Effective 1 December 2025, all public agencies will be operating under modernised and streamlined procurement rules with a strong focus on improving efficiency and productivity.

Like Ozempic's promise to shed unwanted weight, the Government Procurement Rules (GPR) 5th edition has put procurement rules on a serious diet: slimming down from a hefty 71 rules to a leaner 47. The goal? To trim the regulatory fat, reduce complexity, and help local SMEs find it easier to engage with public sector contracting opportunities.

In this article we focus on key changes which we consider will have the greatest impact on construction sector procurement.

First for NZ

In a potential significant boost to the local constructor and trade supply market, new Rule 8 requires agencies to seek economic benefits to NZ in a more pragmatic and streamlined manner replacing the previous “broader outcomes” Rules 16, 17, 18, 18A, 19 and 20. 

Now unless there is a good reason not to, agencies are expected to award procurements below $100k for refurbishment works and $9 million for new construction works to NZ businesses that are capable and have capacity to deliver those works. An NZ business being one that originated in NZ (ie not a subsidiary of an offshore business) is majority owned or controlled by New Zealanders and has its principal place of business in NZ.

Every procurement over $100k for refurbishment works and $9 million for new construction works must seek economic benefits to NZ in procurements by including a 10% minimum weighting in the evaluation criteria for “NZ economic benefits”. The application guidance helpfully sets out the kinds of opportunities which would be considered to provide such benefits such as “using NZ businesses, including SMCs and regional businesses in delivering goods and services, either directly or as a subcontractor or in the supply chain”, “increasing workforce participation, providing training or apprenticeships” and “using spare industrial capacity”. 

Businesses will need to “walk the talk” with all associated contracts being required to have corresponding provisions for the functional delivery of the evaluated economic benefits.

Size matters

The 5th edition introduces a welcome new principle - “be proportionate and right-size the procurement”.

Much criticism of the GPR has been around its introduction of unnecessary complexity and slavish process into what should be quite a straightforward function. We see this principle as a step in the right direction. This principle requires agencies to design and run efficient end to end processes proportionate to value, complexity and risk and to reduce time and resource commitments for suppliers. Importantly agencies are required to make documentation clear and concise and to only ask for information from suppliers that is “essential and relevant”. We consider the application of the “right-size principle” if done consistently will reduce cost, time and effort of both contractors in responding to RFx and agencies in their evaluation and contract management.

Panels get more transparent

Recently, we have seen many agencies make greater use of panels in an attempt to reduce their procurement burden and a number of these panels have been in the construction sector. These panels have come under criticism from contractors as having limited transparency and being inconsistently administered by agencies.

Revised Rule 22 and Rule 32 introduce greater rigour and reporting requirements around the establishment and management of supplier panels which should bolster confidence amongst the construction sector that they are being correctly used. These measures include, for new panels formed from 1 December 2025:

• the requirement for agencies to provide a Panel Guide which provides clear guidance as to how secondary procurement will be undertaken; and
• an obligation on the agency to publish a contract award notice on GETS for each secondary procurement for values $100k or greater or annually report to the Chief Executive of MBIE as to spend and allocation of contracts under the panel.

Existing panel arrangements are not caught by these new requirements. 

Getting the cash flowing (maybe?)

Other changes which could potentially benefit the construction sector are that the 5th edition confirms payment amendments (in Rule 36 and Rule 44) made to the 4th edition in October 2024: 

• requiring agencies to pay 90% of domestic trade eInvoices within five business days and other domestic trade invoices within 10 business days (increasing to 95% from 1 January); (Rule 36);
• agencies must require that their suppliers pass these terms down to their supply chain; (Rule 36)
• large agencies must be eInvoicing capable by 1 January 2026 allowing invoices to be submitted and processed digitally; (Rule 44.1)
• “large” suppliers are required to submit eInvoices to agencies by 1 January 2027 (Rule 44.2).

The guidance notes for Rule 36 suggest that the rule changes won’t apply to ongoing contracts with “progress payments” “which don’t require an invoice” such as roading contracts. We have sought clarification from MBIE as to whether this rule applies to construction contracts and term maintenance contracts, as taxable supply information (previously tax invoices) is created, even if this is buyer created taxable supply information (ie in the form of payment schedules). We are awaiting MBIE’s response and will provide an update once received. 

If Rule 36 will apply to construction contracts or term maintenance contracts, agencies will need to review their standard forms to ensure payment terms and timings align with these requirements for all contracts entered into from 1 December 2025. For those agencies currently transitioning to new NZS391X templates this may present a good opportunity to review and confirm all payment processes align with the GPR requirements.

The weigh in?

There are some positive changes in the new edition such as the NZ first approach which will boost NZ businesses. The consolidation and streamlining of procurement processes will also be welcomed by many procurement teams within government agencies, as it will simplify procurement processes. The change to the panel agreement rules will impact many agencies going forward as these arrangements have streamlined procurement processes for agencies. However, we believe that these changes will provide for greater transparency in the market and open up more opportunities for suppliers. 

Need help navigating the slimmed-down rules?

Whether you're a contractor looking to capitalise on the new NZ-first requirements, a government agency ensuring your procurement processes are compliant with the streamlined rules, or a supplier adapting to the new panel and payment requirements, our construction and procurement team can help. Get in touch with one of our contacts listed below to discuss how these changes affect your business.