The Auditor-General has taken a dim view of the procurement processes, or rather the lack thereof, used to purchase a smart health platform called HealthTap.
The software was purchased in 2015 but the project was cancelled after costs blew out by $9 million to $25.7 million.
"In summary, we have concerns that many of the important elements of procurement we expect to see from a public organisation were missing or carried out too late in the process," a report released today said.
It seems the project was flawed from the get-go.
Among the Auditor-General's concerns was the fact the business case that went to the board was a strategic business case for virtual care, rather than a business case justifying the procurement of a specific service from HealthTap.
"The business case presented a rationale to the board for adopting a virtual care approach at Waikato DHB," the report said.
"However, it did not provide a full and comprehensive description of the market at the time. It did not set out all the possible options that could be considered, and it did not explain why the HealthTap platform was considered the preferred option."
As a result, there was no discussion in the business case of how the services proposed to be purchased from HealthTap aligned with the strategy to move to a virtual care model.
Nor was there any discussion about any of the costs, benefits, or risks of selecting HealthTap as a provider.
"As we have outlined above, an organisation following a good procurement process will first identify its strategic objectives and priorities, and then plan a procurement approach designed to achieve those objectives."
Even more importantly, the business case was presented to the board in July 2015, after discussions with HealthTap, the proposal of a a letter of intent, and after a draft contract had been provided from HealthTap that included an in-principle agreement about the services to be provided and a proposed contract price.
"It was described to us that the business case was informed by what the contract said," the Auditor-General wrote.
"This is the wrong way around. Creating a business case at such a late stage in the process risks the rationale for the procurement being written to reflect a deal that has already been done, rather than setting out a proposal for a deal that meets an organisation's business objectives and priorities.
"In our view, the business case that went to the board did not meet good practice in many respects. Overall, it lacked evidence and authority for the decisions it was seeking to justify."
There was also no final procurement plan setting out Waikato DHB's objectives and how it intended to achieve them or an intended procurement process.
"The plan did not contain a robust description of the matters we expect to see set out in such a plan. It was created too late in the process to be effective as a procurement plan, and it was never completed.
"Its main purpose appears to have been to try to show that good practice had been followed rather than because it actually had."
The lack of a proper procurement planning and evaluation process made it difficult to assess whether any of the benefits were realised or whether the HealthTap platform represented value for money.
The Auditor-General was also concerned about the lack of documentation for the early stages of this procurement.
"Although we were provided with many documents from Waikato DHB's files, many of the details about the procurement had to be obtained from personal recollections of those involved or of staff and board members who became involved later in the process," the report said.
"Not only does this make a subsequent review or inquiry challenging but it also means that Waikato DHB cannot rely on its records to enable public trust and confidence in its processes."
The procurement was neither consistent with government procurement rules around the spending of public money or with the DHB's own rules, the report said.
In July, the Serious Fraud Office announced it would not pursue criminal charges against Dr Nigel Murray, the Waikato DHB chief at the time of the HealthTap project, saying it would be too costly.
Murray quit in October 2017, during an investigation into his expenses by the State Services Commission, which later found $120,608 of unjustified spending on travel and accommodation.