Govt to save $178m in legal & air travel costs

New all-of-Government contracts for air travel and external legal services will save the Government $178 million over the next six to seven years, Economic Development Minister Steven Joyce announced today.

The new contracts include all public sector agencies, councils and up to 2500 schools.

“The contracts we are announcing today will mean we have achieved a total saving to the Government of $293 million from the six contracts that have been completed to date in the Government Procurement Reform Programme,” Mr Joyce says.

“Saving more than $108 million on legal costs over the next six years shows the negotiating power of the whole of government when contracting services. We’ve shaved an average of 18 percent off the $100 million annual external legal services bill which is a great result.”

The legal services contract has produced a 39-strong panel of law firms, large, medium and small, to provide external legal services across the Public Sector, including Crown Law. Robust monitoring of the firms on this contract, will allow agencies for the first time to compare each law firm’s ongoing value for money when considering who to choose.

In addition, the first contracts for air travel have been awarded to Air New Zealand, Emirates, Lufthansa and Qantas for up to seven years. Negotiations are continuing
with one other airline.

Air New Zealand will be the preferred supplier for domestic air travel – the largest area of government travel spend. The remaining suppliers (with Air New Zealand) will provide coverage for international flights. Point of sale discounts will now be available to all public sector agencies.

“Air travel is a significant cost for Government and reducing it by more than $70
million over the life of this deal is another great result”, Mr Joyce says.

These contracts are part of the public sector-wide Government Procurement Reform Programme aimed at making Government buying as efficient as possible, and reducing costs.

These two new contracts join last year’s first set of four all-of-government contracts for office consumables, passenger vehicles, print devices and desktop and laptop computers. These contracts remain on track to deliver $115 million in savings over five years.

“Every dollar the Government saves through sharper pricing is a dollar that can be spent on improving public services, building essential infrastructure and keeping our debt levels low,” Mr Joyce says.

For more details on government procurement and all-of-Government contracts visit www.procurement.govt.nz.