NZ Defence follows the requirements of the NZ Government procurement policy administered by the Ministry of Economic Development. In short, this requires that all procurement over a certain value be the subject of tender, and that local companies (i.e. NZ, and countries with which New Zealand has a free trade agreement) have equal opportunity to bid for the business. NZ business is not entitled to preference, but MUST be given full and fair opportunity to tender.
The process adopted depends on the value of the procurement, but the complete process is likely to be:
- Registration of Interest – a means of reducing procurement effort by identifying all the likely contenders, from which a short list is developed of people to be invited to tender. While this appears to show some favouritism, it's main effect is to reduce the tender effort by NZDF staff, and ensure that tenderers do not waste their time by tendering against a number of companies - in short, reduce the effort and cost for all parties.
- Request for Proposal – a request for proposal is an “open ended” tender, in which the outcome is detailed, and tenderers are asked to propose means of providing it. In simple terms, an RFP could allow for leasing or purchasing of equipment, or could offer a service based solution which does not involve the NZDF in capital equipment management at all.
- Tender – a tender is a response to a specific request. To make tender evaluation effective, tenders should usually respond to exactly what is asked, but alternative bids which offer more cost effective solutions or innovation are acceptable.
Notification of Tenders
Defence tenders are normally advertised only on the Government Electronic Tender System (GETS) web site www.gets.govt.nz Very occasionally a tender may be advertised in technical publications or other media.
The best source of tender information is the Industry Capability Network (ICN) web site, but you may wish to consult the Defence web sites below for additional information on Service activities.
The Ministry of Defence provides information on its projects on the web site www.defence.govt.nz
Unsolicited Approaches
In seeking sources of supply, NZDF staff consider suppliers known to them, those recommended by users, and any they can find from indexes and listings of trade sellers. They will also use the ICN to locate possible New Zealand suppliers. To be part of this process, therefore, potential suppliers must be known to the purchasing staffs and to the ICN.
A number of different methods of procurement are used:
Period Contracts/Standing Offers
These are arrangements to supply a given product, type of product or service for a fixed period at agreed prices and terms. The NZDF may use contracts negotiated by brokers or carry out its own negotiations. Period contracts may be New Zealand wide or of a local nature (such as the supply of fruit and vegetables to bases). In these latter cases the potential contractor should contact the Supply Officer of that base, who will also be able to provide the names of contract brokers where these are used.
Price and Availability
A phone or fax request for price and availability is not a request for a formal quotation. It is a start point in the seller and buyer defining precisely what is required. Information such as part numbers, capacities, sizes and possible alternatives should be given at this time to avoid later misunderstandings and extra work.
Sharing Arrangements
In many cases businesses may be subcontractors to existing NZDF contractors. For example, the NZDF rarely buys fittings for buildings; these are normally provided by building contractors or facilities maintenance contractors. Hence an approach to NZDF by such a company may be redirected to another company.
The names of many NZDF contractors are public knowledge and may be made available to potential subcontractors.
Companies or individuals wanting to move into the Defence market may wish to seek joint venture partners to reduce their investment, offer enhanced service through enhanced capacity or capability, and/or share risk or technology.
Prime Vendoring and Outsourcing
There is an increasing trend towards these two forms of procurement and asset management.
Prime vendoring is simply when a company is appointed to provide an entire product line or range of products, such as stationery. In these cases the NZDF interest is only in the prime contractor and the supply of goods or services. Where the contractor obtains stocks, how these are provided etc is of no interest to the NZDF except to the extent that the Key Performance Measures of the contract are achieved.
That said, a prime vendor who is acting on behalf of the NZDF is generally required to adhere to the same processes and give the same opportunities to NZ companies,
Outsourcing takes prime vendoring a stage further into contracting out of the whole management regime. Thus the NZDF outsources infrastructure support of most of its bases, the contractor being responsible for every aspect of facility management. As with prime vendors, the NZDF interest in the contract is only the outputs, not how they are provided. This gives considerable scope to the contractor for innovation and the use of competitive processes and incentives to lower its own costs.
Partnering. While not strictly a procurement method, partnering is increasingly contributing to NZDF procurement efficiency. Under partnering arrangements, the partners (who may be two or more companies or a company and the NZDF) agree to work together to improve processes and enhance the performance of the contract. This provides scope for variations which are mutually agreed to be implemented at appropriate levels by simple agreement between the partners. The long term aim is for all major contracts to include partnering clauses, and for relationship managers to have the authority to implement them.
Electronic Commerce. It is the NZDF’s intention to move as much as possible into electronic commerce, that is, to adopt methods which allow for electronic documentation exchange, and which allow all aspects of a process to be carried out automatically, including submission and payment of accounts.
This page was last reviewed on 21 February 2007 and is current.