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Rule 8:
Economic benefit to New Zealand

Primary requirement

  1. Agencies must seek economic benefits to New Zealand in procurements above the value thresholds of $100,000 for goods, services and refurbishment works and $9 million for new construction works, to be evaluated as part of the assessment of public value.
  2. Unless there is good reason not to, agencies are expected to award procurements below the value thresholds of $100,000 for goods, services and refurbishment works and $9 million for new construction works to New Zealand businesses that are capable and have capacity to deliver the contract. 

Application

  1. Agencies must operate within the context of relevant national and international agreements and procurement policies to which New Zealand is a signatory, including free trade agreements and the Australia and New Zealand Government Procurement Agreement.
  2. Regarding 8.1, agencies must consider opportunities to deliver economic benefit to New Zealand, such as:
    1. making better use of New Zealand resources, such as increasing workforce participation, providing training or apprenticeships or using spare industrial capacity
    2. using New Zealand businesses, including SMEs and regional businesses in delivering goods and services, either directly or as a subcontractor or in the supply chain 
    3. creating export opportunities, boosting a businesses’ domestic supply chain and/or international competitiveness
    4. developing New Zealand industry capabilities or capacity
    5. developing and adopting innovative products or practices that benefit New Zealand communities 
    6. considering the sustainability and or environmental benefit of the proposed solution
    7. contributing to positive social and cultural outcomes in New Zealand communities.
  3. Agencies must: 
    1. set clear expectations in their Notice of Procurement of the economic benefits they are seeking to be delivered in the procurement opportunity 
    2. ensure their expectations are proportionate to the size, risk, complexity and value of the procurement opportunity
    3. include a minimum weighting of 10 percent for evaluation purposes for economic benefits in a procurement
    4. include contract provisions for the delivering of the agreed economic benefits 
    5. conduct sufficient monitoring of economic benefits to ensure that commitments made in contracts are delivered and reported on.

 

More information

What is the purpose of this Rule?

The Government recognises the importance of considering the economic benefits to New Zealand that can be achieved through procurement.

Agencies can be flexible in the way they assess value for money, including the economic benefit to New Zealand.

Agencies may place a stronger emphasis on economic benefit, and apply a higher weighting than 10 percent, depending on the nature and desired outcome of the procurement.

Consideration of trade commitments

Rule 8.3 indicates that the requirement operates within the context of New Zealand’s trade agreements. These agreements require agencies to (among other things) treat all potential suppliers equitably and not discriminate against suppliers on the basis of their size, location or ownership.

In responding to the economic benefits requirement, suppliers may wish to provide information about relevant business operations, such as: 

  • operational location
  • employee demographics
  • subcontractor arrangements
  • supply chain arrangements.

Application to panels

Economic benefits will be considered when panels are established. This means that agencies have the flexibility to consider whether further economic benefits can be achieved when doing secondary procurement from these panels. 

Applying a weighting

Agencies must include a minimum 10% weighting on economic benefits when evaluating a procurement. They can choose to apply a higher weighting.

When determining what weighting to apply, agencies should consider the length and the whole-of-life cost of the contract as detailed in the guidance.

Guidance on how to apply weightings is available: 

Decide on your evaluation methodology

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