NZ procurement rules on public value a ‘major step forward’

23 October 2019

New Zealand’s metals industry organisation has welcomed new rules for government procurement that focus on public value rather than lowest-cost goods.

Metals New Zealand, an incorporated society serving metals manufacturers and producers, praised the New Zealand government’s rules of procurement which came into effect this month following an industry consultation. The rules provide guidelines on how government agencies should procure products and services.

Nick Collins, chief executive of Metals New Zealand, said the new rules reduce the emphasis on lowest-cost goods and services, and align procurement with wellbeing outcomes instead.

Collins believes New Zealand’s construction sector will receive a stimulus as a result, while its attempts to build a skilled workforce will be boosted. 

The new rules require government agencies to specify within their contracts which construction skills they plan to deliver.

“The focus on broader outcomes and defining public value is a significant step forward to ensure New Zealand businesses are not disadvantaged in government procurement,” said Collins.

“Decisions will now be based on whole-of-life costs, rather than on least capital cost. Alongside this, the government has adopted an overall holistic perspective of sustainability across economic, social, environmental and cultural outcomes.”

Collins added that agencies should be encouraged to learn from the recent Kiwibuild property development debacle where a “one-solution-solves-all” approach was applied to affordable housing problems across New Zealand.

In 2018, the New Zealand government promised to build 100,000 “affordable” new homes within 10 years. However by mid-2019, only 79 new homes had been completed, most of them priced at NZ$500,000 or more.

The Kiwibuild scheme has been accused of using taxpayers’ money to help housing developers sell new-build houses quickly, at a profit, while failing to benefit the public.

Collins insisted New Zealand needs a region-by-region analysis of trades to ensure that it can meet current skills needs.

He praised the Ministry of Business Innovation and Employment procurement team for developing “a robust and comprehensive tool kit of construction guidelines to support the procurement rules”.

“New Zealand and the construction sector especially need government to work collaboratively with the sector to define outcomes,” he added, “and to establish milestones along the way to ensure that the new rules of government procurement have the intended outcomes.”

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