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Defence to draw more on local suppliers, smarts


By Paul McBeth

June 12 (BusinessDesk) - The government wants greater engagement from the New Zealand Defence Force with local suppliers and researchers in its $20 billion blueprint to shape the nation's military for the next 30 years.

Defence Minister Ron Mark yesterday unveiled the 2019 Defence Capability Plan, outlining how the Labour-led coalition plans to meet its priorities for the navy, army and airforce with a 30-year capital investment programme. He said the plan was developed with the government's priorities in mind and will be delivered in a fiscally responsible way. The NZDF will develop a business case for each investment, which will then be tested and subjected to available funding in the budget process.

The new plan directs the Defence Force to focus on local industry in its procurement process, matching a broader goal of the government to use its buying power to support New Zealand firms. That local involvement enhances the value for money, and multinational suppliers will have to outline the steps they've taken to use New Zealand industry to supply their goods and services.

That local favouritism plan isn't just limited to procurement. The plan also identifies additional value being derived from local scientific and tertiary institutions supporting the large multinational vendors.

"Inclusion of universities where suitable, can provide added access to scientific expertise and innovation in future-proofing defence capability solutions," it said.

The New Zealand Defence Industry Association welcomed the industry-specific chapter in the plan, and said it anticipates increased investment will deliver more jobs and employment security in the regions.

"International prime companies submitting proposals to provide the capabilities outlined in this capability plan will be required to provide activity reports setting out the steps they have taken to identify and use New Zealand industry to supply goods and services as part of their proposal," NZDIA chair Andrew Ford said in a statement.

"Activity reports will specify the names and addresses of the New Zealand companies approached, describe the goods and services to be supplied over the life of the proposed contract, and quantify the value of those goods and services."

A 2014 NZDF report on how to get the most out of local industry involvement found an increasing proportion of the military's expenditure had been spent with New Zealand firms, but more could be done on capital investment. That report identified supplying component parts and managing the repair and maintenance of large assets as opportunities for domestic companies, but noted that it was hard to break into the market.

The NZDF's 2016 plan encouraged earlier engagement with industry but prioritised access to the right goods and services from capable suppliers rather than a 'buy local' goal.

The new plan said a review of defence procurement completed last year found early engagement was an area that could be further developed.

"The aim is to engage industry to reduce risk and uncertainty in capital procurements and to ensure Defence understands and can leverage the market," it said. "Engaging early with industry will mean fewer surprises and better quality solutions. It will allow the government to make informed investment decisions, based on the best information available as early in the process as possible."

The paper also identifies about $150 million of smaller capital spending over the next 20 years as an opportunity for New Zealand firms to engage with the Defence Force.

"Feedback from industry has indicated that a more robust and detailed indication of planned projects would allow for more responsive, valuable engagement," the paper said. "To achieve this the New Zealand Defence Force is committing to making its Annual Procurement Plan more detailed and transparent."


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