Large gaps remain in government ICT spending data

Large gaps remain in government ICT spending data

Local supplier share of 'Common Capabilities' revenue has slipped over the last three years.

Gaps remain in new government ICT procurement data.

Gaps remain in new government ICT procurement data.

Credit: Rob O'Neill

Government procurement statistics indicate local ICT suppliers are doing well on the all-of-government Marketplace, but less so elsewhere.

However, the overall data remains patchy because most agency buyers still fail to publicly notify their inked contract awards.

Where ICT is concerned, procurement tends to happen across three structures operated by two government agencies: The Department of Internal Affairs (DIA) and the Ministry of Business, Innovation and Employment (MBIE). DIA, through the Government Chief Digital Officer (GCDO), manages what are called all of government common capability contracts and the all of government Marketplace while MBIE operates the Government Electronic Tenders Service (GETS).

Earlier this month, DIA shared new data with Reseller News for both its Common Capabilities programme and transactions through the Marketplace. While one painted a picture of slowly falling share for the local providers, the other showed quite the opposite.

Strong growth

The share of business won by local suppliers in the Common Capabilities category has fallen slightly over the last three years, but in overall terms that was more than offset by strong growth in the overall category. Turnover of $421.3 million in the year to 30 June 2018 surged to $635.1 million in 2021.

Local suppliers won 60.2 per cent of business  in 2018, rising to 61 per cent in 2019. Since then, though, the local share has slipped, first to 58 per cent and then again to 56.9 per cent.

In 2021, local firms made up 75 per cent of suppliers of Common Capabilities products and services and overseas suppliers 25 per cent.

Total spend through the Marketplace in 2019 was a relatively negligible $65,700, but has grown strongly since. In 2020 $4.1 million was transacted and in 2021 $27.5 million. 

Across those same periods the share of business won by locals grew from 71 per cent to 89 per cent.

Total spend through the Marketplace to the end of December 2021 was $31.7 million with locals winning 88 per cent of that business. Twelve per cent of Marketplace suppliers were international as of the same date.

However, data on contracts awarded on GETS remained extremely patchy.

Analysis by NZRise, which advocates for the local industry, found more than 98 per cent of IT contract awards were not published and almost 70 per cent of published award notices did not specify the value of the contract.

NZRise's analysis of 2021 contracts awarded on GETS found 212 published notices for the digital technology sector. The total published value of the contracts awarded was $58.4 million, less than 2 per cent of estimated government IT expenditure. 

Smaller contracts

Awards to NZ owned companies tended to be for smaller contracts with foreign owned companies securing the larger ones, NZRise wrote.

Barriers facing New Zealand ICT providers and favouring multinationals were significant, including the use of what NZRise called "anti-SME" contractual terms, such as requiring $25 million in guarantees for many projects and high cost of entry barriers at the start of many tender processes.

The group called for changes to improve access for New Zealand businesses, including the removal of all exemptions from procurement rules and publication of the contract value with all award notices, something already required in the rules for contracts estimated to be worth more than $100,000 but often flouted.

Exemptions from procurement rules have been a particular bugbear during the COVID-19 pandemic, with agencies using an exemption for "emergency" procurements to fast-track projects.

Last May, for instance, Orion Health CEO Ian McCrae tore into the Ministry of Health for awarding a $38 million deal for a new national immunisation service platform to Salesforce. McCrae described the cost as "scandalous", but the Auditor-General took no further action after reviewing the procurement process..

While DIA releases statistics on procurement through its programmes, NZRise is pushing for the publication of individual contracts awarded on the Marketplace and their values, the publications of individual panel contracts and their values and the ending of closed procurement panels.

Shifting the culture

NZ Government Procurement, a division of MBIE, is trying to shift the culture of government procurement from focusing on compliance and price to outcomes that benefitted New Zealand. Delivering better data and transparency was part of that effort.

While all award notices published on GETS were made available quarterly as open data files for public inspection and analysis, as NZRise found many contracts were not notified or notifications were incomplete.

NZGP told Reseller News it was committed to enabling government contract awards to be openly notified and published on GETS to promote inclusivity, sustainability and transparency.

"In many instances publishing awards notices is a manual process that relies on accurate and timely self-reporting from agencies," NZGP said in a statement.

Purchases via secondary procurement processes such as an all-of-government panel, including panels led by the Government Chief Digital Officer, part of DIA, were exempt from notification.

NZGP said it was working on ways to improve overall quality of input and process automation to replace existing manual process which would lead to improved transparency and the "use of verifiable percentages".

This included increased visibility of award reports via dashboards and other tools to support transparency.

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Tags procurementtendersMarketplaceNZ Risegovernment



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