By Laurence Millar
Member with Delegated Authority
Since July 2019, the Ministry of Business Innovation and Employment (MBIE) have published contract award notices for government procurement as open data on a quarterly basis. The latest data covers notices of contracts awarded by government up to 31 December 2020. Transparency International New Zealand (TINZ) has analysed this data and published the results for ready access.
Since starting this work, TINZ has highlighted the need for better quality of the data, and the need for more complete coverage of government expenditure in the award data that is published.
TINZ is particularly interested in procurement in response to the COVID-19 pandemic. This has required quick decisions to move vast amounts of resources, thereby increasing the risk of fraud and corruption. Transparency enables people to see that resources are going towards fighting the virus, relief and economic recovery where most needed.
In its February 2020 newsletter at the start of COVID-19, TINZ highlighted the risks of procurement in times of emergencies. We noted that the government provisions for emergency procurement require the publication of contract awards, even if they have been awarded without the usual public tender process.
We expected to find contract award notices that covered government expenditure on COVID-19 responses, but found very few. There were only 26 notices published during the year, of which 19 related to emergency procurements. Only 5 of these notices specified the value of the awarded contract. This is less than 1% of the 2,620 award notices published in 2020.
In the UK, concern about COVID-19 related procurement has been highly visible, to the extent that the government is facing a judicial review for breaching the law and its own guidance. In Aotearoa, information about the suppliers that have provided goods or services to government is not even published.
It is unacceptable that there is almost no transparency of government COVID-19 expenditure. Government agencies have been making unprecedented levels of emergency expenditure without complying with the procurement rules approved by Cabinet.
Inadequate GETS data quality
There are two fields in the Government Electronic Tenders Service (GETS) that are key to the transparency of government procurement – the contracted supplier and the value of the contract. In 2020, a total of 2,620 notices of contract awards were published on GETS, but only 2,043 (78%) properly reported supplier information. Only 820 (31%) included information on the value of the contract.
This information is known by government agencies when they sign a contract with a supplier. So non-publication of this information is either careless or negligent.
Inadequate GETS coverage
The annual total of contract values published on GETS is $1.016 billion, which is just 2.5% of the total annual government expenditure. This means that the financial details of 97.5% of government expenditure are not reported – despite the cabinet-approved procurement rules requiring the data to be published.
The rules include exemptions for certain types of procurement, where an agency:
- has established a panel of suppliers (Rule 57)
- is purchasing under an All-of-Government contract (Rule 58)
- is purchasing under a Syndicated Contract (Rule 59)
- is purchasing under a Common Capability Contract (Rule 60).
However, even when allowing for exemptions, this level of non-compliance with mandatory rules should be considered unacceptable.
What are the rules for Government Procurement?
Government spends over $40 billion dollars a year on goods and services. Local government spends many more billions on top of that. The absence of effective oversight measures raises concerns about bribery, corruption and fraud that have the potential to undermine trust in government.
Current government policy is documented in the Government Rules for Procurement 4th edition. These rules, published by MBIE, require agencies to:
- seek opportunities to include New Zealand businesses and promote inclusive economic development within New Zealand
- openly advertise on the Government Electronic Tenders Service (GETS) any procurement over $100,000
- publish a Contract Award Notice on GETS including the expected spend under the contract.
These rules are in line with global best practice. TINZ strongly supports the work of MBIE to promote the Government Rules for Procurement. We also commend MBIE for publication of contract awards notices as Open Data, enabling scrutiny of expenditure decisions.
What needs to change?
TINZ recommends that:
- Government agencies publish data on all COVID-19 procurements with details of the supplier and contract value.
- Government agencies meet targets for quality of published GETS data with a.) The supplier field published for 98% of award notices in 2021 (current 80%) and b.) The contract value published for 70% of award notices in 2021 (current 35%)
- Government to include all procurement within the rules, with all exemptions being phased out by 2023.