Social Bonds – Procurement process

The 5-phase procurement process to establish a Social Bonds Pilot

One unique aspect of the New Zealand Social Bonds Pilot, compared to overseas programmes, is that it is applying a market-led procurement process to select the Social Bond Pilot(s).

The 5 phases are as follows.

Phase 1: ROI service outcome and providers (completed)

The Registration of Interest (ROI) seeking a shortlist of service providers and service outcome areas closed on 28 February 2014, having received 41 responses. A cross-government team evaluated the responses and agreed a ‘short list’ of 12 service providers and their associated service outcomes to move to Phase 3 – solution establishment. The process was overseen by probity auditors, McHale Group Ltd.

Phase 2: ROI for intermediary (completed)

ROI to assess and recommend shortlist of intermediaries. Intermediaries manage the overall outcome delivery and arrange the financing of the bond. The intermediary ROI closed on 30 May 2014 and 13 responses were received. The process resulted in a panel of 8 intermediaries being established, of which 4 respondents were shortlisted to participate in the first Pilot. The process was overseen by probity auditors, McHale Group Ltd.

Phase 3: solution establishment (current phase)

Solution Establishment comprises a market introduction between shortlisted intermediaries and shortlisted service providers, as well as a structured approach to establish the principles, fundamentals and scope of the Social Bonds Pilot solution. 

The key stages of Phase 3 are:

  1. Matchmaking – where potential partnerships were formed between Service Providers and Intermediaries at a matchmaking event. This was followed up with a participant education event – providing training and education to ensure all shortlisted participants had a common understanding of social bonds and to provide access to Government-provided 'experts' to support the initial Solutions Outline development. 12 Providers and 4 Intermediaries participated in this stage.
  2. Solution Outline – where the basic Solution Outlines were formed and submitted by partnerships for evaluation. 7 potential partnerships made submissions (for a Social Bonds Pilot) for evaluation, including each submitter pitching their proposal to a panel of independent experts. 4 Partnerships are being evaluated further.
  3. Solution Design, Specification and Final Selection – via a Competitive Dialogue process, where each proposed Bond will be further refined (detailed designing and specifying of the solution) and evaluated for consideration as a Pilot. 2 topics are under active consideration.
  4. Specification – the solution specifications are written by Government.
  5. Final selection – prioritisation and selection of initial Social Bonds and approval by Ministers.

Phase 4: contract negotiation

Government will require a contract with the contracting party regarding performance and payment.

Phase 5: pilot establishment

Government will work with all parties where required during the implementation phase. A key part of the implementation phase will be the raising of capital.

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