Hon Simon Power
Minister of Commerce

11 June 2009
Media Statement

Government to reform state sector procurement

Commerce Minister Simon Power today announced the Government’s proposed reform of state sector procurement practice and policies.

"A reform of government procurement activity is of high importance to the National Government, especially given the current financial climate," Mr Power said.

In a speech to the Chartered Institute of Purchasing and Supply's 3rd Strategic Procurement Forum he said the government's procurement spend was approximately $30 billion a year.

The Government Procurement Reform Agenda is based around four key themes:

* Cost savings.

* Building procurement capability and capacity.

* Enhanced business participation.

* Improved governance, oversight and accountability.

"Decisions on procurement can determine how government delivers its functions and services. The government’s procurement reform agenda will drive cost savings, releasing fiscal savings to be used in other priority areas.

"Substantial cost savings will be delivered with the establishment of Centres of Expertise within lead agencies to negotiate all-of-government contracts in common-spend areas.

"At the same time, work will be undertaken to cut red tape in procurement processes, improve capabilities of procurers, and enhance opportunities for businesses to win government contracts.

"Government is a procurer of substantial scale, and in some areas will need cutting edge and complex products. By contracting in sufficient volume, the government can give industry enough of a market to justify investment in labour, equipment, and research and development. This can lead to innovative products being produced and greater opportunities in export markets," Mr Power said.

The focus over the next three months will be on building consensus on the priority actions, setting up the resources in lead agencies to deliver all-of-government contract savings, and ensuring that all procurement policy activities are closely aligned and integrated.

Information on government procurement is available at www.procurement.govt.nz

ENDS

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