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A new approach to procuring maintenance and operations

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We're changing our procurement approach for highway maintenance and operations to ensure better value for money and outcomes for our customers – and early indications are we’re on the right track.

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Our new approach is designed to make maintenance and operations more cost-effective, giving us the opportunity to invest funding via the National Land Transport Programme into other areas such as safety and improvements.

We’re centralising our asset management function and have moved to a nationally planned, regionally delivered approach to maintenance and operations work, and are reorganising the way we outsource our work.

In many of our current maintenance and operations contracts, we have three tiers including ourselves, consultants and contractors. This will be reduced to two layers by introducing 23 geographically focused design and construct contracts (consultants and contractors working together). This new approach has been specifically designed to encourage a healthy, competitive contracting market. 

This is through a number of built-in mechanisms such as a requirement for our primary supplier to tender a set level of work to subcontractors and to commit to grow the capability of sub-contractors.

We’ll be reducing barriers to entry by opening up prequalification to a wider array of suppliers, removing weightings on track record and relevant experience, and allowing multi-party arrangements to bid for work providing they can demonstrate the right experience and technical knowledge.

The results to date are promising. Two existing maintenance and operations contracts have been converted to the new contract form, meaning two medium-sized suppliers are now gaining experience as primary suppliers.

We also have tender processes underway in South Canterbury, Taranaki and Bay of Plenty East in the start of  a three-year programme to procure all state highway networks (except Auckland motorway) using a new network outcomes contract model.

We’re seeing interest from several potential primary suppliers who have not worked in our maintenance and operations area before, and have seen renewed interest from a broader range of consultants.

We’ll be actively monitoring how the market responds to this new approach, and will intervene if we identify opportunities to get a better outcome for the road user and taxpayers.

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