Government Procurement, Could do better

We are working hard with MBIE policy staff to make Government Procurement more user friendly for small to medium size (and even large) New Zealand suppliers. We have argued that in a small economy, the only way to grow bigger companies of scale is to get them involved in bigger projects.

Who does bigger projects in the NZ economy? The Government – with a $40 billion annual spend.

We want local companies to have a fair shot at getting into the supply chain for Government work. We have had some success – with an upgrade of the rules of procurement to include principles that state the “best value for money should account for all the costs and benefits over the life time  of the goods and services” – so taking quality into account, not just lowest price.

The principles also refer to taking account of economic and environmental impacts. While we think the MBIE policy staff in procurement “get it”, it is a hard job to get that to translate across all those government agencies.

We know that some Government agencies are leaders in this space and some are laggards. We know that while some things have been improving – like length of time tenders are in the field, clarity of information in tender documents; other things, like post tender feedback and regular contract review  meetings, are still poor.

The overall rating of government procurement activity is still far from where it needs to be. We don’t think things will change fast enough in this space unless we get some transparency as to how the different agencies are doing.

NZ firms are very reluctant to complain – even if they know how to, as they don’t want to risk getting a bad name. This is in contrast to the US, where suppliers are expected to complain and they do. If they think they did not get a fair shot, officials want to know. There is a lot more transparency  around decisions and complaints.

Also in the US they have a rule that 20% of Federal Government work must go to small to medium sized companies, so they need to be somewhere in the supply chain. In Australia they have rules that require a local industry participation plan for larger projects.

We are working with MBIE to encourage them to publish the results of their audits of government procurement performance, so it is more transparent which agencies are doing a good job in this space. In addition we would also like to see all tenders on GETS have an option for suppliers to rate the tender  experience. It could be along the lines of how do you rate the agency for:

  • Sufficient pre-market engagement
  • Sufficient time to respond to tender
  • Clarity of information supplied
  • Sufficiency of information supplied
  • Quality of the tender document – was it written to get the best solution to the problem?
  • Feedback after tender response; was it helpful.

I am happy to receive any suggestions from readers on this topic. You can email me at [email protected].


16 Jul, 2015

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