This document has been superseded: see our 2008 report, Procurement guidance for public entities

Background

In September 1995 we issued a statement of good practice – Good Practice for Purchasing by Government Departments.

The statement brought together a number of existing documents and instructions relating to purchasing. It was not a centrally promulgated set of rules or guidelines. Rather, it was a guide for the basic procurement process and a set of benchmarks against which departmental purchasing practices could be assessed.

Feedback on the statement showed that it was well received and useful to departments in developing their own purchasing manuals.

Why are we revising the 1995 statement?

Procurement practice has continued to evolve rapidly. We consider that the 1995 statement would benefit from revision in order to:

• identify the overriding principles which apply to the procurement process;
• address new developments over the last 4 or 5 years; and
• address more fully three elements of the process which are especially relevant to significant procurements:
  • the business case;
  • the procurement plan; and
  • project management.

What does this statement of good practice contain?

This statement is in 3 parts.

Part 1 sets out the overriding considerations that a public entity should consider when procuring goods or services.

Part 2 describes, in relation to each part of the basic procurement process:

• the overall principles of good practice; and
• information which a public entity might include in its own procurement manual.

Part 3 discusses particular types of procurement, and how the basic procurement process described in Part 2 applies to them. The types of procurement which Part 3 covers are:

• the engagement of consultants;
• syndicated procurement;
• contracting out, co-sourcing, and outsourcing;
• contracting for the construction of physical works;
• sole source situations;
• monopsonist or sole procurers;
• procurement in the electronic commerce context; and
• guidance on IT System procurement (will be developed at later date).

How should this statement be used?

This publication is a statement of good practice. It is not a set of rules. We suggest that each public entity uses the statement as a benchmark for its own procurement policies and procedures, and as a guide to what its own procurement manual should contain.

In our role as the auditor of public entities, we would expect to find that an entity’s procurement policies and procedures compare favourably with this statement.

The statement is also not a guide to a public entity’s legal obligations. Each entity should supplement the statement with legal advice where necessary.

Scope

This publication is designed for use by any public entity, as defined in the Public Audit Act 2001 – except for local authorities and entities under their control.

We use the term "procurement" throughout this publication. This reflects the growing usage of the term in New Zealand. Some people will be more comfortable with the term "purchasing". Either term is applicable to what we say.