FOREWORD/PREFACE The Defence Act 1990 has brought many changes in the way that Defence operates. The geographic spread and devolution of responsibility within Defence has made it difficult for industry to offer support in the form of goods and services appropriate to Defence needs. It is intended that this booklet and the booklet "The New Zealand Industry Involvement in Defence Contracting and a Guide to the Operation of Defence Offsets", soon to be published, will meet the need to provide a clearer understanding of the workings of the Ministry of Defence and the New Zealand Defence Force and that this will lead to mutual benefit when doing Defence business.
G.C. Hensley Secretary of Defence
A.L. Birks Lieutenant General Chief of Defence Force
Table of Contents PART 1
INTRODUCTION
1.1 1.2 - 1.5 1.6
Background Defence Organisation Points of Contact
PART 2
GOVERNMENT POLICIES
2.1 2.2 - 2.4 2.5 2.6 - 2.8 2.9 2.10 - 2.11 2.12 2.13
Policies and Procedures Purchasing and Industry Policies Government Procurement Agreement Offsets Policy A Guide to the Management of Departmental Purchasing Government Purchasing Guidelines Suppliers Guide to Government Purchasing in New Zealand NATO Codification System : Guide for Industry
PART 3
OPPORTUNITIES FOR INDUSTRY
3.1 3.2 - 3.4 3.5 - 3.11 3.12 - 3.13 3.14 3.15 - 3.16
The Defence Budget Defence Capability in New Zealand Industry New Zealand Industry Involvement Defence Purchasing and Australian Industry International Collaboration Use of Agents
PART 4
EQUIPMENT PURCHASING PROCESS
4.1 4.2 - 4.23 4.24 - 4.29 4.30 - 4.31
Procurement Activities Procurement Projects Maintenance and Support Construction and Maintenance of Facilities
PART 5
COMMUNICATION
5.1 - 5.2 5.3 - 5.5 5.6 - 5.7 5.8 - 5.11 5.12
Introduction Unsolicited Approaches from Industry Registration Publications Release of Prices and Information
PART 6
SPECIAL CONSIDERATIONS WHEN DOING BUSINESS WITH DEFENCE
6.1 - 6.2 6.3 6.4 - 6.5 6.6 6.7 6.8 - 6.9 6.10 - 6.11
Quality Assurance Value Management Security Item Identification Risk Management Standards Procurement Ethics
ANNEXES A B C D
Ministry of Defence and NZDF Organisation Structure Glossary of Terms and Abbreviations Contacts in Defence New Zealand Army Procurement Agencies Command Structure
PART 1
INTRODUCTION
BACKGROUND 1.1 This booklet has been produced to assist suppliers through the complex structures of the New Zealand Defence organisation and provide an insight into the procurement processes employed by Defence.
DEFENCE ORGANISATION. 1.2 An overview of the Defence procurement organisation is shown in Annex A. In the interests of clarity, this booklet will use the following expressions which are common Defence internal usage:
1.3
!
The Ministry is the Ministry of Defence;
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NZDF is the New Zealand Defence Force, including the Headquarters and the three single Services - the Royal New Zealand Navy, the New Zealand Army and the Royal New Zealand Air Force; and
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Defence refers to the Ministry and NZDF jointly. Annex B explains other terms and abbreviations used in this booklet.
1.4 The Ministry, through the Secretary of Defence, has responsibility to procure, replace, or repair ships, vehicles, aircraft, and equipment used or intended for use by the NZDF, where this changes the operational capability of Defence. In addition, the Ministry performs policy, planning and audit functions. 1.5 The NZDF is a complex organisation which must have the ability to sustain an operational military force in the field. The key to success in this role is the establishment and maintenance of adequate supply systems, which in turn requires effective relationships with suppliers and potential suppliers of goods and services.
POINTS OF CONTACT. 1.6 Most suppliers will be working with the Capability Procurement Division of the Ministry, the procurement branches of the single Services or procurement staffs in camps and bases. Suppliers may directly approach potential users of their products within Defence but should be aware that considerations such as standardisation, budget controls, financial priorities or codification requirements may preclude decision making at user level. It is Defence procurement policy to use competitive procurement methods where this is cost effective.
PART 2
GOVERNMENT POLICIES
POLICIES AND PROCEDURES 2.1 designed to:
Defence procurement activities follow defined policies and procedures which are
!
ensure that public money is spent effectively and economically;
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encourage open and effective competition; and
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meet public accountability requirements.
PURCHASING AND INDUSTRY POLICIES 2.2 to:
The Government also uses its purchasing activities to promote industry by seeking
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maximise competitive opportunities for New Zealand and Australian companies to participate in the supply of goods and services to the Government; and
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bring to New Zealand and Australian industry advanced technology, skills and capabilities.
2.3 New Zealand Government agencies produce a number of guidance documents to assist public understanding of procurement policies. These include: !
Government Procurement Agreement dated July 1991.
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New Zealand Government Voluntary Offsets Policy.
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A Guide to the Management of Departmental Purchasing, published by The Treasury.
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Government Purchasing Guidelines: Opportunities for Local Industry, published by the Ministry of Commerce.
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Suppliers' Guide to Government Purchasing in New Zealand, published by the Ministry of Commerce.
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Government Purchasing in New Zealand: Policy Guide for Purchasers, published by the Ministry of Commerce.
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NATO Codification System: A Guide for Industry, published by the NZ Defence Force.
2.4 Defence has an obligation to follow Government directives to buy its needs from the most effective and economic source. Defence has an active policy of encouraging local industry to become that source.
GOVERNMENT PROCUREMENT AGREEMENT 2.5 The New Zealand Government is a member of the Government Procurement Agreement (GPA) along with the Australian Commonwealth and State Governments. Under the GPA, the Australian Commonwealth and State Governments and the New Zealand Government recognise the benefits to Australian and New Zealand industry and the government purchasing bodies of treating Australia and New Zealand as a single market for government procurement. Consequently they have agreed: !
to treat the other country's service providers, products, and suppliers of goods in the same way they treat their own; and
!
to promote opportunities for Australian and New Zealand suppliers to compete for government business on the basis of value for money, and to avoid purchasing practices biased in favour of foreign goods and suppliers.
OFFSETS POLICY 2.6 The New Zealand Government's voluntary and informal offsets policy welcomes commercially viable opportunities for New Zealand industry arising from major off-shore purchases by government departments and other agencies. While it is not compulsory for purchasing bodies to require offsets proposals in tenders, Defence regularly exercises this option. 2.7 To qualify for acceptance as a Defence Offset, the business directed to New Zealand industry must have Defence relevance, be of commercial and technological significance, and must contribute to the development of New Zealand industry. 2.8 The Defence Offsets Policy is set out in a bulletin issued by the Capability Procurement Division of the Ministry of Defence in September 1991. Copies of the policy document, and an explanatory booklet "New Zealand Industry Involvement and a Guide to the Operation of Defence Offsets" are available from the General Manager Capability Procurement, Ministry of Defence, at the address given in Annex C. The Defence Offsets Policy is also included in the "Suppliers' Guide to Government Purchasing in New Zealand", published by the Ministry of Commerce.
A GUIDE TO THE MANAGEMENT OF DEPARTMENTAL PURCHASING 2.9 This booklet, issued by Treasury, looks at the Government's financial management reform programme, the legislative requirements for departmental purchasing, the various stages of purchasing and the practical management techniques to be used when purchasing. GOVERNMENT PURCHASING GUIDELINES : OPPORTUNITIES FOR LOCAL
INDUSTRY 2.10 This booklet, issued by the Ministry of Commerce (revised March 1994), gives a full explanation of the Government's purchasing policy, which is based on the principles of value for money, open and effective competition, and full and fair opportunity for local (New Zealand/Australian) industry. 2.11 The booklet also outlines procedures by which public sector purchasers can ensure that they are giving effective opportunities to competitive local industry.
SUPPLIER'S GUIDE TO GOVERNMENT PURCHASING IN NEW ZEALAND 2.12 This booklet, issued by the Ministry of Commerce (revised March 1994), is designed to help suppliers understand and penetrate the government purchasing market. It explains the new policy environment in which taxpayer-funded buyers operate. It discusses how to go about selling to New Zealand Government departments, and outlines the assistance that can be provided by the New Zealand Industrial Supplies Office (ISO).
NATO CODIFICATION SYSTEM : A GUIDE FOR INDUSTRY 2.13 This booklet, issued by and available from the National Codification Bureau (address at Annex C), is designed help industry understand the NATO Codification System as it is applied in New Zealand. Supplier compliance with the system assists Defence in the continuing support of equipment and could provide potential marketing advantage for suppliers.
PART 3
OPPORTUNITIES FOR INDUSTRY
THE DEFENCE BUDGET 3.1 The annual Defence budget exceeds $1 billion, of which a significant portion is spent in obtaining goods and services. Areas of opportunity for New Zealand and Australian industry include: a.
over $200 million per year on capital equipment,
b.
$30 million per year on contract repair and maintenance of equipment, and
c.
$140 million per year on replacement equipment, spares and day to day operating needs of the NZDF.
DEFENCE CAPABILITY IN NEW ZEALAND INDUSTRY 3.2 New Zealand does not have a "Defence Industry" as it is understood in larger nations. Nonetheless, there may be strategic advantage to Defence in having its needs met from within New Zealand. For this reason, Defence may choose to foster the development of certain industry capability in New Zealand. 3.3 Defence has a policy of procuring items "off the shelf" where these are available and meet Defence requirements. This practice will continue where standardisation and interoperability with allies are important. 3.4 Where Defence enters into a development contract, the contract will include clauses to ensure that treatment of ownership of intellectual property is fair to all parties. The outcome of such development may be increased opportunities for industry both in New Zealand and off-shore markets.
NEW ZEALAND INDUSTRY INVOLVEMENT 3.5 The Ministry of Defence manages a formal New Zealand Industry Involvement (NZII) programme. Although NZDF does not have such a programme, it will nonetheless participate in NZII type activities at its own level when the opportunity presents itself. 3.6 NZII is a programme of production work, research and development, or enhancement of New Zealand technology or industrial capability, arranged by a contractor, or sub-contractor, for execution in New Zealand. NZII comprises: !
New Zealand Industrial Participation, and/or
!
Defence Offsets.
3.7 New Zealand Industrial Participation. Where New Zealand and/or Australian industry participates in the supply of goods and/or services to Defence, the value of local involvement is known as New Zealand Industrial Participation (NZIP). NZIP is also referred to as 'content' or 'local content'. 3.8 Defence Offsets. Defence Offsets are business activities of Defence relevance, directed to New Zealand organisations, which are of commercial and technological significance and contribute to the development of New Zealand industrial capability. Defence Offsets obligations arise when an off-shore supplier undertakes to direct appropriate business to a New Zealand organisation. 3.9
Defence Offsets do not receive any funding assistance.
3.10
NZII undertakings, when agreed in a contract, become contract deliverables.
3.11 Where a contract containing Defence Offset obligations is placed with a New Zealand or Australian prime contractor, the offset obligation falls on the off-shore subcontractors, with the New Zealand or Australian prime responsible for ensuring that the off-shore sub-contractors enter into appropriate project deeds with Defence.
DEFENCE PURCHASING AND AUSTRALIAN INDUSTRY 3.12 New Zealand and Australia have, under the ANZCERTA Treaty and the GPA, made mutual commitment to give each other's domestic suppliers equal treatment in Government purchasing. The ANZAC Ship Treaty and the Cooperation in Defence Logistics Support Agreement (CDLSA) also view the industries in both countries as a common industrial base for Defence procurement purposes. Accordingly: !
Australian industry is invited to participate in New Zealand Defence projects on the same basis as New Zealand industry.
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New Zealand will not seek Defence Offsets against Australian content.
!
Exports from New Zealand to Australia do not qualify as offsets.
3.13 New Zealand Defence Offsets will not normally be satisfied by activities undertaken by Australian industry. However, activities undertaken in Australia may be accepted in the following circumstances: !
The Australian company must be undertaking direct work (NZIP) on the procurement project.
!
The proposed Defence Offset activity must be associated with the procurement project.
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Any proposal must be approved by Defence prior to the commencement of the Defence Offset activity.
DEFENCE EXPORTS 3.14 Further opportunities are available to New Zealand industry through international collaboration between Defence and off-shore organisations. Within its resources, Defence Attachés at overseas posts may arrange introductions between New Zealand industry and potential off-shore Defence buyers, and opportunities may exist to expose New Zealand produced equipment during overseas exercises and operations. The Deputy Director Industrial Policy (See Annex C) can provide more detailed information on this area. International collaboration includes the exchange of item identification data between countries participating in the NATO Codification System. The contact for this work is the Director of the National Codification Bureau, whose address is at Annex C.
USE OF AGENTS 3.15 Defence does not have a specific objection to New Zealand companies presenting proposals on behalf of off-shore Principals, and welcomes collaboration of this nature where there is benefit to all the parties involved. However, where a New Zealand agent is simply acting as an in-country administrator and adding no value to the product or project, Defence reserves the right to deal directly with the Principal. 3.16 Where agents are employed, they will be expected to demonstrate their credibility in the same way as Principals are, that is, to produce evidence of their right to act for the Principal, their right to enter into binding agreements on behalf of the Principal, and their own stability and credibility in the market place.
PART 4
THE PURCHASING PROCESS
PROCUREMENT ACTIVITIES 4.1
Defence procurement activities can be categorised as either: !
Procurement Projects which cover all operational and non operational equipment of a capital nature, major requirements for services, and works; and
!
Maintenance and Support which includes procurement of day to day operating goods and services, including facilities management, small equipment items, spares, consumables and a variety of other service support functions.
PROCUREMENT PROJECTS 4.2 In all procurement, Defence follows established processes, and adheres to the Government Guidelines on purchasing and procurement, especially in regard to giving full and fair consideration to Australian and New Zealand industry. Some steps of the process may be omitted if the size, technical complexity or time frames for the project do not warrant them. 4.3 Major capital equipment (CEP) acquisitions are over $5 million in value and the responsibility of the Capability Procurement Division of the Ministry. The procurement stage of a project is initiated after passing through the Defence Planning System (DPS). The DPS process includes a rigorous assessment of the requirement against performance outputs required of Defence. 4.4 Each Service operates a minor capital equipment programme called the "Fixed Asset Acquisition Programme" (FAAP) for projects estimated at less than $5 million. Procurement is carried out by single Services, and is similar to the model used by the Ministry for CEP acquisition. Approval Process 4.5 Every procurement is subject to some form of financial planning process. Major capital items are likely to be part of the indicative five year plan, other capital items will be included in shorter term plans, while procurement of operating supplies and support services will be part of the operating budget approved annually by Parliament. 4.6 It is important that suppliers and potential suppliers recognise the impact of the Government and defence budgetary processes, because they need to learn how to work effectively within the constraints imposed by these rigid systems.
Procurement Process 4.7 CEP projects are allocated to Ministry Project Directors who are supported by staff from other areas of Defence as required. A plan is prepared for each project which defines all the events and activities necessary to complete acquisition in an orderly and efficient manner. 4.8 The acquisition processes can be lengthy, often having long development stages. Procurement strategies will be developed for each project to address risk, concept, design, development, management planning, production, delivery, testing and acceptance, together with appropriate quality assurance requirements and local industry involvement. 4.9 FAAP projects are managed by single Service Project and Equipment Managers using the same principles. Promulgation 4.10 Invitation to Register Interest (ITR), Request for Proposal (RFP), and Request for Tender (RFT) may be notified through: !
the New Zealand Tenders Gazette;
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the New Zealand Government and Local Body Tender;
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selected national newspapers in NZ and off-shore;
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Australian Defence News and some other Australian publications;
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New Zealand Industrial Supplies Office;
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local or international trade directories; and
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New Zealand Defence Force overseas posts.
Invitation to Register Interest 4.11
The ITR process is designed to obtain information such as: !
an indication of supplier competence in respect of the general requirements of the project;
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the capacity of the company and details of any associated companies that may be involved in the project;
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a description of quality systems currently being implemented;
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contact points within the company; and
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budgetary costings.
4.12 The responses to an ITR are evaluated and a report prepared recommending courses of action and possible supplier short-listing. Request for Proposal 4.13
An RFP is designed to define and obtain the following: !
an offer to satisfy the User Requirements detailed in the RFP;
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the capacity of the company and details of any associated companies that may be involved in the project;
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a description of quality systems used by the company, and the system that will be used to control the contract;
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contact points within the company
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response to the specification;
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an outline of any proposals for NZII; and
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prices and lead times for the equipment.
4.14
The RFP may lead to a contract, or be the preliminary to release of an RFT.
Request for Tender 4.15 Standard RFT documents are used for Defence procurement. A supplier will be required to submit the following: !
a detailed response demonstrating competence to satisfy the requirement detailed in the RFT;
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details of the capacity of the company and the names of any known companies or proposed sub-contractors that may be involved in the project, including the names of the "true" manufacturers of items or components;
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contact points within the company;
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any proposed NZII programme; and
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completed technical, codification, pricing and delivery schedules.
Contracts 4.16
Defence prefers to use Fixed Price contracts.
4.17 Contracts are normally negotiated in New Zealand. All correspondence in connection with a project must be in the English language. Unless otherwise specified, the International System of units (SI) will be used. Project Management 4.18 The Project Director or NZDF Project or Equipment Manager is responsible for successfully introducing into service equipment which meets the specified characteristics, within budgeted cost and time limits. 4.19 Defence project management is carried out using established procedures addressing specific issues such as research, development, policy, funding, financial management, quality assurance, industry involvement and contract management. User Requirements and Specifications 4.20 The prime objective in writing User Requirements is to clearly, accurately and unambiguously specify Defence needs in a way that will not exclude suitable alternatives and which leads to fully meeting the capability requirement in the most cost effective way. 4.21 Defence prefers, wherever possible, to use functional specifications, and will usually be receptive to suggestions from tenderers or prospective tenderers which will provide the requirement more effectively than called for by the specification. The Evaluation Process 4.22 The evaluation process is normally conducted by a team of technical and commercial staff. Tender selection may be based on the initial offer received, especially for smaller projects, or may require detailed negotiations and further written or oral presentations. Tenderers are advised to present their best offer with their initial submission. 4.23 The authority to accept an offer may reside with project staff or with internal Tenders Boards responsible for reviewing and approving project staff recommendations. Any NZDF purchase over $10,000 must be placed before a formal tenders board, and those over $1 million require the personal approval of the Chief of Defence Force. Some CEP projects may require further Government approval of the proposal prior to award of a contract. Confirmation of acceptance is by written order or a formal contract depending on the complexity of the project.
MAINTENANCE AND SUPPORT 4.24 Once equipment has been acquired and placed in service, provision of support for that equipment throughout its period of service offers further scope for industry. Support of equipment involves the procurement of spare parts and the refit, overhaul, repair and maintenance of vessels, vehicles and aircraft and other capital items, as well as associated components. It also includes support to established bases and the wide variety of services required to maintain establishments in New Zealand and support military units in the field. 4.25 Depending upon the level of expenditure involved and the type of goods requiring repair, the decision to repair and method of repair is vested in workshop and purchasing officers at camps and bases, or logistics managers of the three single Services. Repair of general items, including repair and maintenance of facilities, is to normal commercial standards, but for aeronautical, marine or military hardware and similar operational items, repair to specific standards or specifications may be required. 4.26 Opportunities also exist for the provision of a large range of technical, administrative and domestic goods. These are normally of a commercial standard and not subject to the stringent requirements or testing often associated with Defence procurement. Examples include the supply of foodstuffs, office supplies, machinery, tools and hardware. Some items of this type are supplied on long term standing agreements.
Approval 4.27 Depending on the level of expenditure and the goods or services required, authority to approve procurement is vested in appointments ranging from supply officers at individual Service camps and bases to headquarters logistic officers.
Procurement 4.28 The authority to initiate procurement of spares and materials is devolved to individual single Service purchasing officers. A variety of procurement arrangements may be used ranging from negotiated period contracts to one off purchases using petty cash or credit cards.
Service Responsibilities 4.29 Each of the three Services has a designated organisation with responsibility for the acquisition of goods and services. Annex A shows the organisation of procurement in NZDF, and Annex D provides a breakdown for the NZ Army, which has the most devolved organisation structure of the NZDF. Annex C provides a list of contact names and addresses.
CONSTRUCTION AND MAINTENANCE OF FACILITIES
4.30 Where it is operationally feasible, cost effective and practicable to do so, Defence contracts out support activities to industry. Such activities include the maintenance of buildings, facilities and grounds, waste management and the cleaning of living and working accommodation. Opportunities may be available to contractors for a variety of facilities work ranging from major construction tasks to routine maintenance and minor repair jobs. 4.31 Construction and maintenance of facilities follows the same procedures laid down above. Contracts are normally based on NZS 3910: 1987 (Conditions of Contract for Building and Civil Engineering Construction), and may be administered on behalf of NZDF by an engineering or architectural consultant or facilities management contractor.
PART 5
COMMUNICATION
INTRODUCTION 5.1 Defence procurement ranges in scope from large capital projects to replenishment of spare parts and minor building maintenance. It is therefore necessary to ensure that appropriate communication strategies are established to allow Defence to advise industry of its requirements and for industry to offer its products. 5.2 Current NZ Government instructions to Government Departments require all departments to purchase to their own best advantage, while ensuring that procurement practices do not disadvantage local Industry. Defence has a proactive stance on this, and is making positive efforts to encourage New Zealand industry to supply its needs. To achieve this: !
The Ministry of Defence has appointed a Defence Industry Liaison Manager, responsible for ensuring that NZ industry is assisted in every way to tender for Defence contracts.
!
The NZDF has established a position of Deputy Director Industrial Policy. This officer has responsibility for relationships with industry, including assistance to potential suppliers seeking to find points of entry to NZDF, and help to suppliers and potential suppliers in their relationships with Defence.
UNSOLICITED APPROACHES FROM INDUSTRY 5.3 The informal or unsolicited approach to Defence can be difficult for industry, as there is often no obvious point of contact. Potential suppliers should initially determine whether their product or service should be offered: !
At the local level - that is, the "work face" user or the supply officer on the ship, camp or base.
!
At a regional or Service level - for example, to all bases in a geographic area, or to all units of one of the Services.
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At a national level - to single Service headquarters or Headquarters NZDF.
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To an agency dealing with Defence. Brokerage agencies, for example, work with NZDF in arranging many national contracts, and contractors providing services such as facilities management for NZDF bases will often carry out significant procurement on behalf of NZDF.
5.4 Once an approach has been determined, the organisation charts in this publication, and the list of contact points at Annex C may be used to determine a point of entry. If this does not achieve what is required, the Deputy Director of Industrial Policy can provide further direction. 5.5 Where a company is selling day-to-day consumable supplies, it should be aware that, in many cases, purchasing decisions are at a local level, unless advantage can be seen in entering into national contracts for the supply of the item. If a supplier is offering national fixed price or discounted contracts, the single Service logistic branches should be the point of contact.
REGISTRATION 5.6 Calls for ITR, RFP and the majority of contracts and tenders, are advertised through recognised tenders publications in New Zealand and off-shore where necessary, and daily newspapers where appropriate. All those goods or services in which ANZ industry involvement is envisaged will be advertised in New Zealand and Australia. Some procurement agencies maintain lists of potential suppliers. Companies can be added on request, although the lists will be purged regularly and companies removed for reasons such as consistent failure to present an acceptable tender, or poor contract performance. 5.7 As with any other business, the most effective way for any company to do business with Defence is to ensure that it identifies the likely purchasers of its products or services, and maintains a high profile in those areas.
PUBLICATIONS 5.8 The Australian Department of Defence and the Ministry maintain a data base of companies interested in supplying locally (New Zealand or Australia) made goods and services to Defence in both countries. This data base is known as DRB29. Information from this data base is published annually in a commercial publication called "Australian and New Zealand Industry Defence Capability Catalogue" (AIDECC). Applications for inclusion in DRB 29 and AIDECC should be made to the Ministry, at the address in Annex C. 5.9 Each year a document known as "The Yellow Book" is published jointly by the Australian Department of Defence and NZDF. This sets out the approved Australian Defence Minor Capital Equipment Programme and the NZ FAAP for the forthcoming 4 to 5 years. 5.10 A project listing in the Yellow Book does not guarantee that a project will proceed. The Yellow Book indicates intentions, and provides contact points for technical officers dealing with the projects. It therefore offers advance warning to industry and the opportunity for procurement options to be developed prior to development of a Defence contracting strategy. 5.11 A copy of the publication, which is updated in July of each year, can be obtained from the Deputy Director Industry Policy, HQ NZDF, at the address in Annex C.
RELEASE OF TENDER INFORMATION
5.12 All information provided to Defence is treated as confidential, subject to the requirements of the Official Information Act. Defence will, when requested in writing, provide unsuccessful tenderers with reasons for their lack of success. However, detailed pricing information which would be likely to reveal a bidders pricing/marketing strategy in a competitive market, will not be provided. The point of contact is the Ministry Project Director or the NZDF contracts or purchasing staff involved.
PART 6
SPECIAL CONSIDERATIONS WHEN DOING BUSINESS WITH DEFENCE
QUALITY ASSURANCE 6.1 Defence aims to ensure that the goods and services procured meet the standards required for the operational needs of the NZDF. To achieve this Defence is moving to "Quality Assurance", a philosophy of reliance on the quality systems of individual suppliers. Implementation of Quality Assurance will reduce and may ultimately replace direct Defence involvement in the inspection of purchased goods to determine their suitability for use. 6.2 For most major projects suppliers are to be certified to the New Zealand Standard (NZS) 9000 series of standards for Quality Systems, or overseas equivalents. These standards provide a model for audit of suppliers' production and quality systems to ascertain their ability to produce goods to the required standard. However, the Quality Assurance requirements chosen for each project will be appropriate to the goods or service being supplied and to their country of origin. Where commercial products are purchased, industry standards will normally suffice.
VALUE MANAGEMENT 6.3 The NZDF encourages tenderers or suppliers to make suggestions which allow the requirement to be fully achieved at a lower cost. Companies who wish to make such suggestions should advance them as early as possible in the procurement cycle (eg ITR or RFP). Clauses encouraging contractors and or subcontractors to offer further improvement suggestions will be included in contracts with the mutual agreement of the main parties.
SECURITY 6.4 Contractors or subcontractors needing to use and store classified material on their premises will be required to obtain or possess a security clearance at an appropriate level. This will take into account the contractor's ownership and structure, information storage conditions and security clearances for personnel. Similarly, there may be a requirement for company or personal security clearances associated with some projects. 6.5 Sponsorship by the relevant Defence Project Director or Project Officer is an essential prerequisite for contractors seeking security clearance.
ITEM IDENTIFICATION 6.6 Defence also requires contractors supplying equipment to provide information to support quality item identification of the components which make up that equipment. This is to ensure that the requirements of the Standard Agreements on Codification are met and that continued support and maintenance of the equipment can be achieved for the life of the equipment. A booklet explaining Codification requirements is available from the Director, National Codification Bureau, at the address at Annex C.
RISK MANAGEMENT 6.7 Defence is moving towards a risk management philosophy in project management. Tenderers and prospective tenderers may be requested to provide information on their activities, business practices, personnel policies and business and production associates for use in assessing risk factors in tenders. Since this process has been developed some affected companies have found it a useful means of improving their own competitive performance.
STANDARDS 6.8 One of the most effective ways for Defence to achieve standardisation and interoperability with allies is by requiring purchases to conform to appropriate standards. While Defence prefers to use international standards (ISO), military standards of the United States, NATO, other national standards appropriate to the activity involved may be specified. 6.9 It is NZDF policy to use commercial standards and specifications where practicable. Where a contractor has no familiarity with a standard referred to in a tender or contract document, Defence will usually be prepared to discuss the use of alternative standards or specifications provided it does not compromise fulfilment of the contract requirements.
PROCUREMENT ETHICS 6.10 The NZDF adheres to a Code of Ethics in Purchasing based on the principle that procurement is to be, and seen to be, above reproach in all respects. This requires that information entrusted to NZDF be treated with due respect, not disclosed to any other party and not used for personal gain. Business gifts, including hospitality, are not to be accepted unless they can reasonably be described as of small value, and could not be regarded as creating undue influence in decision making. Purchasing staff are required to perform their duties and conduct themselves "in a manner which ensures that they maintain a reputation for fair dealing, without bias, in respect of all potential suppliers". Potential suppliers should be aware that they are likely to cause personal embarrassment and do themselves a disservice by being over generous in their dealings with procurement personnel.
6.11 In the course of their duties some NZDF personnel come into possession of information which is of value to suppliers or suppliers' competitors. The NZDF employment policy provides for NZDF to refuse to do business with firms or individuals where ex NZDF personnel are seen to be unfairly exploiting prior knowledge or acquaintanceships for their own or their new employer's interests. To minimise conflicts of interest, it may also be necessary for some contracts to contain "non recruitment" clauses.
ANNEX A
DEFENCE PROCUREMENT ORGANISATION STRUCTURE
ANNEX B GLOSSARY OF TERMS AND ABBREVIATIONS !
ACNS (Mat) is the Assistant Chief of Naval Staff (Materiel)
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ANZCERTA means the Australia and New Zealand Closer Economic Relations Trade Agreement
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CDF is the Chief of Defence Force
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DCP is the Director of Capability Procurement at Headquarters Support Command
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FAAP is the NZDF Fixed Asset Acquisition Programme
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GM CP is the General Manager Capability Procurement in the Ministry.
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Goods and Services, when used in this booklet, relates to equipment, consumable items, maintenance spares, works, personnel matters, facilities management etc.
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HQ NZDF is the Headquarters of the New Zealand Defence Force, Wellington.
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Ministry means the Ministry of Defence.
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NZDF means the New Zealand Defence Force.
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NZII means New Zealand Industry Involvement and consists of a programme of New Zealand Industry Participation (NZIP) and, or Defence Offsets.
!
OCE is the Office of the Chief Executives, that is, the Secretary of Defence and the Chief of Defence Force acting jointly.
!
SecDef is the Secretary of Defence who heads the Ministry of Defence
ANNEX C
CONTACTS IN DEFENCE MINISTRY OF DEFENCE General Manager Capability Procurement Ministry of Defence Defence House Stout Street Wellington New Zealand Telephone: Facsimile:
postal address
P.O.Box 5347 Lambton Quay Wellington
++64 4 496 0660 ++64 4 496 0858
Responsible for:
Procurement of all major capital equipment for the NZDF which affects the capacity of the single Services to achieve their tasks.
HEADQUARTERS, NEW ZEALAND DEFENCE FORCE The Assistant Chief Development (AC Dev) is responsible for NZDF logistics policy, which includes supply, procurement and movements. The staff of AC Dev includes: Deputy Director Industry Policy Development Branch HQ NZ Defence Force Defence House Stout Street Wellington New Zealand Telephone: Facsimile:
postal address
Private Bag Wellington
++64 4 496 0958 ++64 4 496 0021
Responsible for:
Developing and promulgating matters relating to the relationship between NZDF and ANZ industry. Also forms a single point of contact within NZDF for industry seeking information on areas of opportunity or matters of concern. Also administers NZDF QA policy.
ROYAL NEW ZEALAND NAVY Director of Naval Logistics Naval Staff Defence House Stout Street Wellington Telephone: Facsimile:
Supply and facilities management policy, and procurement of capital items (FAAP)
Naval Supply Depot HMNZ Naval Base Devonport Auckland
postal address
Maritime Headquarters Private Bag 32901 Devonport
++64 9 445 5999 ++64 9 445 5710
Responsible for:
Procurement of spares and maintenance stock, and operational supplies to support the RNZN.
Command Works Office HMNZ Naval Base Devonport Auckland Telephone: Facsimile:
HQ, NZDF Private Bag Wellington
++64 4 496 0335 ++64 4 496 0311
Responsible for:
Telephone: Facsimile:
postal address
postal address
Maritime Headquarters Private Bag 32901 Devonport
++64 9 445 5316 ++64 9 445 5333
Responsible for:
Management of capital works projects and maintenance of Naval facilities.
NEW ZEALAND ARMY PROCUREMENT AGENCIES The New Zealand Army Procurement Agencies Command Structure is shown in Annex D.
ARMY GENERAL STAFF Director of Logistics (Army) Army General Staff Defence House Stout Street Wellington Telephone: Facsimile:
postal address
HQ, NZDF Private Bag Wellington
++ 64 4 496 0999 ++ 64 4 496 0493
Responsible for:
Development of supply and procurement policy for the NZ Army.
HQ SUPPORT COMMAND Capital Procurement Director of Capability Procurement Headquarters Support Command Messines Army Centre Somme Road Upper Hutt
postal address
Private Bag 901 Upper Hutt
Telephone: Facsimile:
++64 4 527 5631 ++64 4 527 5709
Responsible For:
All capital acquisition for Army; that is, all FAAP projects for operational and non-operational equipment, facilities and computers.
Property Management Director of Property Management Headquarters Support Command Messines Army Centre Somme Road Upper Hutt
postal address
Private Bag 901 Upper Hutt
Telephone: Facsimile:
++64 4 527 5910 ++64 4 527 5936
Responsible For:
Management of all Army land, buildings, capital works, routine maintenance, and camp and real estate facilities management
Operational and Base Support Director of Materiel Management Headquarters Support Command Messines Army Centre Somme Road Upper Hutt
postal address
Private Bag 901 Upper Hutt
Telephone: Facsimile:
++64 4 527 5630 ++64 4 527 5637
Responsible For:
Management of in-service equipment, Army base logistic infrastructure support and ammunition procurement.
Contract Support Services Contracts Directorate Headquarters Support Command Messines Army Centre Somme Road Upper Hutt
postal address
Private Bag 901 Upper Hutt
Telephone: Facsimile:
++64 4 527 5624 ++64 4 527 5709
Responsible for:
Tendering and ordering of all operational and non-operational FAAP projects, facilities management, disposals and nominated tri-service projects and contracts.
5th Base Logistic Group Formerly Wellington Regional Support Unit, 1 Base Supply Battalion and 1 Base Workshops. Staff Officer Logistics 5th Base Logistic Group Trentham Military Camp Trentham Upper Hutt
postal address
Private Bag 905 Upper Hutt
Telephone: Facsimile:
++64 4 527 5014 ++64 4 527 5229
Responsible For:
The coordination of all base logistics supply and maintenance for operational forces of the New Zealand Army. Providing domestic support services to the Army units in their geographic area, which includes transport, catering, accommodation, supply services, works and maintenance of facilities and equipment.
5 Logistic Regiment Formerly 1 Base Supply Battalion and 1 Base Workshop) Commanding Officer 5 Logistic Regiment Trentham Military Camp Trentham Upper Hutt
postal address
Private Bag 905 Upper Hutt
Telephone: Facsimile:
++64 4 527 5300 ++64 4 527 5315
Responsible For:
Procurement of off-shore and NZ sourced materiel including spare parts, equipment, clothing, fabrics and personal support items. Major repair, or contract repair management, of all Army equipments including electrical, electronic, instruments, weapons and vehicles.
4 Logistic Regiment Formerly Waiouru Regional Support Unit Staff Officer Logistics 4 Logistic Regiment Waiouru Camp Waiouru
postal address
Private Bag Waiouru Camp Waiouru
Telephone: Facsimile:
++64 6 387 6999 ++64 6 387 6485
Responsible for:
Providing domestic support services to Army units in their geographic area, including transport, catering, accommodation, supply services, works and facilities management and maintenance of equipment.
HQ LAND FORCE COMMAND Staff Officer Grade 1 Logistics HQ Land Force Command 17 Byron Street Takapuna
postal address
Private Bag Takapuna
Telephone: Facsimile:
++64 9 486 1466 ++64 9 486 7809
Responsible for:
Operational logistics for the Army and non-operational logistics in 1, 2 and 3 Logistic Regiments.
1 Logistic Regiment Formerly Northern Regional Support Unit Staff Officer Logistics 1 Logistic Regiment Mount Wellington Barracks Mount Wellington Auckland Telephone: Facsimile:
postal address
Private Bag 14909 Panmure Auckland
++64 9 297 8083 ++64 9 297 8018
2 Logistic Regiment Formerly Central Regional Support Unit Staff Officer Logistics 2 Logistic Regiment Linton Camp Palmerston North Telephone: Facsimile:
postal address
Private Bag Linton Camp Palmerston North ++64 6 325 8819 ++64 6 325 9524
3 Logistic Regiment Formerly Southern Regional Support Unit) Staff Officer Logistics 3 Logistic Regiment Burnham Camp Christchurch Telephone: Facsimile:
postal address
Private Bag Burnham Camp Christchurch ++64 3 347 8011 ++64 3 347 8305
1, 2 and 3 Logistic Regiments are each Providing a full range of domestic support services to the Army units in Responsible For: their geographic area, which includes transport, catering, accommodation, supply services, works and facilities management and maintenance of equipment.
ROYAL NEW ZEALAND AIR FORCE Director of Logistic Support Services Air Staff Defence House Stout Street Wellington Telephone: Facsimile:
++64 4 496 0810 ++64 4 496 0819
Air Force Bases: Commanding Officer Supply Wing RNZAF Base Auckland Private Bag Whenuapai Attention: Local Purchase Telephone: Facsimile:
++64 9 302 7224 ++64 9 302 7223
Commanding Officer Supply Squadron RNZAF Base Ohakea Private Bag 11033 Palmerston North Attention: Local Purchase Telephone: Facsimile:
++64 6 351 5217 ++64 6 351 5230
Commanding Officer Supply Squadron RNZAF Base Wigram Private Bag Christchurch Attention: Local Purchase Telephone: Facsimile:
++64 3 343 9204 ++64 3 343 9207
postal address
HQ, NZDF Private Bag Wellington
Commanding Officer Supply Squadron RNZAF Base Woodbourne Private Bag Blenheim Attention: Local Purchase Telephone: Facsimile:
++64 3 577 1210 ++64 3 577 1235
OTHER NZDF ORGANISATIONS The Director Defence Scientific Establishment NZ Defence Force Private Bag 32 901 Auckland Naval Base Auckland
The Director Joint Communications, Command, Control and Information Systems Defence House Stout Street Wellington
The Director National Codification Bureau PO Box 50 247 Porirua
NZ DEFENCE LIAISON STAFF - Overseas Purchasing Offices New Zealand High Commission New Zealand House The Haymarket London SW1Y 4TQ UNITED KINGDOM Attention: Senior Defence Purchasing Officer Telephone: Facsimile:
++44 71 973 0364 ++44 71 973 0365
New Zealand Embassy 37 Observatory Circle NW Washington DC 20008 UNITED STATES OF AMERICA Attention: Senior Defence Purchasing Officer Telephone: Facsimile:
++1 202 328 4848 ++1 202 667 5227
ANNEX D
NEW ZEALAND ARMY PROCUREMENT AGENCIES COMMAND STRUCTURE
