Auditor-General releases report on using “functional leadership” to improve government procurement

The Auditor-General’s report Using “functional leadership” to improve government procurement was presented to the House of Representatives today.

New Zealand Government Procurement (NZGP), a business unit in the Ministry of Business, Innovation and Employment, is responsible for leading improvements in government procurement. NZGP supports public organisations by producing rules and guidance, as well as carrying out work to increase the number, and improve the quality of, procurement professionals in the public sector.

NZGP has successfully laid the foundations for effective procurement functional leadership. NZGP has shown that having a single organisation lead improvements to government procurement has benefits. This is a significant achievement because cross-agency work is challenging and complex. The estimated savings to the Crown from using all-of-government contracts have significantly outweighed the financial cost of running NZGP.

Public organisations have high expectations of NZGP’s procurement functional leadership. However, NZGP is not yet meeting these expectations. NZGP needs to be clearer about how it is going to influence public organisations to see procurement as a strategic activity focused on achieving public value, rather than as a set of requirements to comply with.

NZGP’s engagement with public organisations needs to be as a strategic partner to make this shift. This means that NZGP needs to provide closer and more nuanced support, be more responsive, and jointly set goals and priorities with public organisations. It also needs to put in place the essential elements of good governance to provide transparency and accountability for improving government procurement, including monitoring and reporting of its planned national procurement strategy.

Our report contains recommendations for NZGP to further improve public sector performance and to be seen as the centre of excellence for procurement in the public sector. It also contains a recommendation to the State Services Commission to clarify its role in setting expectations for procurement functional leadership and reviewing NZGP’s performance.

This report is also available as a one-page summary and an epub.

The tables from the report are also available on the OAG website, here.

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