The Ministry of Health's procurement of a national immunisation system

28 October 2021

Ian McCrae
Chief Executive Officer
Orion Health Limited
181 Grafton Road
Grafton
Auckland 1010

Tēnā koe Mr McCrae

THE MINISTRY OF HEALTH’S PROCUREMENT OF A NATIONAL IMMUNISATION SYSTEM

Thank you for your letters dated 6 and 13 May 2021 (and subsequent correspondence). In those letters, you raised concerns about the Ministry of Health’s (the Ministry’s) procurement of services to provide a Covid-19 Immunisation Register and a national immunisation system. You also raised concerns about the 2021 Budget announcement of funding for new information technology (IT) infrastructure for breast screening. The specific issues you raised were that:

1. the Ministry used Covid-19 to circumvent proper procurement;
2. the Covid-19 Immunisation Register could have been delivered in a more economical way;
3. the Ministry provided false information in its business case about the extent to which there were issues with the National Immunisation Register; and
4. the vendors awarded the contract do not have experience dealing with health information.

You also told us that, in your view, the Ministry has not followed an acceptable procurement process for a new breast screening solution, and you requested we investigate that process. The Ministry told us a procurement strategy for a breast screening solution has not yet been finalised, but it is likely to comprise procuring software, licences, and professional services. As the procurement strategy has not yet been finalised, it is premature for us to comment on this.

What we did

We sought more information to help us decide whether to carry out an inquiry. We met with the Ministry and sought detailed evidence about the procurement processes it carried out, including how and when services were procured.

We also asked about the Ministry’s intentions for the procurement of a new national breast screening solution, and the next steps for delivery of the National Immunisation Solution that was approved last year.

In this letter, we set out and comment on what we have seen from this work.

A summary of what we saw

The Ministry’s procurement of a National Bowel Screening Solution (Screening Solution) in 2017 provides useful context to the Covid-19 Immunisation Register procurement you raised concerns about. In the 2017 procurement of the Screening Solution, the Ministry stated that the successful solution could be used for other population-based health requirements, such as immunisation. We note that Orion tendered for this work, and Deloitte (using Salesforce, Mulesoft, Amazon Web Services (AWS), and other technology sets) was awarded the contract.

The Ministry currently has a National Immunisation Register (NIR) to record children’s immunisations and some adult vaccinations. This system was developed in 2005 by Orion. In the Ministry’s view, the NIR no longer meets the needs of a contemporary immunisation system, and lacked the functionality needed to meet Covid-19 vaccination requirements.

Having determined that a new solution was required, the Ministry contracted Deloitte (using the Screening Solution platform) to deliver the Covid-19 Immunisation Register. Before procuring Deloitte’s services, the Ministry also approached Orion to see if it could meet the Ministry’s requirements. Orion advised the Ministry in writing that it could not meet the requirements in the time frames specified.

This procurement was approached as an emergency procurement under the Government Procurement Rules. Because the Ministry was working under urgency, it documented approval for this approach after the procurement had been completed and work had started. Retrospective approval and documentation are allowed by the applicable emergency procurement guidance in emergency circumstances.  

The Ministry told us that $6.027 million had been spent externally from 1 August 2020 (when the work started) to 31 July 2021 on the Covid-19 Immunisation Register and that a further $3.539 million is forecast to be spent by 31 December 2021. Most of the $38 million contingency Cabinet approved in July and October 2020 for a new, modern National Immunisation Solution (Immunisation Solution) remains available for that purpose. Work is ongoing, with further procurement still to occur.

We have summarised the key dates, actions, and decisions in Appendix 1.

Background

The Ministry’s procurement of a National Bowel Screening Solution in 2017

In May 2017, the Ministry approached the market for a cloud-based screening solution that could meet the requirements of the National Bowel Screening Programme and be extended to other population-based health programmes. The Ministry notified the market that the functional capabilities of the Screening Solution needed to support other future initiatives, such as cervical screening, breast screening, or managing an immunisation registry.

Orion was shortlisted in the formal evaluation process, along with several other suppliers. In September 2017, the Ministry issued a detailed Request for Proposals for the Screening Solution to shortlisted respondents. The Ministry reinforced that the Screening Solution, and subsequent contract, might extend to future population-based register needs. Deloitte was the successful tenderer and the Ministry told us that Deloitte built the Screening Solution using Salesforce, AWS, MuleSoft, and other technology sets. We understand the Screening Solution went live in March 2020.

The Minister of Health’s announcement in 2020 to use Salesforce for the Covid-19 vaccine roll-out

In April 2020, when announcing further investment in the National Contact Tracing Solution (which the Ministry told us used the Screening Solution technology), the former Minister of Health announced that the platform would be developed to manage the delivery of the Covid-19 vaccine. This statement is consistent with information provided to the Minister about the capability of the National Contact Tracing Solution, and is not necessarily inconsistent with the Ministry’s earlier 2017 procurement of the Screening Solution. Orion has indicated that, in its view, decisions at this point had been pre-determined by the Ministry and this undermined the procurement of the Covid-19 Immunisation Register (including any use of emergency exemptions explained below).

However, the Ministry told us that, at the time of the former Minister’s announcement, it had made no decisions about using of the Contact Tracing Solution to manage the delivery of the Covid-19 vaccine. The Ministry said it had told the Minister that it would consider the use of existing strategic assets (such as those used for the Contact Tracing Solution), and that the technology it had been using for Covid-19 purposes was readily available for other purposes.

The Ministry started work to set up a system for the Covid-19 vaccine roll-out

In August 2020, the Ministry started work to set up a system by December 2020 that could record, store, and provide access to information about New Zealand’s Covid-19 vaccine roll-out. The Ministry had a short time frame to administer Covid-19 vaccinations to eligible New Zealanders and it anticipated that thousands of vaccinators across the country could be accessing and recording data simultaneously. As the current National Immunisation Register (developed by Orion in 2005) can be accessed only through the Connected Health IT network, many community-based vaccinators (who do not have access to that system) would not have access to NIR or the information in it.

The Ministry also considered that the NIR would not allow timely and accurate recording of the vaccine roll-out to meet the expectations of the Government and the public. Nor would it enable people to access their immunisation status, something that officials considered important if people needed official confirmation of immunisation status or were required to be tested for Covid-19 before travelling internationally.

Funding for a National Immunisation Solution (and the Covid-19 Immunisation Register)

On 6 July 2020, Cabinet agreed to set aside $23 million for the Immunisation Solution. Cabinet also authorised the Minister of Finance and the Minister of Health (the Joint Ministers) jointly to draw down the funds subject to their approval of a business case.

On 5 October 2020, Cabinet agreed to reallocate a further $15 million to the implementation of the Immunisation Solution. Again, Cabinet authorised the Joint Ministers to draw down that funding, subject to their approval of the Immunisation Solution business case, and to make changes to appropriations as required.

Together these sums make up the $38 million you have referred to in your correspondence with us. The Ministry told us it does not anticipate that this full amount will be required to design, develop, and implement the Immunisation Solution. We cover this in more detail later in this letter.

Business case for a National Immunisation Solution (and the Covid-19 Immunisation Register)

In September 2020, the Ministry finalised a business case to replace the NIR with an Immunisation Solution that would incorporate all immunisation records in a modern platform. Unlike the current NIR, the Immunisation Solution would be able to schedule follow-up appointments (where required); have data-sharing capability, clinical algorithms, reporting, and analytics; and be easy to update as new vaccines were added to the immunisation schedule.

In preparing the business case, the Ministry developed detailed technical specifications for the Immunisation Solution and for the Covid-19 Immunisation Register, which would be the first step of the Immunisation Solution’s development. It provided these specifications and anticipated time frames to Orion and Deloitte, who were the Ministry’s two key incumbent providers of relevant technology.¹

Following engagement with Orion and Deloitte, the Ministry received confirmation from Deloitte that it could meet the Ministry’s requirements in the time frames specified using the Salesforce platform. Orion told the Ministry that it was not able to respond to a formal procurement that would meet the Ministry’s requirements in the time frames specified. Instead, Orion developed an alternative proposal for services it could provide, which it considered complementary to the technology the Ministry needed to procure. We were told by the Ministry that it determined these services were not needed and took this alternative proposal no further.

The business case outlined that the first delivery priority was the development of a minimum viable product to support the Covid-19 vaccine roll-out (that is, a Covid-19 Immunisation Register). The business case stated the Covid-19 Immunisation Register would then be built on iteratively to replace the NIR with the Immunisation Solution. In preparing the business case, the Ministry analysed different procurement approaches. Because the Covid-19 functionality within the Immunisation Solution was critical to the Covid-19 vaccine roll-out, the Ministry decided that using an open competitive process to select a delivery partner was not feasible. It outlined in the business case that:

• Orion had confirmed it was not able to provide a successor solution to the NIR that would meet the Ministry’s requirements and time frames;
• the technology underlying the Screening Solution was viable for the Covid-19 Immunisation Register, and the preferred option for the Immunisation Solution; and
• it had not yet completed market engagement to confirm this, nor engaged the right mix of service partners to progress implementation, but this would be done following approval of the business case.

In October 2020, the Joint Ministers approved the business case to replace the NIR with the Immunisation Solution and agreed the Ministry could draw down up to the full $38 million contingency over four years (2020/21 to 2023/24) to implement the Immunisation Solution. This approval was ahead of the Ministry developing and delivering the Covid-19 Immunisation Register and, as we cover below, the Ministry told us it does not anticipate requiring this full amount to design, develop, and implement the Immunisation Solution.

The Ministry’s procurement of a Covid-19 Immunisation Register

The Ministry aimed to have an interim Covid-19 Immunisation Register live on 1 January 2021 to record, store, and provide access to immunisation information to support the Covid-19 vaccination programme. The Ministry told us that it was important that the Covid-19 Immunisation Register was delivered quickly and that it could have confidence in what was delivered. It decided that using Deloitte and the Salesforce platform would offer that as they were proven delivery partners that had carried out similar recent work.

The Ministry approached the direct procurement of services from Deloitte as an “emergency” pursuant to Rule 14.9(a) of the Government Procurement Rules (the Rules). Rule 14.9(a) provides that a genuine emergency as defined provides a valid exemption from open advertising. The Rule notes, by reference to the Ministry of Business, Innovation and Employment’s (MBIE) Quick guide to emergency procurement,² that emergency situations can include critical environmental or health emergencies, such as a pandemic. This approach was outlined in a memorandum to various executives at the Ministry, including the Deputy Chief Executive, Covid-19 Response and Deputy Director-General, Data and Digital.

The Ministry did not document the reliance on this Rule and obtain approval until December 2020, which was after Deloitte had been engaged in October 2020 and work on the Covid-19 Immunisation Register had started. However, MBIE’s guide says that retrospective documentation of decisions might be appropriate, provided this is done as soon as possible after the emergency event. In this case, it is evident the Ministry considered that it was actively responding to the Covid-19 pandemic, took steps to follow MBIE’s emergency procurement guidance, and sometime later sought approval on that basis.

The Ministry also said to us that there was scope for the Ministry to contract with Deloitte to develop the Salesforce platform in this way by relying on Rule 14.9(d)³ of the Rules. That Rule provides an exemption from open advertising where an original contract was openly advertised, where a change of supplier would not be economical, and where a change would cause substantial inconvenience. This could have been possible because of the signal sent to the market in 2017 that the platform it procured might then be used for other solutions, including immunisation. However, we note that the Ministry did not consider Rule 14.9(d) when it procured services from Deloitte.

It appears to us, from the documents we have seen, that it is the Ministry’s preference to use similar technology for the Immunisation Solution as procured for the Screening Solution in 2017. If the Ministry relies on Rule 14.9(d) for development of the Immunisation Solution, we would expect it would clearly document that at the time.

The Ministry told us that the Covid-19 Immunisation Register was built by December 2020, entered a user-testing phase in January 2021, and went live in February 2021.

Cost of developing the Covid-19 Immunisation Register and National Immunisation Solution

In your correspondence with us, you have said that:

• the cost of the Covid-19 Immunisation Register and Immunisation Solution ($38 million) is excessive and has been “squandered” by the Ministry; and
• Orion could have achieved the same outcome with an upgrade to the existing NIR for a cost of approximately $50,000 or a total technology refresh for $1-3 million.

In light of your concerns, we thought it would be useful to outline the Ministry’s expenditure. The Ministry provided a breakdown of spending from 1 August 2020 to 31 July 2021 (inclusive). By the end of July 2021, $6.027 million had been spent externally. A further $3.539 million is forecast to be spent by 31 December 2021.

The Ministry told us the costs outlined above relate to establishment, development costs, and apportioned software costs, and does not include “other products” that have been used as part of the Covid-19 vaccination programme (such as Post-Vaccine Active Monitoring, Inventory Management, and Book my Vaccine), and which might be part of the Immunisation Solution in the future. We also note that, unlike the NIR, the Covid-19 Immunisation Register can be accessed online, which means it can be easily accessed in workplaces and at community and mobile sites.

The Ministry also told us it now knows the Immunisation Solution will not cost the full $38 million that the Joint Ministers have authorised it to draw on through to 2023/24. We understand this is because much of the work done to date on the Covid-19 Immunisation Register will be used for the development of the Immunisation Solution.

The Ministry has confirmed no significant procurement has started on the Immunisation Solution other than the Covid-19 Immunisation Register. The Ministry initially told us it expected to be able to approve a delivery model and time frames by the end of September 2021, but we understand now that these time frames have been affected by the recent Covid-19 Delta outbreak. We expect this would include forecast costs and a procurement plan for the Ministry to complete the design, development, and implementation of the Immunisation Solution.

Given the Ministry determined that new technology and functionality was required, we have not explored your suggestion that the NIR could have had a simple schedule upgrade to meet the Ministry’s Covid-19 requirements. We have also not independently analysed the costs the Ministry incurred or explored what the technology for the new Immunisation Solution should reasonably cost. It is for the Ministry to determine its technology requirements and we note procurement remains ongoing. We expect the Ministry to demonstrate financial prudence in its procurement decisions to deliver those requirements.

Other issues

Allegations of false information about issues with the National Immunisation Register

One of the specific concerns you raised is that the Ministry did not accurately describe the extent of the issues with the existing NIR in its business case for the Immunisation Solution, in particular “suggestions that the country has not had a well-functioning immunisation system for many years.” We have not analysed whether the NIR was “well-functioning” or needed replacement. In our view, these matters are within the Ministry’s mandate and expertise to determine. However, we note:

• In Orion’s 2017 response to the Screening Solution procurement, Orion acknowledged that the underlying technology of the NIR was regarded as out-of-date and did not meet modern software expectations.
• The Ministry provided us with documents prepared by Orion outlining issues with the NIR, the need for product upgrades and required enhancements, and ongoing technical questions that Orion was supporting the Ministry with.
• Based on the documents we have seen, it is evident that the Ministry held the view that the current NIR would not meet its needs when it was deciding what form a new Immunisation Solution would take.

Concerns the successful tenderer lacks experience with health information

You have stated that the successful tenderer does not have experience dealing with health information. We have not taken a view about whether that is the case. However, the documents we have been provided indicate that, at the time of the 2017 procurement of the Screening Solution, Deloitte outlined its capability to the Ministry. This included:

• clinical capability with experience across screening programmes and the health sector;
• experience working with district health boards, health Alliance, and the Ministry; and
• first-hand experience implementing cancer screening solutions in similar-sized jurisdictions.

The procurement evaluation panel concluded that Deloitte had demonstrated the delivery experience and capacity to manage the implementation of the Screening Solution.

Concluding observations

The Ministry told us it expects to continue to leverage the capability within the Salesforce platform for the delivery of the Immunisation Solution, as signalled in 2017. If that is the case, in our view it is important for the Ministry to carefully document whether and how that 2017 strategy applies to its decision-making. The Ministry should also document how any procurement it carries out (including the next stages of the Immunisation Solution development, cervical screening, and breast screening) aligns with the Government Procurement Rules.

It is also important that the Ministry continues to assess whether it is receiving value for money in its investment in screening and immunisation solutions. This is particularly important given the longevity of the solutions being developed. We expect the Ministry to consider other commercial options and carry out case-by-case analysis of any new uses of the Salesforce platform, as it did with the Covid-19 Immunisation Register.

You also suggested that we should review the Ministry’s IT procurement rules and guidelines, and its adherence to them. Our Office maintains a monitoring role of, and an interest in, the Ministry’s procurement and we will consider whether there is a need for a focus on procurement as part of our work.

Thank you for bringing these matters to our attention. Because this letter raises matters that are of public interest, we intend to publish it on our website.

Nāku noa, nā

John Ryan
Controller and Auditor-General

APPENDIX 1 – KEY DATES AND ACTIONS/DECISIONS

1: Orion alleges that Deloitte and Salesforce worked on these specifications. Consistent with the documentation we have seen, the Ministry has confirmed that Deloitte did not commence work on the Covid-19 Immunisation Register until 2 October 2020, and that Salesforce licences were procured thereafter. The Ministry also confirmed that neither Deloitte or Salesforce worked on the business case or the specifications that were provided to Orion.

2: Ministry of Business, Innovation and Employment, Quick Guide to emergency procurement, Wellington, www.procurement.govt.nz.

3: Additional goods, services, or works: Goods, services, or works additional to the original requirements that are necessary for complete delivery. This rule applies where all three of the following conditions are met: i. the original contract was openly advertised, and; ii. a change of supplier cannot be made for economic or technical reasons, and; iii. a change of supplier would cause significant inconvenience or substantial duplication of costs for the agency.