“It’s all been very quiet and seems quite fragmented about who is doing what.” Don Christie, co-chairman of NZ Rise says it is not at all clear what is happening with government IT procurement.
NZRise is a non-profit incorporated society formed by a group of New Zealand IT firm business leaders to ensure the global competitiveness of the New Zealand IT industry.
“We need to be clear that the aims of public procurement will be best served by the commissioning public agency seeking the best value for public money, irrespective of the locality of the supplier,” he says.
“We support and benefit from open procurement policies, both in New Zealand and other countries.”
To date, the Department of Internal Affairs has confirmed preferred suppliers for PCs and laptops, and for multi-function print devices. Revera and Datacom have been named to provide infrastructure-as-a-service, with negotiations still continuing with IBM.
Christie argues that there is a range of benefits in selecting local suppliers that need to be fully assessed when awarding contracts.
“Similarly, there are a range of artificial barriers that procurers – both public and private – put in place that prevent local suppliers from being able to consider bidding for work.
“These include unnecessary aggregation of projects, a ‘closed shop’ mentality, as seen with the rush to set up panels of suppliers, all-of-government contracts that are compulsory and unnecessarily rigid, with high liability requirements.”
He refers to Land Information New Zealand outsourcing all of its IT to Datacom. “You have to sub-contract to them [Datacom] to get any work, so there is no incentive. It’s not Datacom’s fault.”
Christie notes that the government spends between 30 and 40 percent of the country’s gross domestic product, which can have a hugely distorting effect.
“But if properly recognised, this could be used to have a very positive impact on the growth of the New Zealand IT sector.”
He refers to a New Zealand Industry Capability Network report on procurement, which says the development and implementation of local industry participation plans is not a government requirement.
The report quotes economic research from BERL that indicates that for every $1 million spend locally, 10.4 jobs are created or maintained in New Zealand.
Christie’s own company, Catalyst IT, commissioned a study which he says supports that report “in spades”.
The study shows that local IT companies are cost-effective, with a 25% to 35% cost advantage over Australian companies, and larger cost advantages compared to the US and the UK.
“We spend more than half a billion dollars a year on importing computing services, and $235 million on computing royalties and licence fees.”
The shared services model in Australia has largely failed to deliver and is being abandoned, particularly in Western Australia, he says.
“The New Zealand government spends a hell of a lot of dollars when it comes to procurement, and tries to ignore the massive distorting effect that can have on the economy.
“It could be incredibly positive or very damaging. Our fear is that it might be damaging.”