Economic Development Minister Steven Joyce and Trade Minister Tim Groser just welcomed the World Trade Organisation’s (WTO) decision on the terms for New Zealand’s accession to the WTO Government Procurement Agreement (GPA) in Geneva.
“A positive decision on the terms of New Zealand’s accession has been reached with GPA parties in Geneva overnight (NZ time), following two years of negotiations,” Mr Joyce says.
“Accession to the GPA will provide New Zealand companies with guaranteed access to bid for approximately US $1.7 trillion in annual overseas government contracts across 43 WTO member countries including the US, Canada, Korea, Japan and 28 countries of the EU.”
Mr Joyce says this will make it easier for kiwi businesses to sell their products and services overseas. When the GPA is in place, kiwi companies will be able to export and do business with the likes of the US Government from right here in New Zealand, creating local jobs and growing New Zealand for all.
I fully agree that this is a great achievement and congratulate the NZ negotiation team, which have designed the new Government Procurement Rules of Sourcing around meeting the WTO GPA.
While this development is of course very positive for export-oriented companies accessing government business overseas, it also means that overseas GPA partner companies have similarly equal access to NZ government business. This equal access approach has been the New Zealand Government procurement practice for some time now and is nothing new.
However, the new government procurement rules of sourcing currently consulted on and to be expanded to include more government agencies, also offers real additional opportunities for local industry. With New Zealand now officially following the WTO GPA, these Rules will become the bible for the NZ Government and increasingly also public sector procurement.
Based on the introduction of the 5 Principles of Government Procurement in the new Procurement Rules of Sourcing, the specific rule “get the best deal for everyone” with the following sub-principles becomes very important:
- Get best value for money – account for all cost and benefits over the lifetime of the goods and services
- Make balanced decisions – consider the social, environmental and economic effect of the deal
- Encourage and be receptive to new ideas and ways of doing things – don’t be too prescriptive
- Take calculated risks and reward new ideas
- 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 to the deal – be accountable for the results
As advocated many times, the unique opportunity lies in the fact that being local can offer real advantages to “getting the best deal for everyone”, and in my view it largely will depend on our industry’s leadership to build the local competitive advantage when government procurement truly follows the 5 Principles.
For example, to “Get best value for money – account for all cost and benefits over the lifetime of the goods and services”, particularly the requirement to account for all cost and benefits over the lifetime of a product, offers new opportunities if we include maintenance and servicing in our industries’ offerings, as this clearly is different to the lowest cost initial procurement option traditionally practiced.
To do things differently is specifically prescribed by the guidelines for the procures to “encourage and be receptive to new ideas and ways of doing things” – e.g. include a lifetime maintenance and servicing agreement in the request for tender, or “work together with suppliers to make ongoing savings and improvements” which likely can be best done through the local supply chain.
Equally the two principles advising the procurers to “have clear performance measures – monitor and manage to make sure you get great results” and “it’s more than just agreeing the deal – be accountable for the results” are offering unique opportunities to the local industry to be better than the imported options.
Take fabricated steel work as an example, based on our New Zealand specific design and quality conformance framework, demonstrating performance by the domestic suppliers should be more cost effectively possible by the local industry, especially when the procurer actively follows the rule to monitor and manage performance also for competing imported products and helps ensure that there is a level playing field.
And lastly, our industry should especially be more competitive if the criteria, “make balanced decisions – consider the social, environmental and economic effect of the deal,” is applied. As HERA members are aware, HERA has researched balanced decision making extensively and in conjunction with BERL, has developed a tender evaluation tool which is assisting procures to make balanced decisions.
I am urging each industry members who tenders for government and public sector contracts, even when not asked for, to provide information towards balanced decision making to remind procurers of their obligation to consider this criterion. This may remind the procurer that he should also consider these effects from competing imports.
Demonstration particularly of the social and economic effects of local fabrication such as the contributions to the NZ tax base and on the NZ trade balance which comes from “Made in New Zealand” can be a real eye-opener for procurers and local suppliers alike and may demonstrate that the best deal is indeed with the NZ supplier.