If we can optimise New Zealand industry’s involvement in the Defence system then that will create jobs, generate tax revenue and ultimately build New Zealand’s economy.
Defence Industry: Optimising New Zealand Industry Involvement in the New Zealand Defence Sector looks at how to make the best or most effective use of New Zealand industry in the Defence sector, but within a level playing field for all suppliers.
How the review was done
Information for the report was collected by reviewing current Defence spending, surveying suppliers and potential suppliers, interviewing Defence and Government personnel and industry representatives, and reviewing process documents.
A more detailed methodology is in the report.
Findings and recommendations
The project found that over 80% of operating expenditure (day-to-day costs) was spent in New Zealand. In comparison, a much lower proportion of capital expenditure (hardware and other equipment) is made to New Zealand suppliers (around 30%), so it is in this area that there is more room to increase the involvement of New Zealand industry.
The project made three recommendations:
- Apply and improve whole-of-life costing in key stages of the Defence capability process. In other words, when planning to buy new equipment, think about both the cost of buying the equipment, and also the long-term cost of maintaining and upgrading it. When asking for tenders, information provided to industry needs to be very clear what whole-of-life costs need to be included in the tender.
- Improve Defence purchasing processes and practices to optimise New Zealand industry involvement. For example, request a New Zealand Industry Engagement Plan as part of all large tenders, and require suppliers to track and report on expenditure on New Zealand subcontractors.
- Improve Defence’s relationship with the Defence industry, for example, develop a website that suppliers can use to make enquiries and Defence can use to provide information on future tenders and tender processes.
Total Defence Operating Expenditure Overseas (NZD)
Optimising New Zealand Industry Involvement in the New Zealand Defence Sector3.5 MB22 Oct 2014