New Zealand’s 5th edition of the Government Procurement Rules (GPR) will come into force on December 1, thus initiating major changes in how public agencies source goods, services and construction. The changes are intended to simplify procurement, level the playing field for local suppliers and deliver broader economic outcomes. In particular, a new mandatory “economic benefit to New Zealand” test will apply to every procurement process. This means that when government agencies decide who to buy from, they must assess the wider benefit to New Zealand, alongside traditional factors such as price and quality. According to the Minister for Economic Growth, Nicola Willis, this change is designed not only to give New Zealand businesses a fair chance to win contracts, but also to ensure taxpayer money is spent responsibly and efficiently, while maintaining public trust. The economic benefit assessment will give extra weight to factors such as:

using New Zealand businesses to deliver contracts; creating local jobs; and offering training and development to upskill New Zealand workers. There is also an expectation that contracts below the specified thresholds will be awarded to capable local businesses. This ‘buy-local plus value-adding’ is part of a broader global trend aimed at strengthening domestic supply chains, building regional resilience and ensuring that public spending delivers tangible benefits within the local economy. In a statement, Minister Willis said the new rules aim to make it easier for local businesses to compete for and win government contracts, an area worth more than $50 billion annually. The intent is to “create value and jobs for Kiwis” and ensure “taxpayer money supports Kiwi businesses to grow, hire and thrive,” she said.

The Government also intends for the reforms to encourage international companies bidding for New Zealand government work to show how they will contribute to the local economy through partnerships, employment or technology transfer. By doing so, the economic benefit test not only supports local firms but also incentivises global players to add value within New Zealand. Importantly, the Government confirmed that the revised rules uphold New Zealand’s international trade obligations, ensuring continued access to global markets for our local businesses.

For the steel industry – which is capital-intensive, heavily-regulated, exposed to international competition, and intertwined with infrastructure, construction and manufacturing – these changes represent both opportunity and imperative. The initial response from the industry has been positive. The chief executive of Civil Contractors New Zealand, Alan Pollard, said the new rules would better support businesses looking to tender for government contracts. “Procurement has long been unclear and inconsistent for contractors tendering on government work, so it’s good to see positive steps taken that streamline procurement and provide a better focus on benefit for New Zealand businesses and communities,” he said.

Given that the procurement rules now give explicit weight to local economic benefit, NZ‐based steel producers and fabricators are better positioned to win segments of government supply chains. There will also be a boost to local `value-add´ because the procurement evaluation will consider how proposals use New Zealand businesses, create jobs, provide training and build capability. Steel firms which invest in local fabrication and skills development will thus have a competitive advantage. Furthermore, by encouraging government buyers to source from local suppliers, the rules promote shorter supply chains, reduced lead times and more reliable procurement. This is particularly relevant for steel where disruptions in global supply of raw materials or fabricated components can cascade delays and cost overruns. Local capacity helps buffer such risks. There is also likely to be a reduction in the burden of compliance. With fewer and clearer rules, some of the heavy administrative and documentary burdens that small or mid-size steel firms faced may ease. This means lower overheads for bidding (which have often been a barrier) and better cost visibility. In short, the upcoming procurement rule changes in New Zealand represent a significant and positive shift for the steel industry. By explicitly valuing economic benefit, simplifying the rules, promoting local capability, and mandating transparency and accountability, they enable steel firms to add value domestically and align with national goals.

In other news, New Zealand Steel is preparing to switch on its new electric arc furnace (EAF). This is a major investment and marks a turning point for the country’s steel industry. Once operational, the new furnace will allow steel to be made using mostly recycled scrap metal, thus cutting the company’s carbon emissions dramatically and removing around 1% of New Zealand’s total annual emissions. The EAF project underpins a new range of lower-emissions steel products from New Zealand Steel. The products include the company´s reinforcing steel branded DCRB™, which will be produced locally at the Glenbrook mill. Built on high scrap content, these steels are designed to deliver the same strength and performance that builders and manufacturers rely on, while significantly reducing their environmental footprint. The first products in the range, released through sister company, Pacific Steel, will include reinforcing bar and coil used in construction, as well as steel plate. The new furnace is expected to be completed soon, with commissioning to follow. Its launch will mark the beginning of a new era of locally-made, lower-emissions steel for New Zealand and the wider region.