Value for money at heart of Government Procurement Rules

In the latest iteration, the application of the Government Procurement Rules to public sector agencies is broadly unchanged, subject to a few nuances.

• • Who: The Rules continue to apply to central and local public agencies with a clarification to directly name types of Crown entity to which the Rules apply (rather than relying on the previous “State Services” definition).
  • Value threshold: The value threshold is unchanged – the Rules continue to only apply to the procurement of goods, services and refurbishment works, or any combination thereof, where the whole-of-life cost meets or exceeds $100,000. The Rules apply to the procurement of new construction works where the whole-of-life cost meets or exceeds $9 million (value threshold).
  • Broader application: There is a nuance that some Rules now impose “expectations” on agencies where the value threshold is not met. This would appear to increase the application of the Rules to procurement processes which are not currently covered by the current Rules. Agencies will need to be alive to this and review their procurement processes in that light – see our further comment below.
     

In addition, an “expectation” is a new category of Rule which indicates an expectation that agencies meet good practice standards unless circumstances mean it is not appropriate to do so. Agencies must record their decision-making processes. Procurement teams should ensure their processes are up to date to comply with this documentation requirement.

The concept of a compulsory rule (a “must” rule) and a good practice/strongly recommended rule (a “should” rule) have also been maintained in the new Rules.

Appropriate use of taxpayer-funded, public money remains at the heart of the Rules.

New requirement: Economic benefit test

Where the value threshold is met, the new Rules introduce an “economic benefit test” which will replace the “broader outcomes” rules. 

Examples of economic benefits include: 

• • Employing workers
  • Using New Zealand businesses as subcontractors or otherwise in the supply chain
  • Developing New Zealand industry capability or capacity
  • Developing and creating export opportunities for New Zealand goods and services
     

When contracting with a supplier, agencies must ensure the contract includes provisions for delivering the economic benefits. Agencies also have to conduct sufficient monitoring throughout the life of the contract to ensure suppliers’ commitments are delivered and reported on.

New requirement: Supplier panels and secondary procurements

The new Rules introduce new requirements for setting up a supplier panel (a “secondary procurement”), including having a contract management plan and guide in place for how the panel will operate.

There is also a new transparency requirement for secondary procurements over $100,000, with agencies required to either:

• • Publish a contract award notice
  • Report panel spend to New Zealand Government Procurement (NZGP) annually (including estimated spend, actual spend and the number and value of contracts awarded to each supplier on the panel)

We understand these changes aim to improve transparency and contract/supplier management in secondary procurements.

Updated: Government model contract templates

NZGP published a new version of the standard government model contract (GMC) templates in August 2025 to “reflect the new Rules”.

The key changes are (in our view) non-material and include:

• • Clarifying agency/supplier overlapping obligations under the Health and Safety at Work Act 2015
  • New references to, and obligations about, security and protective security
  • A new clause to reference the Supplier Code of Conduct
  • A new clause on Employment Standards to support the government’s policy objectives to achieve good employment standards.

The GMC templates continue to be suitable for low-value, low-risk routine goods and services (but excluding ICT and construction contracts, or contracts where personal information is accessed by, or collected by third-party suppliers). Updated copies are available here and should be used going forward.

Key takeaways

Overall, we think the new Rules are positive. Of note:

• • We expect SMEs will welcome the clear direction to award smaller contracts to capable New Zealand businesses
  • At the same time, the government can continue to maximise the use of international partners (without discrimination) to ensure the best outcome for the New Zealand economy (and now reinforced by the economic benefit test)
  • At a more granular level, the new Rules have been streamlined and reduced in number – though time will tell whether this makes them easier to understand and apply in practice

Agencies should prepare for the 1 December 2025 commencement date by familiarising themselves with the new Rules (and associated guidance and template documents) and update their procurement processes to reflect these. NZGP has published guidance on transitioning to the new Rules here. 

Suppliers also need to familiarise themselves with the new Rules, and in particular, should think about how they will respond to the economic benefit test as part of a procurement.

What’s next?

We are following how the new Rules sit alongside the government’s guidance on generative AI procurement when procuring AI tools for their organisations. Most generative AI providers and developers are based overseas, so they will need to show they can deliver an economic benefit to New Zealand.

We are also watching the developments in the centralisation of digital procurement by the Government Chief Digital Officer on behalf of most public service agencies and Crown entities, following the announcement in September 2025. Plans currently include a “NZ Government App”, which will include functionality relating to secure notifications, digital identity documents and payments for government services.

How we can help

Our team has deep experience advising government agencies, and suppliers to government, on the implications of the rules and on best practice in procurement. If you’d like advice on the implication of the new Rules on your organisation, or assistance with a procurement, contact our experts Campbell Featherstone, Hayley Miller, Hayden Wilson and Peter Callus.