The Office of the Auditor-General has written to the Ministry of Transport with concerns over the Auckland light rail City Centre to Māngere project’s adherence to government procurement rules.
It said concerns were raised with the Office about the decision to run a “parallel process” to select a delivery partner for the project.
In particular, the concerns raised were whether the process complied with the Government Procurement Rules, the Office said.
In the letter to Ministry of Transport chief executive, Peter Mersi, Controller and Auditor-General, John Ryan outlines the concerns of his Office.
“My Office has an interest in this project because of its scale and significance to the Auckland region and the country as a whole, and because of our interest in good procurement practice generally,” Mr Ryan wrote.
“Concerns were raised with us about the decision to run a “parallel process” to select a delivery partner for the project.
“This would have selected a delivery partner based on two competing proposals – one provided by Waka Kotahi / New Zealand Transport Agency (NZTA), the other provided by NZ Infra a proposed joint venture between the New Zealand Superannuation Fund and Canadian institutional investors, Caisse de Depot et Placement du Quebec (CDPQ) (NZ Infra) – rather than running a fully competitive market process.”
He said the particular concerns raised with were whether the parallel process complied with the Government Procurement Rules and, if it did not, what risks this might pose to market confidence in the Government’s procurement practices, and its ability to provide assurance to Parliament and to the public that the chosen delivery partner would provide the best value for money.
For these reasons, we have been following the parallel process closely, with a view to deciding whether there were any matters that warranted an inquiry under section 18 of the Public Audit Act 2001.”
He said that in recent months, the Office had talked to officials from the Ministry and from other government agencies, such as the Treasury, the Infrastructure Commission (and the Infrastructure Unit at Treasury before that), and NZTA, and have considered papers prepared by those agencies.
“Our main focus has been on the Ministry’s actions in relation to the project, and not on the content or merit of the proposals. The Ministry has helpfully provided us with relevant Cabinet papers and aide memoire papers,” the Auditor-General wrote.
“On 24 June 2020, after completing its evaluation of the two proposals received from NZTA and NZ Infra, the Government announced that the parties to the coalition Government were unable to reach agreement on the preferred way forward with Auckland light rail and therefore decided to halt the parallel process. We understand that the Ministry and the Treasury will report to Cabinet soon on the best options for delivering the project.”
“Given this decision, it is important that we are clear about our concerns in relation to the process to get to this point.
“We have had several discussions with the Ministry and we acknowledge there is a difference of views about the process carried out to date. However, we are still left with a number of unanswered questions. Rather than attempting to answer these through a formal inquiry under section 18, we have recorded our views on the process that led up to the decision to run the parallel process. Our intention in doing so is to help inform any future procurement process for the provision of light rail in Auckland or other similarly complex infrastructure projects.”
The remainder of the letter was divided into three parts which summarised the background to the decision to run the parallelmprocess based on the information provided by the Ministry; set out the main aspects of the relevant Government Procurement Rules; and sets out the Office’s views on the process outlined in the first part, based on their discussions with the Ministry of Transport.
Mr Ryan concluded by saying he intended to maintain “a watching brief” on the progress of the project.
“How the Government goes about that process will not only affect trust and confidence that the process is being carried out appropriately, it will also affect the assurance provided to the public that the result will deliver the outcome that the public is paying for,” he wrote.