Trans-Pacific Strategic Economic Partnership Agreement (P4 FTA): Implications for Core Public Sector Procurement

Tim Barber, Senior Advisor, Government Procurement Policy

Ministry of Economic Development

27 June 2006

Slide 1: Overview

• Existing Government Procurement Policy
• P4 FTA
• New Rules for Departments
• Coverage of the Rules
• Main Features of the Rules
• Exclusions from the Rules
• Exceptions to Open Tendering
• Impact
• Advice and assistance

Slide 2: Government Procurement Policy

Endorsed by Cabinet in 2002, A Framework of Principles Consistent with:

• individual agency autonomy and accountability for procurement decisions
• an open economy
• OAG guidelines on probity and good practice

Guiding Principles

• best value for money over whole of life
• open and effective competition
• full and fair opportunity for domestic suppliers
• improving business capability, including e-commerce
• recognition of bilateral obligations to Australia (CER) and Singapore (CEP)

Trade

• we subscribe to APEC principles and participate in APEC work towards increased transparency and liberalisation in the region
• the agreements with Australia and Singapore are based on principles of non-discrimination and transparency

Slide 3: P4 FTA (New Zealand, Brunei, Chile, Singapore)

Also based on principles of non-discrimination and transparency, but goes further by binding the Parties to ensure that procurement

• by their listed government entities
• at or above specified value thresholds
• follows prescribed open and transparent procedures, which are set out in some detail

A key procedural requirement is that entities shall award contracts by means of open tendering procedures, i.e. public invitation to any interested supplier to:

• submit a tender, or
• apply to meet conditions for participation in a procurement process (i.e. register interest or qualify to be invited to tender)

Slide 4: New Rules for Departments

• MED consulted with MFAT and the Procurement Advisory Group to translate the P4 FTA procedural provisions into Rules
• The Rules were approved by Cabinet and became mandatory for departmental procurement initiated from 1 May 2006
• Announced by Minister of Commerce and published on MED's website

Slide 5: Coverage of the Rules

• The "public service" departments (State Sector Act schedule) plus NZDF and NZ Police
• Procurement by any contractual means
• At or above value thresholds - goods/services $100k/construction services $10m
• Below these values departments still expected to be guided by the existing framework of procurement policy/good practice principles
• Other agencies encouraged to act within this framework and to apply the Rules as appropriate

Slide 6: Main Features of the Rules

• Open tendering is to be the norm (including staged tendering - open registration and/or pre-qualification followed by selective tendering)
• Technical specifications not to be unnecessarily restrictive and must, where appropriate, be in terms of performance/functional requirements
• Time limits to be reasonable in circumstances for all interested suppliers, and in no case less than 10 working days
• Government Electronic Tenders Service (GETS) to be the portal for globally open advertising of supply opportunities
• Any supplier lists in continuing use must be published and open for application via GETS
• Contract award notices to be promptly published on GETS
• Debriefing of unsuccessful tenderers to be provided on request
• Supplier complaints are to be given impartial and timely consideration
• Departments are to prepare and publish on GETS by 1 July indicative Annual Procurement Plans, on a rolling basis (updated at least every 6 months)
• APPs to consist of a strategic procurement outlook statement supported by preliminary details of planned procurements

Slide 7: Exclusions from the Rules

• Confidential information where disclosure would prejudice legitimate commercial interests or the public interest (still subject to OIA)
• Protection of essential security interests
• Protection of public morals order or safety; human, animal plant life or health; intellectual property
• Procurement of health, education and welfare services for provision to the public

Slide 8: Exceptions to Open Tendering

• Absence of competition for technical reasons
• Spare parts or upgrades of existing equipment where need for interchangeability dictates only one supplier
• Extreme urgency
• Prototype developed at request of department under R&D contract
• Construction services added to a contract that have become necessary for unforeseeable reasons (not to exceed 50% of initial contract value)

Slide 9: Impact

By introducing standard thresholds for open tendering, the new Rules do place new limits on departments' discretion to decide on procedures for each procurement, but

• not excessively detailed; allow some flexibility; and are broadly consistent with the current policy principles and good practice
• Tendering costs can still be managed through shortlisting stages (ROIs, ITRs etc)
• Departments already following competitive procedures consistent with the procurement policy and good practice should not find the new Rules involve major change or new compliance costs
• The Rules do not stand in the way of continuous "best practice" improvements e.g. streamlining and standardisation of tender documentation where appropriate, to reduce administration and transaction costs
• Improved information, transparency and consistency of departmental procurement practice will benefit competitive suppliers
• Result will be a more competitive environment and improved value for money for departments
• And the Rules help us to meet our international trade obligations and global trade objectives

Slide 10: Advice and Assistance

• MED is consulting with Audit NZ on requirements for audit of compliance
• MED will shortly be increasing its capacity to monitor departments' procurement performance, including compliance with the Rules, by taking over the Syndicated Procurement Unit from SSC
• MED will also now administer GETS (ex NZTE)
• Continuing program of practitioner training and education - seminars, workshops
• Community of Practice Workspace FAQs
• MED website and direct enquiries to MED

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