Procurement and Contract Management Policy.pdf

PROCUREMENT &
CONTRACT MANAGEMENT POLICY
PURPOSE
This policy sets out the Ministry’s expectations for the sourcing and management of suppliers of the goods and
services the Ministry uses to run our business.
POLICY STATEMENT
Procurement covers al  aspects of the acquisition and delivery of goods or services. This includes the
identification of a need, the sourcing of a supplier and the management of the contract through to the end
of a service contract, or the end of the useful life and subsequent disposal of an asset.
The Ministry is required to follow the Government Procurement Rules (Rules). This Procurement and Contract
Management Policy has been designed to ensure that procurement activities conducted by the Ministry comply
with our obligations under the Rules
SCOPE
This policy applies to al  Ministry employees, contractors and consultants involved in the procurement of
goods or services. This includes:
• General goods or services
• Professional, Outsourced or Consultancy Services
• Digital or ICT products and services
• Non-Professional Services, such as cleaning services and catering
• Property and Construction Services
• Registered Trades
Out of Scope: This policy does not apply to the procurement of:
• Contractor Engagements (refer to Contractor Engagement Policy)
• Employment of permanent or fixed term staff
• Procurement that is the direct result of judicial decisions
• Purchases or payments to, or from, a specific entity as required by legislation (e.g. Treaty of
Waitangi Settlements)
• Disposals and sales by tender
• Gifts, donations and any form of unconditional grants
• Statutory appointments or Ministerial appointments
For clarity, the Ministry’s definitions of a contractor and consultant are included at the end of this document.
In the event that uncertainty exists as to whether a procurement activity falls outside the scope of this policy,
the Ministry’s Procurement and Commercial Team should be consulted for guidance.
OUR POLICY
General
In every instance, all of our procurement activity wil  align to the Principles of Government Procurement (the
Principles
Principles) (Appendix 2) and the Government Procurement Charter (Appendix 3) and where they apply, the
Government Procurement Rules
The way we procure goods and services wil  vary depending on the value, complexity and risk involved.
The approach best-suited to the individual purchase should be applied in al  instances after considering the
under the Official Information Act 1982
following:
• How to conduct the procurement activity in an open and transparent manner with full and fair
opportunity for al  eligible suppliers
• How we wil  encourage and support opportunities that support New Zealand businesses
How we wil
• How to best deliver public value over the whole life of the goods, service, or asset
work
• How to best minimise procurement costs for suppliers and the Ministry, ongoing operational costs
and consequential costs
• How the activity wil  contribute to the Ministry and wider government directive of achieving positive
cultural, environmental, social and economic benefits (together called Broader Outcomes)
•

How to reinforce positive supplier relationships
In all circumstances, we wil  record the need for a procurement, how we intend to source the goods and
services, the rationale as to why this is the best approach and the reasons why we selected a particular
supplier
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Broader
  The Ministry is committed to achieving broader outcomes from our procurement activities wherever possible.
Outcomes and  Broader Outcomes may not be applicable to al  procurement activities.
Supplier

Diversity
Broader Outcome
What we wil  do for individual purchases
Increase access for New
Size and focus our procurement activity in a way that allows New Zealand businesses,
Zealand businesses
including Māori, Pasifika and regional businesses are involved wherever possible.
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Increase the size and skil
level of the construction
Expect and encourage our construction suppliers to actively contribute to developing the
sector
construction skil s of their workforce.
Test the health and safety capability of our suppliers who work in construction and ensure
Improve conditions for
that our suppliers have appropriate governance and policies in place protecting
New Zealand workers
employment standards where low-paid or vulnerable workers may be involved in
Act
providing a service to the Ministry.
Reduce emissions and
Make conscious purchases that wil  either reduce emissions or waste for office supplies,

waste
light vehicles and/or stationary/process heating systems.
Preferred
  All-of-Government contracts and established Ministry supplier arrangements that the Ministry has joined or
Suppliers
implemented are used in al  instances where they are applicable.
Sourcing
In al  instances, it is the responsibility of the Financial Delegation Holder for the procurement to ensure they
Approaches,
have sufficient confidence that due process has been followed, that the supplier is able to deliver the goods
Approvals,
or services and that the purchase wil  deliver Public Value.
Documentation   New Suppliers and Contracts
and Due
When sourcing a new supplier (i.e. not utilising an existing contract or Al -of-Government arrangement) we
Diligence
wil  identify the preferred sourcing approach based on the table below:

Sourcing
Sourcing Approach suitable when
Approach Options  value of contract opportunity is…
Documentation Required
Purchase card
Less than $1000
Not required
Information
The need for the service/goods and the approach
Direct Source
Less than $75,000
and justification for selecting the supplier must be
recorded and kept on file to ensure transparency
and accountability of the decision-making process
Closed competitive
process
Less than $100,000
Short-form Procurement Plan required
Open competitive
Any value, but required when $100,000
process
or more
Procurement Plan required
Purchasing off an
existing contract /
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All-of-Government
Refer to table below in the Existing Contracts / Al -of-Government Arrangements section
arrangement

Existing Contracts / Al -of-Government Arrangements
Certain existing contracts and Al -of-Government Arrangements have operating procedures that must be
followed. These operating procedures detail the sourcing approaches, thresholds and processes that must be
the
followed. Operating procedures supersede the table below.

Where no operating procedures exist for an existing contract or Al -of-Government arrangement, the table
below outlines which sourcing approaches should be used:
  Sourcing Approach  Sourcing Approach suitable when
Options
value of contract opportunity is…
Documentation Required
The need for the service/goods and the approach
Direct Source
Less than $150,000
and justification for selecting the supplier must be
recorded and kept on file to ensure transparency
under
and accountability of the decision- making process
Less than $200,000: Short-form Procurement Plan
Closed competitive
required
process
Any value

More than $200,000: Procurement Plan required

Joining
Endorsement from the Procurement and Commercial team must be obtained prior to joining to any
Collaborative
collaborative contract or Al -of-Government arrangement that the Ministry is not currently participating in.
or AOG
arrangements
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Contracting
For Goods
Suppliers
For goods in excess of $5,000, there must be a contract in place between the Ministry and the supplier, which
must also be registered in the Ministry’s Contract Management System.

For Services
The parameters of any engagement that includes any type of service must:
  Service value  Requirement
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Under $5000
Be documented and agreed between the Ministry and the Supplier
$5000 and
Have a formal contract between the Ministry and the Supplier. The Government Model
over
Contract (GMC) template is the Ministry’s preferred contract format for low value
purchases.
OLC Review
Act
Unless otherwise stated in operating procedures or other guidelines, the Office of Legal Counsel (OLC) must
review al  contracts for $25,000 or more prior to execution
Contract
Al  contracts must be managed in accordance with the Ministry’s Contract Management Framework.
Management
Conflicts of
Conflicts of Interest must be actively identified and managed by al  those involved in a procurement process
Interest
or anyone who has influence over a purchasing decision in accordance with the Ministry’s Conflicts of Interest
Policy
Separation of
At least two people must be involved in each purchasing decision over $1,000. The Financial Delegation
Duties
Holder approving a purchasing decision should not be involved in identifying or sourcing a new supplier.
Period not to
The Ministry wil  not issue any competitive sourcing process during the period starting 10 working days prior
issue Tenders  to Christmas Eve and 10 working days following the New Year public holidays.
or Quotes
Information
Exemptions
In some circumstances, the Rules allow the Ministry to exempt itself from certain obligations. Exemptions
from this
from this policy may also be appropriate from time to time.
Policy and the
Rules
Exemptions can only be authorised by the applicable Level 2 Financial Delegation Holder funding the
purchase (or Level 1 Financial Delegation Holder as appropriate), following consultation from the
Procurement and Commercial team.

Details of the exemption, and the supporting rationale must be recorded, retained and sent to the
Procurement and Commercial team.   Official
ROLES AND RESPONSIBILITIES
Al  Staff
Applying our Procurement and Contract Management Policy and procedures
Financial Delegation
Accountable for ensuring that they do not exceed their financial delegation when applying this
the
Holder
policy.
Level 2 Financial
Accountable for decisions to exempt a purchase from aspects of either this policy or the Rules
Delegation Holder
Procurement &
Administer and support the application of this policy.
Commercial team
Provide advice to a Level 2 Financial Delegation Holder on an exemption decision
DEFINITIONS
under
All-of-Government
A type of col aborative contract that has been established by the Government Procurement Group
Contracts (AoG)
and are mandatory for the Ministry to use.
Broader Outcomes
The secondary benefits that are generated from the sourcing and contract management activity.
Broader Outcomes can be environmental, social, economic or cultural benefits.
Closed competitive
Where a limited number of suppliers are invited to respond to an opportunity directly, often through
process
a Request for Proposal (RFP).
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Collaborative Contracts
There are several types of collaborative contracts used by New Zealand government. Mandatory
All-of-Government contracts established by the Government Procurement Group, optional
syndicated contracts established by another government agency open for use by all of government,
closed cluster contracts whose use is limited to a defined list of agencies or Common Capability
contracts established by the Department of Internal Affairs.
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Financial Delegation
Provides the holder with authority to make decisions or approve purchases up to the financial limit
Holder
set by the Financial Delegations Policy.
Direct Source
Approaching suppliers directly to provide goods or services, this could include buying directly from a
supplier, a panel of suppliers or buying selectively from a specific supplier for a specialist service.
Act
Government Model
The Government’s default contractual terms and conditions. A Government Model Contract (GMC)
Contract
is appropriate to use when purchasing low-value, low-risk common goods and services.
Māori business
A Māori business for government procurement purposes is one that has at least 50% Māori
ownership or a Māori Authority as defined by the Inland Revenue Department.
Open competitive
An opportunity that is advertised publicly and any supplier can submit a proposal. An open
process
competitive process can be run as a single-stage or a multi-stage process.
Principles
Short for the Principles of Government Procurement.
Rules
Short for the Government Procurement Rules.
Public Value
Means achieving the best possible result from a procurement activity.
RELATED POLICIES, PROCEDURES AND LEGISLATION
Information

•  Ministry Contract Management Framework
•  Contractor Engagement Policy
•  Business and Sensitive Expenditure Policy
•  Ministry Conflict of Interest Policy
•  Ministry Code of Conduct
•  Financial Delegations Policy
•  Gifts Policy
•  Government Procurement Rules, Procurement Charter, and Procurement Principles (MBIE)
•  Risk Management Policy
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CONTACT
Procurement and Commercial
OWNER(S)
General Manager Commercial and
Property
the
LAST REVIEWED
October 2021
NEXT REVIEW
October 2022
LAST UPDATED
October 2021
APPROVED BY   SLT

under
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APPENDIX 1: DEFINITIONS OF SERVICE CATEGORIES
A contractor or temporary worker (out of scope of this policy – see contractor engagement policy) meets all of the
following:
•  is engaged on a contract either directly (self-employed) or via a third party (recruitment agency), and is not an
employee; and
1982
•  is providing backfil  or extra capacity in a role that exists within the Ministry or acts as an additional resource
for a time-limited piece of work (project work); and
•  Charge on a time unit basis (e.g. By the hour or day); and
•  is under the direct supervision of the Ministry and the Ministry assumes the risk for the quality of the work
product (e.g. If the deliverables are not up to standard, the Ministry has to pay for the time for the work to be
Act
rectified).

A consultant:
•  Does not meet the definition of a contractor or temporary worker;
•  Is a company or individual engaged in a contract to provide professional advice or information to the
Ministry on its activities and/or operations
•  Provides expertise in a particular field not readily available from within the Ministry;
•  Is engaged to perform a specific piece of work or outcome with a defined scope and often invoice for
delivering certain milestones;
•  Operates independently from the Ministry and is responsible for all the resources and managing the risks
associated with delivering the piece of work
•  Generally, works offsite, but may be required to work onsite from time to time.
•  Generally, carry the risk of payment being withheld for if the piece of work they are engaged to complete is
not delivered or is not fit-for-purpose.
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Professional or Outsourced Services:
•  Do not meet the definition of a Contractor or Consultant
•  Are provided by an organisation that has been engaged to provide al  or part of a business function or
activity (for example, implementing and supporting a new ICT system into the Ministry or the delivery of
community-based justice services).
•  Operates independently of the Ministry and is responsible for al  the resources and managing the risks
associated with delivering the services.

Non-Professional Services are:
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•  Services that support the operation of the Ministry but are outside of our core business (for example, cleaning
services and catering).

Registered Trades:
the
•  Are building- and property- related services that are required to be carried out by individuals holding
appropriate qualifications (for example, plumbers, structural engineers and qualified builders).

Audit, Actuarial and Legal Services:
•  Services directly associated with the provision of external audits of the Ministry’s activities
•  Legal fees paid to a firm of solicitors for legal advice or representation (note that a lawyer engaged by the
Ministry to backfil  or provide additional resource to the Ministry’s internal legal teams would be considered a
contractor)
under
•  Services directly associated with the provision of actuarial services to the Ministry.

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APPENDIX 2: THE FIVE PRINCIPLES OF GOVERNMENT PROCUREMENT
•  Identify what you need and then plan how to get it
•  Set up a team with the right mix of skil s and experience
1.  Plan and
•  Involve suppliers early – let them know what you want and keep talking
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manage for
great results   •  Take the time to understand the market and your effect on it. Be open to new ideas

and solutions
•  Choose the right process – proportional to the size, complexity and any risks involved
•  Encourage e-business (for example, tenders sent by email)
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•  Create competition and encourage capable suppliers to respond
•  Treat al  suppliers equal y – we don’t discriminate (this is part of our international
obligations)
2.  Be fair to all
•  Give NZ suppliers a ful  and fair opportunity to compete
suppliers
•  Make it easy for all suppliers (small to large) to do business with us

•  Be open to subcontracting opportunities in big projects
•  Clearly explain how you wil  assess suppliers’ proposals – so they know what to focus
on
•  Talk to unsuccessful suppliers so they can learn and know how to improve next time
•  Be clear about what you need and fair in how you assess suppliers – don’t string
suppliers along
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3.  Get the right  •  Choose the right supplier who can deliver what you need, at a fair price and on time
supplier
•

  Build demanding, but fair and productive relationships with suppliers
•  Make it worthwhile for suppliers – encourage and reward them to deliver great results •
•  Identify relevant risks and get the right person to manage them
•  Get best value for money – account for all costs and benefits over the lifetime of the
goods or services
•  Make balanced decisions – consider the social, environmental and economic effects of
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the deal
4.  Get the best
•  Encourage and be receptive to new ideas and ways of doing things – don’t be too
deal for
prescriptive
everyone
•

  Take calculated risks and reward new ideas
the
•  Have clear performance measures – monitor and manage to make sure you get great
results
•  Work together with suppliers to make ongoing savings and improvements
•  It’s more than just agreeing the deal – be accountable for the results
•  Be accountable, transparent and reasonable
5.  Play by the
•  Make sure everyone involved in the process acts responsibly, lawful y and with
under
rules
integrity

•  Stay impartial – identify and manage conflicts of interest
•  Protect suppliers’ commercially sensitive information and intel ectual property

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APPENDIX 3: THE GOVERNMENT PROCUREMENT CHARTER
The Government Procurement Charter sets out government’s expectations of how agencies should conduct their
procurement activity to achieve public value.

We need to ensure that government procurement delivers public value for all New Zealanders while supporting the
delivery of better public services throughout New Zealand.
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In al  of our procurement activities, the Ministry will seek to meet as many of these expectations as practical.

The New Zealand government directs agencies to:

Act
1.  Seek opportunities to
Openly work to create opportunities for local businesses and smal -to-medium
include New Zealand
enterprises to participate in your procurement processes.
businesses.
2.  Look for new and
Make sure you don’t overprescribe the technical requirements of a procurement,
innovative solutions.
give businesses the opportunity to demonstrate their expertise
3.  Undertake initiatives to
contribute to a low
Ensure that economic and social development can be implemented on a
emissions economy
sustainable basis with respect for the protection and preservation of the
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and promote greater
environment, reducing waste, carbon emissions and pol ution.
environmental
responsibility.
Ensure that the businesses you contract with operate with integrity, transparency
4.  Engage with
and accountability, and respect international standards relating to human and
businesses with good
labour rights. For businesses operating within New Zealand, ensure that they
employment practices.
comply with all New Zealand employment standards and health and safety
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requirements.
the
Engage with Māori, Pasifika, and regional businesses and social enterprises in
5.  Promote inclusive
order to actively contribute to our local economy. Openly working to include and
economic development  support these businesses and enterprises through procurement wil  promote both
within New Zealand.
skil s development and a diverse and inclusive workforce.
Responsibility for managing risks should be with the party – either the agency or
under
6.  Manage risk
the supplier – that is best placed to manage the risk. Agencies and suppliers should
appropriately.
work together on risk mitigation strategies.
7.  Encourage
Look to support greater collaboration, both across-agency and across-businesses
col aboration for
to give likeminded groups the opportunity to find common solutions within your
col ective impact.
procurement opportunities.

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Act
Information
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the
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