Fourth edition of Government Procurement Rules released

MBIE has now released the fourth edition of the Government Procurement Rules.  This fourth edition updates and renames the current 3rd edition Government Rules of Sourcing, and will come into force on 1 October 2019.

The Rules largely reflect the changes proposed in the draft Government Procurement Rules, released for consultation earlier this year. The Rules can be accessed in full here.

Key changes to the 4th edition of the Government Procurement Rules include:

• A new definition of “public value”, in place of the “best value for money” concept;
• A requirement for agencies to consider and incorporate broader outcomes when procuring goods and services (Rules 16 to 20), being the secondary environmental, social, economic and cultural benefits which may be generated from the way a good or service is produced or delivered;
• Changes to construction procurement (Rules 18, 64 and 69);
• New Rules around procurement capability (Rules 70 and 71), reporting (Rule 53) and planning (Rule 15);
• Amending the construction threshold to $9 million (down from $10 million);
• Changes to expectations around subcontracting and the conduct of suppliers (Rule 25 and Rule 44), including a new Supplier Code of Conduct (assessable here), which condenses the original six proposed expectations into five; and
• A new Government Procurement Charter, which agencies must incorporate into procurement processes. The Charter has refined an original eight proposed focus statements into seven.

You can read our previous article regarding the changes in the consultation draft here.  There are a few differences between what was proposed and the final form of the Rules though, as noted above.  In addition, the proposed obligations that agencies should ensure suppliers comply with Government security standards and that agencies consider how to flow down expectations around broader outcomes to the subcontractors of a supplier have not been included in the Rules.  Also, the proposed obligation to ensure suppliers meet minimum employment standards has become a “should” requirement instead.

The Rules apply to the public sector.  For those agencies that are required to comply with the Rules, you have until October this year until the Rules come into force (although you can apply then now too).  We suggest using this time to review and update your procurement processes to ensure you will comply with the Rules.  We also recommend those agencies that must have regard to the Rules to review their procurement processes accordingly too.

If you provide services to the public sector you should start considering how the services you provide stack up against the public value test and assist agencies to meet some of the broader outcomes, so that you are able to provide that information when responding to a tender.  This is particularly important as the Rules require the broader outcomes to be considered when determining the public value of the procurement.  Such businesses also need to become familiar with the new Supplier Code of Conduct with which agencies will require you to comply.

Business Law team

If you need any assistance do not hesitate to get in touch with the Business Law team at Lane Neave.

Gerard Dale, Claire Evans, Graeme Crombie, Evelyn Jones, Anna Ryan, Joelle Grace,  Peter Orpin, Ellen Sewell, Matt Tolan, Carlo Wan, Kristina Sutherland, Jacob Nutt, Whitney Moore, Alex Stone, Ben Cooper, Lisa Catto