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Investing for New Zealand: Insights from 2015/16

New Zealand Government Procurement and Property

New Zealand Government Procurement and Property (NZGPP) is responsible for improving procurement outcomes across government. It supports agencies to get results from their procurement activities through a range of initiatives, such as procurement capability reviews and providing agencies with access to a pool of commercial experts.

Procurement includes all aspects of the acquisition and delivery of goods or services, spanning the whole contract life cycle from the identification of needs to the end of a service contract, or the end of the useful life and subsequent disposal of an asset.

Agencies and suppliers can find more information about the tools and services New Zealand Government Procurement offers on its website: www.procurement.govt.nz/procurement

How does procurement contribute to investment/the investment system?

Government procures the goods and services it needs to deliver investment objectives, so successful outcomes depend on good procurement.

NZGPP provides a framework, the Government Rules of Sourcing[7], which gives confidence to all participants - purchasers, suppliers and providers - about how to engage. The framework is based on identifying value and opportunities for all parties, and provides a level of assurance that investment decisions will be completed in a fair and equitable manner.

The Government Rules of Sourcing provide a foundation for good practice, underpinned by the five procurement principles:

  1. Plan and manage for great results
  2. Be fair to all suppliers
  3. Get the right supplier
  4. Get the best deal for everyone
  5. Play by the rules

Guidance for agencies undertaking procurement is available here: www.procurement.govt.nz/procurement/for-agencies/key-guidance-for-agencies/the-new-government-rules-of-sourcing

Why is this important in helping government realise value from its investments?

Procurement (if done well) provides all parties with early and robust understanding of upcoming opportunities.

This is important because it enables those of us within government to identify common needs across agencies, and collaborate where this makes sense for efficient and effective outcomes.

It also provides the market with good notice, which is important because informed participants, with confidence about the way we will engage them, are well-placed to act and think innovatively, make pre-sales investments, and deliver in a way that benefits everyone.

What do you think the biggest improvements/achievements were for the system from a procurement perspective in the 2015/16 year?

In my view it's the genuine and increasingly early dialogue between the Corporate Centre and agencies on a wide number of factors - including procurement - that impact on the quality of new investment, and realising the benefits from current investments.

All parties are contributing earlier in the investment process which provides greater opportunities for sustainable success.

What do you see as the top challenge for government in procurement?

Capability and capacity remain the biggest barriers to procurement contributing to system improvement - we don't have enough skilled and experienced people to go around.

On a positive side, it is the recognition of the value that good procurement can add to investment that is putting the most strain on current government procurement resources. It is probably a good problem to have - if there is such a thing.

What is/are your team's key focus area(s) for the 2016/17 year?

Our key focus is on the capability development of both agencies and individuals. NZGPP has established a ‘Procurement Capability Index' (PCI) which will be used to measure agency procurement capability.

The Procurement Capability Index enables agencies to self-assess their procurement effectiveness and identify where further support may be required. The Procurement Capability Index has been successfully piloted with 27 agencies and will be rolled out to agencies covered by the Government Rules of Sourcing in 2016/17[8].

The Procurement Capability Index will also help us to target the investment and support we provide to where it can make the most difference.

What are the key tools and resources you offer agencies who are undertaking procurement?

Apart from Procurement Capability Index, we are also implementing the Significant Service Contracts framework[9]. This will provide much needed transparency around key service contracts - so we can be sure that critical public services provided by third parties are well-managed. This will help ensure effective service performance: realising expected benefits; and managing any risk of service failure.

The Commercial Pool continues to provide procurement resources on a cost recovery basis, targeting high risk/high value commercial activities where agencies require assistance from professionals with intimate knowledge of how to apply the Government Rules of Sourcing.

NZGPP will continue to invest resource in supporting agencies to improve their procurement capability - in particular moving from a tactical to a strategic approach to procurement.

Our goal continues to be about improving performance, not enforcing compliance. We want to incentivise people to do the right thing - and most people do. We think this is more impactful than chasing the few who don't.

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