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Rule 13:
Opt-out procurements

Explains the circumstances under which an agency may opt-out of the Rules.

  1. In certain circumstances, when a procurement is covered by the Rules (meets the requirements of Rule 6 and Rule 7 or Rule 6 and Rule 8), an agency can opt-out of applying all Rules to that procurement, except those listed in Rule 13.4 and 13.5. These circumstances are listed in Rule 13.3 and are called opt-out procurements.
  2. When doing an opt-out procurement, an agency should still conduct its procurement according to the Principles and other procurement good practice guidance. It should also achieve the best value for money over the life of the contract, which isn’t always the cheapest price.
  3. The following is the list of valid opt-out procurements:
    1. Between government agencies: Any of the following agencies can purchase goods, services or works from each other:
      1. Public Service departments
      2. New Zealand Police
      3. New Zealand Defence Force
      4. agencies covered by the Whole of Government Direction (Rule 6.1)
      5. Crown Research Institutes.

      However, if the purchasing agency chooses to use an open competitive process it must apply the Rules.

    2. Overseas: Goods, services or works purchased outside of New Zealand for use outside of New Zealand.
    3. Offices overseas: Any procurement relating to constructing, refurbishing or furnishing New Zealand government offices overseas.
    4. Non-contractual arrangement: Any non-contractual arrangement (eg a Memorandum of Understanding between two government departments) or any form of assistance including cooperative agreements (eg diplomatic assistance to another government).
    5. Land and buildings: Purchasing or renting land or existing buildings or other immovable property. This does not include refurbishment works or new construction works which are covered by Rule 7 and Rule 8.
    6. Conditional grant: Any form of conditional grant. However, an agency must not design or structure a procurement as a form of conditional grant to avoid applying the Rules.
    7. International development assistance: Providing international development assistance through multilateral or bilateral assistance, including aid in the form of conditional grants, budget support or any form of contribution or diplomatic assistance.
    8. International funding: Any procurement funded by an international grant, loan or other assistance or that must comply with an international organisation’s procedure where that procedure is inconsistent with the Rules.
    9. International organisation: Any procurement conducted under a procedure required by an international organisation or funded by an international grant, loan or other assistance that is inconsistent with the Rules.
    10. International agreements between countries: Agreements between countries for the joint implementation of a project.
    11. Public services: The provision of certain types of health services, education services and welfare services. See the Definitions for more information.
    12. Government's central financial control functions: Central banking control functions on behalf of government such as those carried out by the Reserve Bank, and Crown debt management functions such as those carried out by the Treasury. See the Definitions for more information.
    13. Military and essential security interests: Measures necessary for the protection of essential security interests, procurement indispensable for national security or for national defence, the maintenance or restoration of international peace or security, or to protect human health, including:
      1. procurement of arms, ammunition or war materials
      2. stationing military or implementing a joint military project under an international agreement (eg a peace-keeping deployment)
      3. a measure to protect: public morals, order or safety; human, animal or plant life or health; intellectual property; or relating to goods, services or works of persons with disabilities, philanthropic or not-for-profit institutions, and prison labour.
  4. The following Rules apply to all opt-out procurements:
    1. Rule 5 Protection of suppliers' information
    2. Rule 47 Supplier complaints
    3. Rule 48 Prompt payment
    4. Rule 49 Maintaining records
    5. Rule 50 Audit
  5. The following Rules apply to opt-out procurements when relevant:
    1. Rule 46 Debriefing suppliers (if the agency has used a competitive process)
    2. Rule 55 All-of-Government contracts
    3. Rule 56 Syndicated contracts
    4. Rule 57 Common Capability contracts
    5. Rule 60 Geospatial information and services
    6. Rule 61 Intellectual Property
    7. Rule 62 Public Private Partnerships
    8. Rule 63 Business cases and investment decisions
    9. Rule 64 Investment reviews
    10. Rule 65 Timber and wood products
    11. Rule 66 Employee transfer costs

More information on opt-out decisions

The opt-out Rule allows the government flexibility in the way it sources goods services or works in certain situations. Agencies should always consider their options and use good judgement to decide whether or not opting out of the Rules is the best way to meet their needs.

Agencies should always keep a record of their decision and the reasons for it.

More information on procurement between government agencies

Rule 13.3.a does not mean a listed agency can purchase goods, services or works under a contract that another listed agency has awarded to a third party supplier.

More information on conditional grants

Conditional grants - for information about these, read the Auditor General's guide Public sector purchases, grants, and gifts: Managing funding arrangements with external parties, at the Office of the Auditor-General website