Appendix: Understanding available information on strategic suppliers

Strategic suppliers: Understanding and managing the risks of service disruption.

What we did

The main dataset we looked at was the significant service contracts reports submitted by public organisations to the Ministry. The Ministry provided this dataset to us as 560 individual spreadsheets dated between March 2017 and October 2020.

After receiving the files, we consolidated them into a single dataset and cleaned the data to ensure that it was standardised. For example, we needed to ensure that we could consistently identify public organisations and suppliers (which were named in different ways). We also had to make sure we had consistently recorded contract values. When a maximum contract value and a minimum contract value were recorded, we used the median as the contract value.

We used information from the Companies Register to retrieve the unique New Zealand Business Number for as many New Zealand-based suppliers as possible because this was not always recorded by public organisations. We also gathered information on the parent company for each supplier (where available) from the companies register.

To see whether they could provide additional information to augment the significant service contracts dataset, we looked at:

  • data held by the Department of Internal Affairs on public organisations' use of ICT services under the all-of-government common capability contracts; and
  • publicly available data from the Government Electronic Tenders Service on contracts awarded to suppliers.

We wanted to know whether we could match the information on suppliers of significant service contracts to suppliers in these datasets to get a fuller picture of strategic suppliers' business with the Government.

What we found

The significant service contracts dataset contains a wide range of information about the nature, management, and performance of each contract. This includes:

  • the contract name, a short description of the contract, and the United Nations Standard Products and Services Code for the goods and services provided by the contract;
  • the supplier name and their New Zealand Business Number;
  • the minimum and maximum intended lengths of the contract (in years), start and end dates, and minimum and maximum contract values;
  • whether performance measures are in place and how performance is tracking against these measures (a green, amber, or red rating, with optional commentary);
  • whether risks and issues are being identified, tracked, and managed and the current risk profile of the contract (a green, amber, or red rating, with optional commentary);
  • whether continuity and contingency plans are in place;
  • whether there is a plan for working with the supplier and the current status of the relationship (a green, amber, or red rating, with optional commentary); and
  • the overall health of the contract (a green, amber, or red rating, with optional commentary).

However, there are some limitations to the dataset:

  • Reporting is incomplete. In any given reporting period, some public organisations did not submit a report to the Ministry. Thirteen organisations have never reported their significant service contracts to the Ministry, despite being subject to the Government Procurement Rules.
  • The data is of variable quality. The main issue we found was inconsistent recording of important information like supplier names (with variations in wording) and contract value (which sometimes includes text or multiple pieces of information). This limits the analysis that can be done. There are also gaps in the information that is reported. Stronger controls in the reporting tool would help address these issues.
  • Information on risks is limited. The reporting tool does not require public organisations to directly comment on the risk of supplier failure. The risk of supplier failure can only be inferred from the risk status and any commentary that public organisations provide. In addition, the relationship between ratings for risks and issues and the overall health of the contract is unclear. We identified some contracts that had been assessed as "red" for risks and issues but "green" for overall health of the contract, which was not always well-explained in the commentary.

Overall, we concluded that the significant service contracts dataset has the potential to provide a rich source of information on government strategic suppliers for the 130 public organisations that are required to report to the Ministry. However, improvements to the reporting tool are needed to improve the quality of information and get the best value from it.

The Department of Internal Affairs' dataset on use of ICT services is of higher quality than the significant service contracts dataset. For example, supplier names are consistently recorded because the data is provided by the suppliers themselves. "Consumption value" is always recorded as dollar amounts and does not include any text. Although we could match the ICT services dataset to the significant service contracts dataset, we had no way of identifying whether there was any duplication of contracts between the datasets.

It is important to note that the Department of Internal Affairs' dataset is not an alternative source of information on strategic suppliers. It includes only data on use of ICT services under the all-of-government common capability contracts and does not distinguish between significant service contracts and non-significant contracts.

We found that we could not match the significant service contracts dataset to the Government Electronic Tenders Service dataset because there was no unique identifier common to both datasets. The New Zealand Business Number is available in the significant service contracts dataset but not in the Government Electronic Tenders Service dataset. The Government Electronic Tenders Service dataset includes the United Nations Standard Products and Services Code identifier but this was added to the significant service contracts dataset only in 2019 so has limited value for analysis. The Government Electronic Tenders Service dataset also lacks completeness. For example, about 90% of the contract values in the dataset we looked at were missing.

What the data tells us

We limited our analysis to the significant service contracts dataset.

We used a consolidated dataset of three years of data for the analysis. It contains information on 3839 significant service contracts across 101 different public organisations. There are about 500 unique suppliers that we identified in the dataset. We cannot give an exact figure for suppliers because inconsistencies in the dataset means there are many alternative names for the same suppliers.

Our analysis indicates that:

  • The total number and dollar value of significant service contracts varies in each reporting period. In our dataset, we identified 401 contracts with a total whole-of-contract value of over $23 billion in the reports submitted to the Ministry at 1 October 2020. These figures are lower than those reported by the Ministry in its dashboard because there were some files that we could not attribute to a specific reporting period. Our decision to use the median contract value could also have contributed to different figures.
  • Most public organisations report up to five significant service contracts. Some public organisations report between six and 20 significant service contracts. A few public organisations have many more significant service contracts, with one public organisation reporting 58 significant service contracts at 1 October 2020.
  • There is considerable variation in the dollar value of each significant service contract. For example, the value of contracts reported at 1 October 2020 ranges from $10,000 to more than $1 billion. The median contract value is about $6 million.
  • Most suppliers hold only one or two significant service contracts with public organisations. Some suppliers have more than five significant service contracts. One company was identified as the supplier for 14 significant service contracts at 1 October 2020.
  • Most significant service contracts are for ICT services. Other services provided by suppliers with the most significant service contracts include construction, facilities management, and health care.
  • The suppliers with the highest dollar value of significant service contracts are different in each reporting period. ICT and construction companies dominate the list of top 10 suppliers by dollar value at 1 October 2020.
  • Analysis of a subset of public organisations that deliver critical public services13 suggests that these organisations report more significant service contracts than other public organisations. These public organisations collectively account for a high proportion of total expenditure on significant service contracts (99% in our analysis of 1 October 2020 reports).

These figures should be treated with caution given the limitations we identified with the dataset.

13: There is no official list of critical public services. Our view of which organisations deliver critical public services was informed by the list of essential services prepared for Covid-19 Alert Level 4, the lifeline utilities identified in the Civil Defence Emergency Management Act 2002, and the essential services list in the Employment Relations Act 2000.