NZ Government Procurement contract controversy

New Zealand Government Procurement (NZGP) has reissued its Generation 3 Talent Acquisition Services (TAS) request for tender (21 October 2022) with changes to the commercial agreements after a supplier backlash.

The new all-of-government external recruitment services (ERS) contract covers a range of ICT job positions. These include application support, architect, business intelligence, change management and transformation, CIO, and cyber security and testing positions.

There are 179 NZ government agencies participating in the ERS contract. They spent $142 million on permanent, temporary, and contractor placement types in the last financial year. To service this, there were 41 recruitment agencies interacting with government agencies almost continuously.

What went wrong?

NZGP paused the tender process last month because they said “not all voices were heard” during their earlier request for information (RFI) stages.

NZGP’s consultation with their Client Advisory Group, supplier briefings and one-to-one meetings, had failed to respond to the market’s needs. NZGP had “hoped that the change from percentage fees to a fixed fee structure would remove complexity, improve clarity, and allow for greater transparency for everyone involved”.

A backlash occurred with one recruiter describing NZGP’s proposals as “the assassination of contractor recruitment in New Zealand as we know it”.

How NZGP fixed it

Key changes have now been implemented by NZGP in the new RFT. These include introduction of new, lower rates associated with the placement of contractors if they stay in placement and move into the second year of work with the organisation they have been placed in by a recruiter. There is also a move from a “transaction-focused approach” to a “value-focused approach”. This includes a conversion fee for temporary and contracting staff when they become permanent employees.

Relevancy to Australian tenderers

There are lessons for tenderers in Australia in this. It is important to realise that government procurement does not always understand the markets they are working in as well as the people that operate in it (ie the sellers). While this was an extreme case of the tender process being unsuitable for the contracts they were looking for, governments’ one-size-fits-all approach to buying can mean a mismatch between the tender process and the market.