New Zealand: Public Value, Proportionality, and Maori Inclusion

At a Glance

Why New Zealand Is a Global Leader

New Zealand has contributed two of the most transferable concepts in global procurement: the proportionality principle (right-sizing processes to contract value and risk) and the “best deal for everyone” framework that extends procurement value beyond the purchasing agency to the broader public.

The Public Value Framework

New Zealand’s Government Procurement Rules establish a framework built around five principles: getting the right supplier, getting the best deal for everyone, playing fair, being transparent, and being accountable.

The “best deal for everyone” principle is particularly noteworthy, as it explicitly extends the concept of procurement value beyond the purchasing agency to encompass broader public benefits.

The government’s Broader Outcomes policy, implemented through Rule 18, requires agencies to consider how procurement can contribute to four priority outcomes:

1. Increasing access for New Zealand businesses (including Maori and Pasifika businesses)
2. Increasing the size and skill level of the domestic construction workforce
3. Improving conditions for workers (including payment of living wages)
4. Demonstrating environmental responsibility (including transition to net-zero carbon)

For contracts above NZD $100,000, agencies must identify relevant broader outcomes and plan how to achieve them.

The Proportionality Principle

One of New Zealand’s most distinctive contributions to procurement policy is its emphasis on proportionality. The Government Procurement Rules explicitly state that the level of procurement process should be proportional to the value and risk of the procurement.

This is codified through a tiered system:

This approach contrasts sharply with the US system, where the same FAR regulations and compliance requirements often apply regardless of contract size, creating disproportionate administrative burden for smaller, lower-risk purchases.

The Economic Benefit Principle and Maori Targets

New Zealand requires that agencies assess the economic benefit of procurement decisions, with a minimum standard that contracts deliver at least 10 percent economic benefit beyond direct procurement value — measured through employment creation, technology transfer, regional development, environmental sustainability, and Maori economic development.

New Zealand has set explicit targets for procurement with Maori-owned businesses, aiming for 8 percent of government procurement spend. As of the latest data, the government had achieved approximately 6 percent — roughly NZD $930 million annually — progressing toward but not yet reaching the target (MBIE, 2024).

Table: New Zealand’s Public Value Procurement Framework

Lessons for the United States

1. The proportionality principle is perhaps the single most transferable concept for US reform. The US system’s one-size-fits-all regulatory approach — where a $50,000 IT services contract may face the same compliance requirements as a $500 million defense system — is a primary driver of inefficiency and small business exclusion. Adopting a proportionality framework would right-size procurement processes to the value and risk of each acquisition.
2. The broader outcomes approach provides a model for systematically incorporating social and environmental considerations without the complexity of the UK’s Social Value Act scoring methodology.

Cross-Cutting Role in Global Best Practices

New Zealand is the co-model (with the UK) for Pillar 3 (Social Value and Public Benefit) and a key model for Pillar 6 (Speed and Simplification) via the proportionality principle. It demonstrates Pattern 2 (Explicit “Not Lowest Price” Default), Pattern 4 (Social Value Integration), and Pattern 6 (Speed and Simplification through proportional processes).

Sources: MBIE (2024), New Zealand Government (2023)