The Auditor-General has lambasted the Ministry of Health over its handling of a $60 million contract for saliva testing, raising questions over whether bias or ulterior motives played a role.
The ministry has faced constant criticism over the slow pace with which saliva testing has been adopted, with Covid-19 Response Minister Chris Hipkins even saying he has been frustrated that it didn't happen sooner.
General rollout of saliva testing was recommended "as soon as possible" in September last year in a report by Sir Brian Roche and Heather Simpson, but it only started to be used more widely in the second half of this year.
It was also under-utilised in the Delta outbreak when, in the first weeks, people waited up to 12 hours to be tested while private provider Rako Science's offer to help was declined; Rako says it can process 10,000 saliva tests per day.
Auditor-General John Ryan looked into the issue following a letter from former Deputy Prime Minister and NZ First leader Winston Peters, who asked questions around why introducing saliva testing had taken so long.
In a letter released today to director-general of health Dr Ashley Bloomfield, Ryan said his team had "serious concerns" with the way the contract, awarded to Asia Pacific Health Group (APHG), was handled.
In particular, he raised concerns around the conflicts of interest among four out of the five panel members who evaluated the tenders.
Those interests included some panel members having "regular professional contact with staff/organisations that might be responding to, or affiliated with, tenders".
Panel members also had "past and current employment relationships with staff from potential respondents or associated laboratories".
And they had experience reviewing different saliva testing methods, and had developed their own opinions about which was better.
"The public needs to be confident that decisions are made for the right reasons and are not influenced by personal interests or ulterior motives," Ryan said.
"If it looks like you might be influenced by personal interests or ulterior motives when making a decision, you risk undermining public confidence in the integrity of that decision."
Ryan also criticised the ministry's attempts to manage these conflicts of interests.
The ministry, for example, said panel members were asked not to disclose material relating to the tender with any of the respondents, but Ryan said this was standard practice regardless of any conflicts of interest.
"The actions in the conflict of interest management plans did not serve to effectively restrict the panel members in any way," he said.
"The risk with having a conflict of interest – at least, one that is not properly managed – is that you will be seen to be advancing your own interests or the interests of others you feel a sense of loyalty or obligation to, rather than the interests of your role as a public servant."
The ministry said the conflicts were managed in accordance with its standard procurement process, but those guidelines were rubbished by Ryan as "brief, and provide minimal, if any, direction on how to manage conflicts of interest in practical terms".
Conflict of interest declarations were also signed by panel members stating that there were none, and later changed to say that there were in fact some.
Ryan also criticised the ministry for having no procurement plan for the contract, nor did it appoint an independent probity auditor for the process.
The ministry claimed it had independent advice from a team at Audit NZ in early April, but Ryan said the tenders had already been evaluated, and the Audit NZ team wasn't formally engaged, wasn't even told a major procurement was being discussed, and was provided limited information.
Nor was the team given "any specific information about the nature of the conflicts of interest across the five panel members".
Peters said that Ryan's comments showed a Government that "has an unhealthy penchant for crony capitalism and protecting their mates".
"They have again blatantly decided to run roughshod over due process and transparency in favour of their own back-patting advice."
National's Covid response spokesman Chris Bishop said the extent of the conflicts of interests among panel members was "simply incredible".
He called for an independent inquiry.
"While today's report deals with the procurement process, there are wider, unanswered questions around saliva testing in New Zealand."
The inquiry should cover the slow pace of adopting saliva testing, and whether awarding the contract to APHG was appropriate, given that it didn't have a diagnostically-validated saliva test at the time but Rako Science, which also applied for the contract, did.
In his letter to Winston Peters, Ryan mentioned this issue by saying that the winner of the contract needed to have their tests processed in a lab that was appropriately accredited by Independent Accreditation New Zealand (IANZ).
"The Ministry told us that it ensured that APHG had the necessary IANZ accreditation before it entered into the contract," Ryan said.
But Bishop said the ministry had altered the standards used by IANZ for accreditation, and asked for the inquiry to look into this too.
Ryan also told Peters he didn't find any information that supported Peters' concerns that the contract was awarded to help the NZ Super Fund, which had acquired APHG.
Hipkins' office declined to comment.
A Ministry of Health spokesman said that the ministry accepted the findings of the Auditor-General.
"The ministry will be using the recommendations from the Auditor-General's review to guide its ongoing planning and management of the ministry's procurement process."