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Support for new procurement rules

11:21 Fri Mar 8 2013
AAP

Changes to the way the government awards work contracts to assist Kiwi companies are being applauded by business leaders and political opponents.

Economic Development Minister Steven Joyce will soon take proposed changes to cabinet which will make it easier and more worthwhile for small and medium-sized local companies to bid for contracts.

The government is one of the country's largest procurers, but has drawn criticism for giving contracts to offshore companies.

BusinessNZ has been working with the Ministry of Business, Innovation and Employment on the planned changes.

Catherine Beard, the executive director of the organisation's ManufacturingNZ division, says government procurement managers need to learn more about local market capability before tenders go out, and must show that they have considered local capability and where it could fit in the supply chain.

Local companies should have longer lead times to respond to tenders and put together joint ventures, while the government must consider the whole-of-life cost of a project, rather than just opting for the lowest-cost contract, Ms Beard says.

"Local firms tend to provide a higher quality product which is better value. They also have the ability to tailor make a solution and are on the ground for back-up and support," she said.

The Green Party also welcomed the changes, but says they're long overdue.

Co-leader Russel Norman says the government has a "dire record" of sending major contracts overseas, including buying trains from China, which has been linked to the closure of Kiwirail's Hillside workshops.

Both the Greens and Labour unveiled New Zealand-focused procurement policies before the 2011 election, and launched a manufacturing inquiry earlier this year calling for better government support for the sector.

Mr Joyce admits the government has not been good at picking up innovation from smaller local companies in the past.

He says the changes are likely to mean more work for New Zealand companies, and more jobs, over time.