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New Rules overview(3 hour presentation)
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Government Rules of Sourcing
Training Presentation
New Rules training module
This presentation provides information about:
1. Rules and Principles
7. Existing Cabinet directives now part of the Rules
6. Other new Rules
5. Notice of Procurement
4. Response times, minimum time periods and allowable reductions
3. Non-procurement activities, opt-out procurement and exemptions from open advertising
2. Application of the Rules
Section One
Rules and Principles
Rules and Principles
The Rules set out the standards we work to
The Principles represent our values
Why do we have Rules?
To strengthen accountability
To promote our values
To encourage commercial practice
To support economic development
The Rules set out the government standards for all of the sourcing
stages of the procurement lifecycle
What are the values that underpin the Rules?
The five principles of procurement
A new rule sets out the five principles of procurement:
You’ll learn more about these over the next few screens.
Rule 1
Principle 1
Rule 1
Principle 1
Rule 1
Principle 2
Rule 1
Principle 2
Rule 1
Principle 3
Rule 1
Principle 3
Rule 1
Principle 4
Rule 1
Principle 4
Rule 1
Principle 5
Rule 1
Principle 5
Rule 1
The Principles
Each agency must have in place policies that incorporate the five Principles
The Principles apply to all procurements, even if the Rules don’t apply
Each agency must make sure that:o all procurement staff have been trained in
the Principles o its procurement practices reflect the
Principleso for each procurement, it is able to show
good planning and an appropriate market strategy
Rule 1
Section Two
Application of the Rules
Who do the Rules apply to?
• Government in New Zealand is made up of four ‘tiers’, each of which has different levels of responsibility and oversight by central government
• Some agencies are required to apply the Rules
• Other agencies are expected or encouraged to apply the Rules
Who do the Rules apply to? continued
Tier 1: Public ServiceMust apply the Rules}
Ministries and Departments(includes NZ Police and NZ Defence Force)
Who do the Rules apply to? continued
Tier 2: State ServicesExpected to have regard for the Rules as good practice guidance
eg ACC, DHBs, Crown Research Institute
Who do the Rules apply to? continued
eg universities, State Owned Enterprises, Regional Councils, local government
Tiers 3 & 4:Encouraged to regard the Rules as good practice guidance
Section Three
Non-procurement activities, opt-out procurement and exemptions from open advertising
When the Rules don’t apply
The Rules don’t apply in two broad areas:
Opt-out procurements
Non-procurement activities
In addition, there are exemptions from open advertising
Rule 15Rule 13Rule 12
For the Rules, these activities are not considered to be procurement activities:
a. Non-procurement activities
employing staff (excluding contractors and consultants)
Category 1 Legal Services
Ministerial appointments
statutory appointments
gifts, donations and any form of unconditional grants
investments, loans and guarantees
disposals and sales by tender
Rule 12
What is an opt-out procurement?
b. Opt-out procurements
These circumstances are called ‘opt-out procurements’
Rule 13
If a procurement is covered by the Rules, in some circumstances an agency can opt-out of applying the Rules
b. Opt-out procurements continued
The circumstances in which an agency can opt out of the Rules:
government offices overseas
purchased overseas / for use overseas
non-contractual arrangement purchasing or renting land and buildingsconditional grant
some forms of international development assistance
between government departments, NZ Police or NZ Defence
Continued on the next screen
Rule 13.3
b. Opt-out procurements continued
The circumstances in which an agency can opt out of the Rules:
international agreements between countriespublic services, eg, certain types of health service government’s central financial control functions
military and essential security interests
international funding that is subject to another process
international organisations’ procurement processes
Rule 13.3
Exemptions from open advertising
An agency does not need to openly advertise a contract opportunity on GETS if an exemption from open advertising applies
following an open tender
if there is only one supplier
, for example:
in an emergency
Where a procurement can be exempt from open advertising all other Rules still apply
in the case of an unsolicited proposal
Rule 15.9
Exemption to open advertising continued
All other Rules still apply, even when an exemption to open advertising has been claimed These Rules include:
Rule 45.2.h Rule 46Rule 45.1
an agency must offer each unsuccessful supplier a de-brief
the circumstances of the exemption must justify the exemption
the agency must publish a Contract Award Notice when it has awarded the contract
the Contract Award Notice must state the reasons for the exemption to open advertising
Section Four
Response Times, Minimum Time Periods and Allowable Reductions
Sufficient time
How much time should I give suppliers to respond?
• Unrealistic time periods introduce unnecessary risk
• Don’t jeopardise your results with a rushed process
• Put yourself in the suppliers’ shoes to work out how much time is Sufficient Time
Rule 26
• An agency must allow Sufficient Time for suppliers to respond to a Notice of Procurement
Sufficient time continued
Ask yourself: how long it will take to:
• ask questions to clarify the requirements and get answers?
• prepare a meaningful response including accurate pricing information?
• develop, check and submit a response including delivering it on time?
Rule 26
• obtain, read and analyse all tender documents?
Sufficient time continued
• An agency must act in good faith and use sound judgement when calculating Sufficient Time
What is considered to be Sufficient time will always vary, depending on the nature and complexity of the procurement
Rule 26
Sufficient time continued
The key factors to take into account when calculating Sufficient Time include:
• the nature and complexity of the procurement• the amount of information and level of detail
that suppliers must provide in their responses• the type of goods, services or works• how simple or hard it is to describe deliverables• the level of risk• the extent of any possible subcontracting• how critical the procurement is to the agency’s success• the time it takes for domestic and foreign suppliers to
submit tenders
Rule 26
Sufficient time continued
Example 1: Simple one-step Request for Quote• The request is for a large quantity of an off-the-shelf product
at short notice• You need a fixed price and a guaranteed delivery date
Rule 26
Sufficient time continued
Example 2: One-step Request for Proposal• You need a review of a social policy programme• This requires experts who will provide their own methodology,
work plan, budget quote and timeline for delivery
Rule 26
Minimum time periods
Minimum Time Periods
• The Sufficient Time that an agency sets for a procurement must not be less than:
Rule 31Rule 26Rule 27
o the Minimum Time Period, or
The ten-day rule no longer applies!
• The Rules set Minimum Time Periods for different procurement processes
o the new Minimum Time Period, after Allowable Reductions
Minimum time periods continued
Rule 31
The following Minimum Time Periods apply:
One-step processes:
Multi-step processes:
Process Minimum time period
RFQ 13 business days
RFT or RFP 25 business days
Step / process Minimum time period
Step one: ROI, EOI, ITP 20 business days
Step two: RFT, RFP 25 business days
Allowable Reductions
• In some circumstances reductions to the Minimum Time Period are allowable
• If any of these Allowable Reductions apply, you can deduct them from the Minimum Time Period
• The result is the new Minimum Time Period
Rule 28
Allowable Reductions continued
An agency can claim Allowable Reductions if it complies with the requirements in any of the following circumstances:
• a prior listing in Annual Procurement Plan
• all documents are made available electronically
• responses are accepted electronically
Rule 28
Minimum time period and allowable reductions for a one-step process:
Allowable Reductions continued
Business Days
One-step process RFQ RFT / RFP
Minimum time period (Rule 27) 13 25
Allowable Reductions (Rule 28):
• Prior listing in an Annual Procurement Plan -1 -3
• All tender documents available electronically on GETS -3 -4
• Suppliers’ tenders or proposals accepted electronically -1 -3
Minimum time period allowed, if allowable reductions apply 8 15
Rule 28
Minimum time period and allowable reductions for step one of a multi-step process:
Allowable Reductions continued
Step one of a multi-step process Business Days
Minimum time period (Rule 27) 20
Allowable Reductions (Rule 28):
• Prior listing in an Annual Procurement Plan -3
• All tender documents available electronically on GETS -4
• Suppliers’ tenders or proposals accepted electronically -3
Minimum time period allowed, if allowable reductions apply 10
Rule 27 Rule 28
Minimum time period and allowable reductions for step two of a multi-step process:
Allowable Reductions continued
Step two of a multi-step process Business Days
Minimum time period (Rule 27) 25
Allowable Reductions (Rule 28):
• All tender documents available electronically on GETS -5
• Suppliers’ tenders or proposals accepted electronically -5
Minimum time period allowed, if allowable reductions apply 15
Rule 28
Section Five
Notice of Procurement
Notice of procurement
What is a Notice of Procurement?
It includes all the information that suppliers need to know in order to prepare and submit a meaningful response
Rule 34
A notice published on GETS that advertises a new contract opportunity, eg, a Registration of Interest or a Request for Tender
Notice of procurement continued
Everything to help suppliers prepare meaningful responses
Which procurement process is being used, eg, RFQ or RFP
Contact details and descriptions of the goods / services
Any conditions, including any pre-conditions or standards
Any limits on the number of shortlisted suppliers
The evaluation criteria and their importance / ranking
The deadline and address for submitting responses
Rule 34
What should I include in my Notice of Procurement?
Notice of procurement continued
What should I include in my Notice of Procurement? Any limits on how suppliers can send responses
Any other conditions relating to the procurement process
The proposed contract conditions
If procurement will be done electronically, all information suppliers will need to participate electronically
The rules of an e-auction and info suppliers need to participate, if applicable
Rule 34
Delivery date
how complex the procurement is
how much sub-contracting there might be
how long it will take to produce and transport goods
how long it will take to deliver services
Rule 23
When identifying a delivery date take into account:
E-auction
An e-auction is an online reverse auction - it gives suppliers the opportunity to bid against each other to improve their offers
This advance notice must be in the Notice of Procurement which must include:o a summary of the rules that will
apply to the e-auctiono the specific criteria that will be used
in the e-auction
Rule 42
An agency must notify suppliers in advance if it intends to run an e-auction
Types of supply lists
Rule 54Rule 53Rule 52
If an agency regularly purchases a specific type of product, service or works it may establish a list of suppliers
· Panel of Suppliers
· Pre-qualified Suppliers List
Common types of lists include:
· Registered Suppliers List
Types of supply lists continued
Rule 54Rule 53Rule 52
Registered Suppliers List:
A list of suppliers who have been preapproved by an agency as capable of delivering specific types of goods, services or works
Panel of Suppliers:
A list of suppliers who have registered an interest in supplying specific types of goods, services or works
Pre-qualified Suppliers List:
A list of suppliers who have been preapproved by an agency, and who have agreed to the terms and conditions for supply
Section Six
Other new Rules
New Rules
Several Rules have been added since the Procurement Rules were last released
The new Rules include:o Rule 18: Extended Procurement Forecasto Rule 19: Significant Business Caseso Rule 57: Common Capability contracts
Rule 57Rule 19Rule 18
Extended Procurement Forecast
An Extended Procurement Forecast (EPF) is a list of forecast contract opportunities over the next 5 years
Agencies must give an EPF to MBIE for review, for all procurements that:o have a value of $5million or more, oro pose significant risk, or o have the potential for collaboration
EPFs are for cross-government planning purposes only
Agencies must update their EPF at least once a year
Updated EPFs are due by 1 October each year
Rule 18
Significant Business Cases
An agency must give to MBIE for review its Business Case for any procurements that fall into one or more of these categories:
Rule 19
This is a supportive peer review
An agency should take note of MBIE’s advice
o have a value of $5million or more, oro pose significant risk, or o have the potential for collaboration
Significant Business Cases continued
This requirement doesn’t apply where a Business Case is subject to review under another governance process
Rule 57Rule 63 Rule 56
o the Syndicated Contract process, or
o the Common Capability contract process
Rule 19
, for example:o the Better Business Cases process
Common Capability contracts
Common Capability contracts (CCs) are a type of approved collaborative contracts between government and approved suppliers
Rule 57
Common Capability contracts continued
Rule 57
There are two types of CC contracts:• Mandatory CC contracts
o an agency must purchase from these contracts where the contract reasonably meets the agency’s needs
• Voluntary CC contractso an agency should purchase from these contracts
where the contract meets the agency’s needs
o an agency that wants to opt-out of purchasing from this type of contract must seek the approval of the relevant Functional Leader
Common Capability contracts continued
CC contracts differ from other contracts:
The lead agency may charge a participating agency an admin fee
A supplier acting for an agency may purchase from a CC contract
Rule 57
Before approaching the market for goods, services or works an agency should check if there is an existing CC contract that meets its needs
Section Seven
Existing Cabinet directives now included in the Rules
Existing Cabinet directives now included
There are several cabinet directives that are now included in the Rules
The Rules provide links to other websites where details can be found
Prompt payment
Each agency should ensure prompt payment of suppliers’ invoices
At a minimum, invoices must be paid in accordance with their contract terms and conditions - or earlier if possible
Rule 48
All-of-Government Contracts (AoGs)
An All-of-Government contract (AoG) is a type of approved collaborative contract
Rule 55
Examples of the types of common goods and services are office consumables, vehicles and travel
AoGs establish a single supply agreement between the Crown and approved suppliers for the supply of selected common goods, services and works purchased across government
All-of-Government Contracts (AoGs) continued
Before approaching the market an agency should check if there is an existing AoG which meets their needs
All agencies must purchase from the AoGs, unless there is a good reason not to
Rule 55
Syndicated Contracts
Syndicated Contracts typically involve a ‘cluster’ of agencies combining their needs and going to market together
They typically include a Common Use Provision (CUP) clause in the contract, to allow other agencies to join the contract later
Agencies wishing to establish a Syndicated Contract with a CUP clause must get approval from MBIE before publishing a Notice of Procurement
Before approaching the market an agency should check if there is already a Syndicated Contract that meets their needs
Rule 56
Web Standards
If an agency outsources web development work, it must include a requirement in its Notice of Procurement, and contract for the work to comply with the latest version of the New Zealand Government Web Standards
Rule 58
Approved Government Model Templates
From time to time, the Chief Executive of MBIE, as the Procurement Functional Leader, issues Approved Government Model Templates (A-GMTs)
Rule 59
Agencies must use these templates in their procurement activities, regardless of whether or not the Rules apply to the procurement
An example of an A-GMT is the Government Model Contract (GMC)
Geospatial Information and Services
If an agency intends to procure geospatial information or services it must first contact the New Zealand Geospatial Office (NZGO) (www.linz.govt.nz/geospatial-office) before:o approaching the market or o publishing a Notice of Procurement
Rule 60
Intellectual Property
If a procurement involves creation by the supplier of new Intellectual Property, the agency should advise its intentions about:o ownership, o licensing, and o future commercialisation of that
Intellectual Property
Rule 61
Agencies should take these guidelines into account
Public Private Partnerships (PPPs)
The PPP Team in the Treasury oversees all Public Private Partnership (PPP) arrangements
Rule 62
All capital projects of $25 million or more must consider PPP
Public Private Partnerships (PPPs) continued
If an agency wishes to do a Public Private Partnership (PPP):
Rule 62
o the PPP Team should be involved in the economic and financial assessment and advice on the PPP
o the agency should give the PPP Team the chance to make an experienced officer available to the project steering and working groups
, and
o the agency must consult the PPP Team early in the development of the PPP proposal
Capital Business Cases
Capital Business CasesCabinet approval is required for some capital
expenditure, lease or asset disposal proposals from Departments, Crown agents or other Crown entities
Rule 63
A capital asset project that meets one of more of the criteria shown on the next slide must:o consult with the Treasury, and o use the Treasury’s Better Business Cases (BBC)
methodology
Capital Business Cases continued
The criteria are: o any project that requires new Crown funding
Rule 63
o any project that is a potential PPP
o any project with a whole-of-life cost of $25 million or more
o any project identified as high risk in the Gateway Risk Profile Assessment
o any programme / project involving asset disposals with significant policy decisions
Gateway assurance
Gateway is an assurance review process for major investments
Rule 64
It examines programmes and projects at key decision points in their lifecycle to provide assurance that they can proceed successfully to the next stage
Gateway assurance is part of Treasury’s Capital Asset Management regime and is managed by the State Services Commission
Timber and wood products
When procuring timber and wood products, agencies must apply the New Zealand Timber and Wood Products Procurement Policy
Rule 65
Employee transfer costs
In certain situations an agency must disclose the costs relating to the transfer of employees due to a restructuring
Rule 66
The circumstances are contained in the the Employment Relations Act 2000, Part 6A and Schedule 1A
In relation to a procurement activity the disclosure costs must be made available to prospective suppliers (new employers) who ask for them if:o the restructuring is the subject of a tender, ando the type of employees affected falls within a category listed
in the Act
Property Services Industry
Agencies must recognise the Principles for a Sustainable Property Services Industry in their procurement of property services
Rule 67
For further information about procurement, go to:
www.procurement.govt.nz
Questions?
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