Why winning NZ Government contracts might become easier

Published 21 March 2025 | 2 min read

Winning a government contract in New Zealand isn’t easy. With over 70 procurement rules and a mountain of paperwork, many Kiwi businesses feel shut out.

Small and medium-sized enterprises (SMEs) often struggle to meet rigid criteria, and the complexity can discourage even the most capable firms.

Government contracts are no small prize either—worth more than $50 billion annually. But many businesses find themselves stuck navigating red tape instead of focusing on delivering innovative solutions.

Lost opportunities for local NZ businesses

For years, businesses have voiced their frustration with the procurement process. Complex rules, environmental compliance, and rigid standards often favour larger, more established firms or international players with the resources to manage the bureaucracy.

Smaller businesses, including those in regional areas, often face barriers when competing for these lucrative contracts. The sheer volume of rules and administrative burdens have prevented many from even attempting to bid.

Minister of Economic Growth Nicola Willis acknowledges these concerns. In response, the Government is proposing a major shake-up to streamline procurement and prioritise New Zealand businesses.

What’s changing? Your questions answered

1. What is the new economic benefit test?

The proposed economic benefit test requires government agencies to consider how a contract benefits New Zealand when awarding tenders. This means businesses will need to demonstrate how they support local jobs, provide training, pay taxes, or create export opportunities.

2. What rules are being removed?

The Government plans to scrap 24 rules that are seen as unnecessary or duplicative. This includes:

• Requirements for new non-residential buildings to meet a five-star rating.
• Mandates to purchase battery electric or hybrid vehicles.
• Rules requiring low-waste office supplies.
• Living wage requirements for cleaning, catering, and security contracts.

3. Which contracts are affected?

The economic benefit test applies to all contracts over $100,000 for goods, services, and refurbishments. For construction works, the threshold is $9 million. Below these levels, agencies are expected to prioritise capable New Zealand firms.

4. When will these changes happen?

Public consultation on the new rules is open until 8 April 2025. After this, the proposed changes will go to Cabinet for approval.

How these changes would impact employers:

• Economic benefit test: All qualifying contracts must consider how they contribute to local employment, skills development, and other economic outcomes.
• Reduced complexity: 24 rules that added administrative burdens will be removed.
• Lower barriers for SMEs: Smaller businesses will face fewer hurdles when competing for government work.
• Stronger local focus: For smaller contracts, there is a clear expectation to choose capable New Zealand businesses.
• Increased transparency: Agencies must publish their procurement policies and report on how they deliver economic benefits.

What now? 

If you’ve ever felt excluded from government contracts, this is your chance to engage. The new rules aim to open the door for more local businesses by reducing bureaucracy and prioritising the economic impact on New Zealand.

Now is the time to prepare. Review how your business supports local jobs, skills, and the economy—these will be key factors in winning future government work.

For further details on the consultation process and upcoming changes, visit the Ministry of Business, Innovation and Employment (MBIE) website or check out the official Government Procurement Rules guide.