The Government has updated some of its purchasing rules in an effort to give Kiwi businesses a boost.
The changes to Government procurement rules were announced by Economic Growth Nicola Willis this morning, and would come into effect on December 1.
Among the changes was a new economic benefit test for when Government agencies decided who they buy from.
The new rule said that at least 10% of the decision must be based on how much a business’s proposal benefits the economy.
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There would be extra weight given to factors like using Kiwi businesses to deliver contracts, creating jobs, and training and development to upskill New Zealand workers.
“Businesses shared that the lack of weighting for New Zealand’s interests in the evaluation criteria was holding them back,” Willis said.
“We want to see taxpayer money supporting Kiwi businesses to grow, hire, and thrive.”
She said the test was also intended to encourage international companies bidding for Government contracts to “demonstrate a commitment to creating value in New Zealand”.
The rules themselves had been simplified to make it easier for businesses to follow and apply them.
“Government contracts are collectively worth more than $50 billion a year. The purpose of these changes is to make it easier for New Zealand businesses to win more of these contracts, either directly or as subcontractors in the supply chain,” Willis said.
The Government also slashed the number of rules from 71 to 47, “making them more accessible and easier to navigate”.
The new rules would apply to all goods, services and refurbishment contracts worth more than $100,000 and all construction contracts over $9 million.
Contracts below the threshold were expected to be awarded to “capable local businesses”.
“These changes not only help level the playing field but help ensure that taxpayer money is spent responsibly and efficiently and maintains public trust as well as supporting local businesses.
“New Zealand respects its international trade commitments and the settings in the Rules continue to uphold our obligations. This is important to ensure that Kiwi businesses continue to benefit from open access to large international markets.”
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Changes should give local businesses an ‘edge’
BusinessNZ chief executive Katherine Rich said the updated rules “should give local and small businesses an edge in winning valuable contracts” and would boost the economy.
“In a country of five million people, where most of our businesses are small to medium-sized enterprises, winning a government contract can make a big difference.
“Starting December, the introduction of an economic benefit test should result in more Kiwi bidders winning contracts, and will ensure international companies have considered the wider value they provide to New Zealand as part of the application process.
“If local companies can more easily participate in bigger contracts, either directly or via subcontracting to an international lead supplier, then New Zealand will be growing larger companies, employing more people, paying more tax and potentially having more products to export.”
Buy NZ Made said the changes represented a “decisive shift” from lowest cost tendering to long-term value.
Executive director Dane Ambler said the economic benefit test was a signal that “buying local matters”.
“This is about ensuring the money we already spend as a country works harder for New Zealand. When local firms win contracts, that spend circulates through wages, apprenticeships, and community investment – instead of leaving the country.”
“Buy NZ Made is encouraging businesses to get ready by quantifying their local impact – including local employment, regional sourcing, sustainability practices, and supply-chain resilience – so they can showcase measurable economic benefit in tender responses.
“This is the time for Kiwi manufacturers, service providers, and suppliers to step forward. Government buyers want to work with you – but you need to tell your economic story clearly.”
