New Zealand Government Procurement Rules changes - Letting you know the budget
In today’s article, I’m highlighting an interesting addition to the information agencies need to give you in their procurement documents. I won’t share the whole Rule because there’s a lot of detail that is the same from the previous version – just the important change. For those who want to check the whole thing out, the full Rule is here.
Rule 17: Notice of Procurement
1. Agencies must include all of the information that suppliers need to prepare and submit meaningful responses in each Notice of Procurement.
Application
2. Each Notice of Procurement must contain the following information:
…
g. where known and appropriate, the expected budget available to spend on the goods, services or works
Definition of Notice of Procurement
The document published on GETS that advertises a new contract opportunity, like a Request for Tender.
Why this change?
Agencies have historically been reluctant to include the
budget when they are advertising a contract opportunity. The fear is that if
suppliers knew the budget, then they would “price to the purse” – for example,
if the advertised budget was $150,000, then all the responses would be priced
at $149,999.
However, this means suppliers are flying blind when trying
to put their pricing response together. Without a rough idea of the budget, it
is very challenging to know if you are underselling to the point that your
quality would be questioned, or, conversely, putting in a price that, while
fair for what you are selling, is so far out of the agency’s budget that you’d never
be successful.
By requiring agencies to include the budget where known and practicable, suppliers will have a better idea of whether the opportunity is worth responding to, and be able to price their solution accordingly.
What does this mean for me?
By getting the budget up front, you will be able to:
- Make a better decision about whether or not to bid for the work. If the budget is too low, then this could be an indication that you could be wasting your time. If the budget is significantly higher than you are used to, then it could be an indication the agency is looking for a larger organisation, or a more significant volume of work than you have previously provided. Make sure you’d be capable of delivering the contract before putting the bid in. ·
- Better prepare your response in line with the agency’s expectations. If the budget is at the lower end of the market scale, then the agency is clearly not looking for all the bells and whistles!
What do I need to do now?
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