Using contractors and consultants in the public sector

When you shouldn’t use consultants or contractors

Agencies should not engage consultants or contractors to deliver core functions. Core functions include all the operational work, products and services that are essential to the running of the government and delivery of public services.

For example, in the policy area, core functions include (but are not limited to):

• providing policy advice to Ministers
• developing Cabinet papers and budget bids
• preparing briefings to incoming Ministers
• supporting the preparation of legislation and regulations. This includes advising Parliament while they are considering legislation
• delivering long-term insights briefings
• reporting to Parliament, including statements of intent and annual reports.

Sometimes you may need external contractors to supplement core public service functions. You should not engage contractors for longer than one year at a time.

When it may be appropriate to engage external consultants or contractors

There are limited circumstances where agencies may need to use consultants and contractors.

• Skills and expertise
  When the work requires skills and expertise not found in the public service (including in other agencies). This could include technical knowledge or skills not retained in an agency. For example, hydro scheme development.
• Independence
  You need an independent view or evaluation from outside of the public service. For example, for some situations requiring community engagement, compliance, audit or risk management.
• Short-term capacity
  You need extra capacity due to demands that you could not reasonably have foreseen and that need immediate action.
• Long-term capability
  You have an opportunity to build the public service’s capability by connecting with the latest technical opportunities, emerging key skills or expertise.
• Efficiency
  A contracted service provider can support the function more efficiently because its scale of operation is greater than what an agency can achieve. These functions are not usually government’s core business. For example, property services.

Steps to take before engaging external consultants or contractors

Consider the following points to decide if you need to use a contractor or consultant:

• Capacity test
  Your agency’s workforce plan maps your staff resources to the known pipeline of work. You should verify that need for consultants or contractors either falls outside your agency’s planned pipeline or cannot be managed within it. For example, through re-prioritisation within or across agencies.
• Duration test
  Check the duration of the project or service. Use employed staff if the project or service is business as usual. Baseline the resource into the agency’s business plan if the service is new and will be ongoing (except where services are outsourced.)
• Scope test
  Confirm whether the knowledge or solution needed is available from existing toolkits, methodologies, reports or case studies. Limit the scope of contractors’ or consultants’ work so that it does not duplicate what is already available.
• Quality test
  You should be confident that the quality of output received from the contractor or consultant will be at least equal to (if not higher than) the quality expected from employed staff (depending on the rate you are paying). You should have evidence that supports this.
• Security test
  Ensure that the consultant or contractor can work in an environment with the appropriate level of security and assurance required of the agency, the functions it performs, and the wider public service.

Reporting

• You should continue to report on contractors and consultants as part of your usual reporting to select committee - definitions of "contractor" and "consultant" have not changed.
• We receive reporting from providers on the All-of-Government (AoG) consultancy services and talent acquisition services panels on agencies’ use of consultants and contractors. We will be monitoring this use.
• All agencies will continue to report quarterly to the Public Service Commission on their use of contractors and consultants. This includes reporting on the value and purpose of this spending.

Definitions

The terms "contractor" and "consultant" are defined by Te Kawa Mataaho Public Service Commission.

Follow the Public Service Commission guidance to enable state services agencies to consistently measure and report their usage of contractors and consultants:

Contractors and consultants guidance [PDF 642KB] – Te Kawa Mataaho Public Service Commission

Note: Having the title of "consultant" or being engaged through the AoG consultancy services panel doesn’t automatically mean someone is considered a consultant. It is the nature of the engagement that matters.

Related guidance

Free and frank advice - December 2017 [PDF 83KB] – Te Kawa Mataaho Public Service Commission

Contractors and consultants guidance [PDF 642KB] – Te Kawa Mataaho Public Service Commission

If you have any questions about the guidance, email us.