16 May 2021

MBIE to provide payment range guidance for contractors

12:33 pm on 16 May 2021

A new way of measuring what contractors are charging the government will set out the range of what is paid for each type of job.

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Photo: 123RF

The public sector is under orders to rein in contractor spending, and also rein in employee pay rises.

But while employee pay has been carefully tracked for years, contractor and consultant fees have not been until now.

The Ministry of Business, Innovation and Employment expects to put out the first benchmark data later this year.

"The data for the first year will not demonstrate [percentage] rise as it will be a benchmark," a spokesperson said in a statement to RNZ.

"It will establish a range per job/contractor."

For example, project managers being paid between $x and $x.

"The aggregate information rolled out by MBIE ... for the quarter 1 October-31 December [2020] will identify the rates for each agency, the providers involved, and will enable agencies and MBIE to compare and monitor rates paid."

Earlier, it said the benchmark data would be anonymised.

RNZ repeatedly asked why the ministry has taken till now to set this system up - the ministry calls it a "data and insight solution" - when it was put in charge of monitoring contractor pay across the public sector in 2018.

"There are complex privacy and commercial aspects, regarding publication, which we are working through," the spokesperson said.

"MBIE is not responsible for individual government agencies' decisions regarding the use of contractors, agreed payment rates or what agencies report to select committees.

"Analysing and negotiating rates remains the role of each agency."

The reports to select committees are the main way the public has of monitoring taxpayer spending on contractors.

The major mechanisms for controlling the spend - which amounts to at least $1 billion across just the core 30 or so departments, let alone the scores of other agencies - are:

  • The common All-of-Government Consultancy Services Contract sets limits on charge-out rates
  • Rate increases are only approved under this contract every two years, if "reasonable and justified"
  • Other contracts allow annual consumer price inflation increases if requested by the contractor
  • Standard legal terms and conditions, contract obligations
  • Agencies can negotiate prices under the cap
  • Agencies can compare what contractors are charging in an online directory.

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