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NZ government cuts deal with law firms, airlines, slicing costs by $178M over 6-7 years

Thursday 15th December 2011

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The New Zealand government will slash $178 million off its legal and travel costs in the next six-to-seven years after concluding all-of-government contracts with 39 law firms and up to five airlines.

The new travel and external legal services contracts cover all public sector agencies, councils and up to 2,500 schools and are the latest under the government procurement reform programme, according to a statement from Economic Development Minister Steven Joyce.

They add to last year’s first four all-of-government contracts, signed last year, for office consumables, passenger vehicles, print devices and desktop and laptop computers which are on track to generate savings of $115 million over five years.

Under the contract with the panel of law firms, government agencies will save $108 million on legal costs over the next six years, with the annual $100 million bill trimmed by about 18 percent. Cost savings from a seven-year contract with airlines will amount to $70 million over the life of the deal.

The cost savings “show the negotiating power of the whole of government when contracting services,” Joyce said.

Under the airline contract, Air New Zealand will be the preferred supplier for domestic air travel and will vie with Emirates, Lufthansa, Qantas and one other airline still in talks to provide international travel under the seven year deal.

Joyce said the legal contract “will allow agencies for the first time to compare each law firm’s ongoing value for money when considering who to choose.”


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