01 August 2022

A formal mandate from Cabinet assigns an agency the responsibility to provide that function for other departments.

The basics

  • When to use this tool

    • Where agencies recognise that one agency can perform a corporate function more efficiently or capably on behalf of others
    • Most participating agencies agree that this helps them better deliver for New Zealanders
  • How to agree goals/outcomes

    • Recognition by PSLT
    • Agreed with Cabinet when seeking formal mandate (especially if applied to Crown entities)
  • Governance model required

    • Agency to keep PSLT updated on progress as necessary, and consult PSLT when appropriate (especially where participation is compulsory)
    • CE governance group could be formed for support where useful
  • Ministerial relationships required

    • Appropriate minister for function
  • Incentives required

    • Need new incentives to encourage entrepreneurialism 
    • Crown Entities Act 2004 section 107 whole of government direction if seeking to extend mandate to Crown entities
  • How to manage the funding

    • Fee for service (cost-recovery)
    • Fees reviewed periodically by PSLT (test and learn)

About this model

The ‘shared functions’ model is a form of system leadership suited to activities where centralisation may drive efficiencies, centres of expertise and improved services. Areas where there is duplication of services or functions or a lack of functional capability in many agencies may indicate a shared functions approach would be beneficial. As there are a large number of small departments, often with small functional teams, a shared functions approach could be used to reduce costs and improve quality of functions.

The model can be used in response to workforce pressures, where capability in functions is lacking across the system, a centralised functional team could alleviate some of the pressure. Similarly, in situations where functions require considerable expertise but are performed infrequently, the ‘shared functions’ approach would ensure the effective deployment of resources.

When considering the possible benefits of centralising functions, the boundaries of economies of scale should also be considered — some larger departments may better achieve economies within their departmental groups rather than through a cross system approach. In some cases a ‘shared functions’ approach may require some agencies to sacrifice agency interest for collective interests. Some agencies had a better deal for a particular service than was available under the all-of-government contract, but understood that the all-of-government model provided better value for government as a whole.

Any group of agencies can decide to share functions, however if you want all government agencies to share the function then you will likely need a Cabinet mandate — especially if you want Crown entities involved.

Case Study: Procurement system leader

The Chief Executive of the Ministry of Business, Innovation and Employment (MBIE) is the system leader for both procurement and property. This role has existed in some form for the last decade — previously as a functional leader. The procurement role was established to:

  • strengthen government procurement across the board
  • introduce stronger leadership based on a centre-led model
  • provide clear accountability for delivery of procurement commercial results
  • support greater collaboration across public sector agencies
  • improve oversight and support for agency procurement.

In this role, the procurement leader issues Government Rules of Sourcing, which provide a framework for managing procurement. Mandated agencies must apply these rules. Mandated agencies are Public Service agencies, New Zealand Police, New Zealand Defence Force and Crown entities.

The system leadership approach was intended to make sure agencies:

  • worked to clear and relevant standards, including those specifically tailored for example, to social sector procurement
  • could access support, risk management, planned procurement activities, opportunities for collaboration, potential shared resourcing and, where necessary, hands-on expert support.

In much of its work the procurement leader is designed to operate as a ‘system leader’ model, however there are certain areas which follow a ‘shared functions’ model, such as:

  • The commercial pool is a small deployable pool of capable and experienced procurement experts resourced from MBIE, but deployable into agencies as requested. The commercial pool provides public sector agencies with access to high quality, sound commercial advice and hands-on support (if needed).
    The team ensures that agencies have access, on a user pays basis, at a reasonable cost, to temporary support with expertise in government procurement and commercial acumen that is aligned with government priorities.
  • All-of-government contracts establish a standard supply agreement between the Crown and approved suppliers for specific goods and services which are commonly purchased by most agencies (such as office consumables, vehicles, travel, electricity and external legal services).
    The procurement leader is responsible for 21 all-of-government contracts. This includes the development, negotiation, supplier performance, and on-going contract management.

Since the procurement leader was designated a system leader under the Public Service Act 2020, they are also looking at how they can strengthen their approach to taking a more centralised and strategic approach to procurement of goods and services.

​​Functional leadership — New Zealand Government Procurement and Property

Mandated and eligible agencies — New Zealand Government Procurement and Property