5. Documenting Consideration of Tenders for Contracts at or above $100,000
Policy statement
As previously explained in this Guide, a fundamental objective of the government procurement policy is best value for money though open and effective competition. This requires proper evaluation of whole-of-life value for money factors, including where relevant any practical and commercial advantages associated with local supply. In this context, the policy principle of "full and fair opportunity for domestic suppliers" aims to ensure that any such competitive advantages are not overlooked.
As further assurance that all relevant aspects have been considered, Cabinet has agreed that "departments be required to ensure that their internal documentation of tender short-listing and contract award decisions (for contracts at or above $100,000) includes assurance of compliance with the government procurement policy, including justification for the rejection of any New Zealand tender, signed off at appropriate senior management level".1
It should already be standard practice for departments' internal documentation of a procurement process, including tender evaluation, to state reasons for selecting or rejecting any tender (domestic or foreign), after consideration of all relevant whole-of-life factors. Such reasons should relate to the requirements and criteria stated in the documents provided to all tenderers.
For consistency with the value for money objective and with the non-discriminatory trade approach of the government procurement policy departments must continue to base short-listing and contract award decisions on competitive value for money merit, and buy from the best source available, domestic or foreign.
Accordingly, the Cabinet direction is not to be interpreted as requiring preferential short-listing or final selection of New Zealand tenders. The aim is to ensure full and fair consideration of the objective merits of New Zealand as well as other tenders in a whole-of-life value for money context, in accordance with existing policy. By using open tendering procedures, specifying requirements in functional and performance terms as far as possible, and evaluating tenders on a whole-of-life basis, departments will maximise competitive opportunities for local supply, and their own prospects of achieving best value for money in a globally competitive market.
Documentation of the reasons for rejection of any New Zealand tenders will also be a useful source of data to inform the government's supplier capability development programmes, which aim to help New Zealand suppliers address shortcomings in their tendering practices and maximise their natural competitive advantages in the domestic market.
Definition of "New Zealand Tender"
In this context, a "New Zealand tender" is one in which there is substantial or significant New Zealand content.
In order to identify substantial or significant New Zealand content, departments will need to ask tenderers to provide sufficient information to give a broad indication of the place of origin of goods or services offered. Questions in tender documents should seek such information as is readily available on the following elements:
- place of final manufacture
- source of major components or materials;
- place of modification and assembly;
- origin and ownership of intellectual property;
- location of research and development effort;
- origin of design; and
- contribution to service and support back-up.
For any given procurement, departments should use their own judgement in assessing the relevance and significance of this information for the achievement of best value for money, in terms of the stated requirements and criteria of the procurement.
Documentation Sign-off
To ensure compliance with the Cabinet direction that documentary assurance of compliance with the government procurement policy be signed off at "appropriate senior management level", internal delegation levels should be reviewed and approved by the Chief Executive. For procurements of major size and significance, Chief Executive sign-off may be appropriate.
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