Part 1: Introduction

Inquiry into the Ministry of Health's contracting with Allen and Clarke Policy and Regulatory Specialists Limited.

Events leading to our inquiry

1.1
During 2004, the Hon Murray McCully MP asked the Minister of Health a series of questions in Parliament about the contracting of Allen and Clarke Policy and Regulatory Specialists Limited (Allen & Clarke) by the Ministry of Health (the Ministry). The 2 principals of Allen & Clarke – Matthew Allen and David Clarke – are former employees of the Ministry.

1.2
Mr McCully raised a number of issues with the Auditor-General and with the State Services Commission (SSC) after he received responses to his Parliamentary questions, seeking an examination of:

  • the probity of the Ministry’s contracting practices with Allen & Clarke;
  • the adequacy of the Ministry’s contracting practices; and
  • the adequacy of the Ministry’s processes for responding to Parliamentary questions.

1.3
In March 2005, the SSC agreed to investigate the Ministry’s processes for responding to Parliamentary questions. The SSC reported separately on this matter on 22 July 2005.

1.4
On 8 April 2005, the Auditor-General decided to look into issues relating to the Ministry’s contracting practices. Audit New Zealand, a business unit of the Office of the Auditor-General, undertook the inquiry work.

Issues examined by our inquiry

1.5
Our inquiry examined:

  • the adequacy of the Ministry’s policies and procedures for procuring professional services, in particular as they related to:
    • employees undertaking contract work concurrent with their employment;
    • the Ministry contracting with former employees; and
    • the awarding of preferred/sole provider status in contracts;
  • the Ministry’s policies and procedures for documenting, managing, and monitoring contracts; and
  • whether those policies and procedures were followed in respect of the contracts with Allen & Clarke.

How we carried out our inquiry

1.6
We took the following approach in the conduct of our inquiry:

  • We reviewed the Ministry’s documented procurement policies that were in place during the period that the contracts with Allen & Clarke were entered into.
  • We reviewed documentation that had recently been collated by the Ministry on the contracts awarded to Allen & Clarke.
  • We identified and reviewed other audit and assurance reports into the Ministry’s contracting practices, and discussed them with Ministry staff.
  • We reviewed documentation relating to initiatives taken by the Ministry to improve its contracting practices and, in particular, its monitoring standards project.
  • We reviewed some personnel information, and researched company records for information about Allen & Clarke.
  • We reviewed the Ministry’s Code of Conduct, financial delegations policy, and other financial information.
  • We interviewed 6 Ministry officials who had been involved in engaging Allen & Clarke as contractors to the Ministry. Some of these staff had known the principals while they were employees of the Ministry.
  • We interviewed the principals of Allen & Clarke, and reviewed information Allen & Clarke provided to us after our interview with the principals.
  • We provided a draft of this report to both the Ministry and to Allen & Clarke, to give them the opportunity to comment on the accuracy of the findings and balance of the views expressed.

1.7
We were also guided by the principles set out in our June 2001 report Procurement – A Statement of Good Practice.

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