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Rule 8 for a below-threshold procurement

This example illustrates how an agency can apply Rule 8: Economic benefit to New Zealand to a below-threshold procurement.

A government agency is seeking design services for an upcoming campaign with an estimated contract value of $70,000.

The agency procurement policy requires a staff member to get 3 quotes for contracts between $50,000 and $100,000 in value and does not require an approach to the open market.

Deciding how to apply Rule 8

As the procurement is below $100,000, the agency in this scenario:

  • has considerable flexibility with below-threshold procurements but is expected to follow good procurement practice and their own procurement policies
  • is not required to seek economic benefits in this contract
  • should apply Rule 8.2: “Unless there is good reason not to, you are expected to award contracts to New Zealand businesses that are capable and have capacity to deliver the contract.”

How this agency can apply Rule 8 to their below-threshold procurement

  1. The agency in this scenario must also follow procurement best practice, including the Government Procurement Principles, including evaluating whether the organisations have the capability and capacity to deliver the contract and documenting their process.

    Government procurement principles

  2. The agency is expected to directly approach one or more New Zealand businesses as part of their process to seek three quotes.
  3. The agency is expected to award the contract to a New Zealand business that is capable and has capacity to deliver the contract. 

Where an agency is using an open market approach for values less than $100,000, they should refer to Rule 8.2 in their tender documentation. 

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