New Zealand saves NZ$700 million through 'all-of-government' deals

22 December 2015

The New Zealand government’s single supply agreements for certain goods and services are estimated to be saving NZ$699 million, an increase on June’s forecast saving of NZ$415 million.

More than 860 government agencies, including 500 schools, have begun participating in the 'all-of-government' (AOG) procurement contracts, which account for 2 per cent of New Zealand’s government spend with third party suppliers.

Designed to use collective purchasing power to improve supplier engagement, reduce transaction costs and standardise procurement processes, each contract is managed by a Centre of Expertise within the government procurement branch of the Ministry of Business, Innovation and Employment.

Centres of Expertise manage the development, negotiation, supplier performance and ongoing contract management, and provide procurement advice to public sector organisations.

The initial five-year AOG contracts for vehicles, IT hardware, office supplies and print devices signed in 2010 saved the government more than NZ$130 million. Following a re-tender, they are projected to save an additional NZ$168 million.

In addition, the AOG banking services solution, signed in October this year, is expected to save NZ$120 million over eight years, and improve productivity. The increase in forecast savings is thought to be the result of improved supplier engagement, greater efficiencies and the implementation of more new contracts, according to New Zealand’s economic development minister Steven Joyce.

“By harnessing the collective purchasing power of government and establishing single supply agreements for selected common goods and services, government agencies are saving a significant amount on procurement,” he added. “Government agencies have been embracing the availability of these contracts.”

Joyce said that the panels of suppliers created under the contracts are “diverse and made up of suppliers of all sizes, which gives everyone an opportunity to pitch for government business”. “The AOG approach to procurement is also benefiting suppliers,” he added.

The approach was established under the government’s procurement functional leadership programme, set-up in 2012 to improve public sector procurement.

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