Ben Kepes: What spending $38m on a vaccine register says about NZ
I grew up in the 70s here in New Zealand. What that means is that my formative years were spent in the midst of Muldoon-era regulation when how much people could be paid, what they would spend their hard-earned salaries on, and what companies could import from overseas was limited. What this meant was that anyone who had a TV generally had the only option at the time, the Phillips K9. It was pretty useless but it fitted into the rules.
The rules of the time also led to perverse situations where incredible inefficiency was embarked upon simply as a way to comply. An example: cars were built in Japan, disassembled there and then shipped to New Zealand in parts before being re-assembled at local plants. It didn’t make any sense from an efficiency perspective, and just made things more expensive, but it satisfied the dogma of a particular school of thought. The only advantage it created was that an entire generation of kids who lived near the Mitsubishi Motors plant in Porirua had access to awesome wooden crates that got repurposed as forts. Unintended consequences, huh?
It is perhaps as a reaction to these austere and limited times that New Zealand has, since that time, developed something of a cultural cringe and a preference for anything that comes from anywhere other than here. For years the fact that a product or service came from overseas carried extra cachet as if down here in EnZed we couldn’t possibly compete with a product from offshore. Indeed, the number of conferences I go to where the keynote speaker was chosen simply because they have an American accent is hilarious. I’ve been working on my own US-accent but so far haven’t finessed it sufficiently.
I’ve been thinking about Muldoonism and the fact we’ve swung almost 180 degrees away from it recently in the context of the Covid vaccination register test storm. As is so often the case, I need to disclose that I’m involved in the health sector, sitting on the boards of both a Primary Health Organisation (PHO) and a health insurance society. I’m also the chair of The Akina Foundation, an organisation pushing hard to get the government to view procurement through the lens of “impact” rather than simple price. All of that aside, my views are obviously my own, and likely more swayed by frustration with overseas procurement being the modus operandi in this country than they are by my involvement in the sector.
Anyway, it seems that last October, just as the country was getting to grips with what a mass vaccination campaign would entail, the Ministry of Health awarded a $38 million (and, no, that’s not a typo) contract to deliver the National Immunisation Solution (NIS). The contract was awarded to big-four consulting firm Deloitte, as well as US-based technology vendors Salesforce and Amazon.
It’s worth noting that we already have a National Immunisation Register (NIR) in this country, which is tasked with recording other immunisations. One would be forgiven for questioning why that register couldn’t have simply been repurposed (or extended) to cover Covid vaccination as well.
That was the perspective of Ian McCrae, CEO of Orion Health, a local IT firm that originally built the NIR. McCrae stated that Orion could have built out the existing register with all the Covid-specific information for somewhere between $1m and $3m. Obviously, McCrae is a bit peeved that the men from the ministry didn’t come knocking on his door. He’s also probably miffed that the new platform will eventually replace the Orion-powered one but, still, notwithstanding Orion’s ability to deliver or not, $38m seems like a huge price tag.
I was discussing the Covid register with a doctor recently, and their response was that everything about it is a debacle – in particular the booking aspects. Somewhat ironic given that this was the very value proposition that saw the contract awarded as it was.
This particular register aside, there does seem to be an issue around procurement in New Zealand. I’ve seen firsthand just how often government departments flout the government’s own rules for procurement, which instruct them to look beyond simply the price and assess “broader impacts” from procurement decisions. My business, Albion Clothing, has numerous examples of government agencies flouting those rules to obtain jackets from Vietnam and shirts from Fiji, all at the expense of local employment.
This travesty also exists in the digital space. NZ Rise, a consortium of locally owned IT firms recently published a report that found that a sum total of 2 per cent of government IT contracts awarded in 2020 actually went to local providers. Two per cent!
I’ve worked in the technology industry for 15 years. I’m well aware that we don’t have companies that can compete with Microsoft, Amazon or Salesforce for the biggest ticket events. But I also fail to see why we aren’t using our local vendors for the stuff they can do. In this example, we’re talking about a great big register with patient details and the ability to book online. That’s not rocket science and far less technical than, say, building an online accounting product or launching rockets into space (something that Kiwi companies have done with Xero and Rocket Lab respectively). Hell, notwithstanding my bias, I’d suggest that building a vaccination register is easy compared to making the toughest trousers in the world (shameless plug, there).
And, as a report on the benefits of local procurement commissioned by local tech firm CatalystIT found, the flow-on effects from procuring locals – be it clothing or technology solutions, are huge, and goes a large part of the way to making any cost difference irrelevant.
I’m sure we’ll never know the real story behind the register decisions, and I’m aware that in the midst of a war, decisions get made with less information than is usual. I just hope that, in the future, Kiwi companies will be given a fair chance to compete – they deserve it.
• Ben Kepes is a Christchurch-based investor and entrepreneur
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