefits for New Zealand. See Rule 8 for a list of considerations you can use for delivering economic benefit. Agencies should consider what is most appropriate for the procurement and most likely to deliver the benefits.

Choosing the most appropriate procurement process — one that’s proportionate to the value, risk and complexity of the procurement — helps achieve public value. Good procurement is about being risk aware, not risk averse. 

public value diagram procurement rules

Text description of image

Public value

Good quality

A fit-for-purpose solution that delivers your needs. 

  • Effective – meets objectives.
  • Efficient – delivered in the right way. 
Good outcomes

Deliver economic benefits to New Zealand in all your procurement activities (Rule 8).

  • Economic – developing the market, suppliers, or skills.
  • Environmental – fewer negative, more positive impacts.
  • Cultural – partnering with Māori and Pasifika.
  • Social – benefits to communities.
Good price

Consider costs across the whole life of the contract.

  • Upfront price.
  • Ongoing and whole-of-life costs.

What is good procurement?

Government procurement is based on the Government Procurement Charter, Principles, Rules and other good practice guidance. Collectively, these provide a broad framework that supports accountability for spending, sound business practice and better results

Good practice isn’t just mechanically applying the Rules. It’s about understanding all aspects of the procurement lifecycle, and skilfully applying this understanding alongside commercial judgment to deliver the best results. While you still need to comply with the Rules, you should design your process proportionate to the value, risk and complexity of the procurement. This may involve a typical tender process or making the most of approaches outside of traditional tendering (like lean agile procurement or competitive dialogue).

All procurement covered by the Rules should be supported by a robust business case or procurement plan that has a level of detail reflecting the size, value, duration and complexity of the procurement.

Good procurement also means proactively managing supplier and other key stakeholder relationships throughout the sourcing process and the duration of the contract. This continues to develop the supplier and drives public value through ongoing gains in efficiency and effectiveness.

The procurement function can add value to an organisation beyond simply acquiring the goods and services the organisation needs. It’s an agency’s key market interface, meaning it can gather insights on market dynamics and trends, as well as external feedback on key investment projects. The procurement function can also feed information back to suppliers, supporting critical market investment and growth. By being available ‘in-house’, the procurement function is readily accessible. It can become a valued business partner within the organisation, informing operational and strategic decision-making, and driving better risk mitigation and management practices overall.

What are the Rules?

The Government Procurement Rules are the Government’s standards of good practice for government procurement. 

They must be read alongside the Principles, Charter, and other good practice guidance. 

Government procurement principles

Government Procurement Charter

Guide to procurement

This fifth edition aims to improve transparency of procurement activities, strengthen accountability, focus on growth, and streamline and simplify as much as possible.

Why have Rules?

To guide public agencies to procure responsibly and achieve public value

The Rules set a standard of best practice procurement. To responsibly procure, agencies must achieve public value; this includes any economic benefits to New Zealand that an agency is seeking to achieve. The ability and responsibility to achieve public value through procurement applies to everyone involved in an organisation’s procurement processes, not just the procurement team. 

To provide and maintain the integrity of government procurement and accountability for public funds

Government agencies must account for how they spend public money.

The Rules are part of a wider framework that promotes responsible spending when purchasing goods, services, or works. This framework also includes the Principles of Government Procurement, the Government Procurement Charter and good practice guidance, available on this website and www.oag.govt.nz. This framework supports proactively managing procurement process and delivery risks.

The Rules establish processes that are consistent and predictable, making it easier for agencies and suppliers to engage with each other.

To maintain integrity, agencies must also be aware of and comply with relevant law, including:

  • the common law of contract
  • public law
  • commercial law obligations
  • government policies relevant to them.

Acting with integrity and being accountable for our actions will promote and maintain public trust in government.

To promote our values

New Zealand is committed to open, transparent and competitive government procurement that:

  • delivers public value
  • does not discriminate against suppliers (domestic or international)
  • meets agreed international standards

The Rules reflect these values and standards.

To encourage commercial practice

Early market engagement and continued open dialogue with suppliers are essential to building strong relationships and achieving good results. These stronger relationships with business can foster commercial benefits. The Rules encourage these types of behaviours, leading to greater public value.

To support New Zealand’s economy

New Zealand needs to export to thrive. A competitive economy trading successfully with the world can create jobs and build ongoing economic growth nationwide. New Zealand businesses need good access to international markets to increase their export opportunities.

Access to markets is secured through Free Trade Agreements (FTAs). Under FTAs, countries offer reciprocal access to their government contracts and agree minimum standards for open, transparent and fair government procurement.

The Rules reflect New Zealand’s FTA commitments, the Australia New Zealand Government Procurement Agreement, and align with the World Trade Organization Agreement on Government Procurement (GPA).

Following the Rules is essential:

  • to provide open and fair competition that supports innovation and helps create a competitive, productive supply base in New Zealand – which supports economic growth and development
  • for New Zealand being valued as a desirable trading partner – demonstrating our professional practice and maintaining our reputation for integrity.

To build high-performing public services

Third party suppliers deliver a large share of the government’s public services. We can make public service delivery more effective and efficient through better procurement planning, supplier management, and more collaboration across government.

Treaty of Waitangi / Te Tiriti o Waitangi

Agencies should be aware of their obligations under The Treaty of Waitangi/Te Tiriti o Waitangi (the Treaty) and how this relates to their procurement activities. This includes procurement obligations that are specifically named in Treaty settlements and Treaty settlement legislation, as well as agency-specific agreements with Iwi/Hapū.

Information that may help agencies understand their Treaty obligations can be found at:

New Zealand is party to International Agreements that include specific provisions preserving the pre-eminence of the Treaty. The Treaty exception provides flexibility for the Government to implement domestic policies in relation to Māori, including in fulfilment of the Crown’s obligations under the Treaty. Pursuant to this provision New Zealand may adopt measures it deems necessary to accord favourable treatment to Māori, provided that such measures are not used as a means of arbitrary or unjustified discrimination or as a disguised restriction on trade in goods, trade in services and investment.

The Treaty exception is not to be used to preference Māori suppliers, or as an opt-out or exemption from open advertising when undertaking procurement activities.

Where an agency is considering how to apply this provision in their procurement work, discuss in the first instance with the Trade Law Unit at the Ministry of Foreign Affairs and Trade (DM-LGL@mfat.govt.nz). 

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