Review of funding decision says two panellists could have unduly influenced other members' scoring

Two of the six panel members who made the shock decision to stop funding the Problem Gambling Foundation had conflicts of interest, a review has found.

The review by accountants PricewaterhouseCoopers (PWC) also found the panel rejected providers who scored highest on the evaluation criteria in eight out of 13 regions.

The review, dated March 13, was trumpeted by Associate Health Minister Peter Dunne last week as showing the Health Ministry's "rigorous commitment to probity" in the process it followed to stop funding the Problem Gambling Foundation (PGF) for all except its Asian services, which employ 11 of its 63 staff.

An edited 15-page version of the review was placed on the ministry's website late yesterday in response to requests under the Official Information Act.


It does not give any clue as to the reasons for the decision to shift most of the PGF's $4.7 million annual funding to the Salvation Army, focusing purely on the tender process.

Mr Dunne has already said the evaluation panel comprised three Health Ministry officials plus one from the Internal Affairs Department, one from the Health Funding Agency and one Pacific health consultant.

PWC found that two of the three non-Health Ministry panellists declared potential conflicts of interest.

"One declared a conflict with a particular provider in one region and he did not evaluate that provider's proposal, but evaluated all other proposals in that region," the review said.

"The other had previously worked for one of the providers, but this was not assessed by MoH [Ministry of Health] as a sufficient risk to eliminate her from evaluating that provider's proposal or other proposals.

"We compared both panel members' scoring patterns relative to other panel members to see whether there was any significant deviation in their scoring, which might indicate any bias in their scoring. We found no evidence to this effect.

"Despite finding no evidence, the MoH should remain aware that the market could perceive that these two panel members could have unduly influenced other panel members' scoring of proposals in their joint panel moderation sessions."

The request for proposals set out the evaluation system, which gave 30 per cent weight to ability to deliver services for the specified prices and 70 per cent to quality factors of which the two biggest were ability to deliver the services and staff capability (15 per cent each).


But the review found that, in eight of the 13 regions, the panel selected providers "ahead of providers whose proposals had scored higher in the proposal evaluation results".

Furthermore, the panel provided "no documentation for the method used by the panel to moderate the proposal evaluation results".

PGF business director Graham Aitken said the findings were "very interesting" but the agency has not yet decided whether to seek a judicial review of the decision.

The Health Ministry manager in charge of the tender, Rod Bartling, said the panel members' potential conflicts of interest were "identified and appropriately managed". He said the ministry had now documented the method used by panel members to moderate the evaluation results.