Monday, July 15, 2024

OAG finds limited progress on strategic supplier report findings

The Auditor-General says the public sector has made limited progress on recommendations presented in its 2021 report Strategic suppliers: Understanding and managing the risks of service disruption.

“We have published a letter to the Governance and Administration Committee that sets out our view of the progress that has been made to address the recommendations in our 2021 report,” said Auditor-General John Ryan.

Strategic suppliers provide goods and services that are critical to the delivery of public services and are not easily replaced. In 2023, the Office of the Auditor-General carried out follow-up work and published letters from five public organisations, including the Ministry of Business, Innovation and Employment (the Ministry), to assess how they had addressed the Office’s recommendations.

“We decided to carry out further follow-up work because the potential impact of strategic supplier failure is significant, and limited progress had been made,” said Mr Ryan.

“We wanted to understand whether the Government is now better positioned to understand its strategic supply risks than it was in 2021. Our letter focuses specifically on the Ministry, the system leader for procurement in the public sector.

“The Ministry told us about the work it does to support improving the capability of public organisations to identify and manage their strategic suppliers through the Supplier Relationship Management work programme it started in 2021.”

Cabinet changed the Ministry’s role from functional leader to system leader for procurement in July 2023. As system leader, the Ministry now has the mandate to identify and manage risks associated with strategic suppliers across a wider range of important public services. To do this well, the Ministry needs good information on who those strategic suppliers are, said the Auditor-General.

“The Ministry stopped requiring organisations to report key information about significant service contracts in October 2022. The Ministry told us that there is other data and intelligence that is used to identify strategic suppliers across the public sector. However, these sources of information do not provide a comprehensive picture.”

“As a result, the public sector is not well positioned to understand the risks of disruption to important services if a strategic supplier fails to provide these. Without this understanding, the Ministry has little ability to ensure that the public sector is actively managing the risks of disruption to services that are critical to New Zealanders,” said the Auditor-General.

Mr Ryan said his Office will continue to monitor the progress that public organisations have made in implementing the recommendations from the 2021 report. The Committee might also wish to invite the Ministry to present to them on its progress in addressing these recommendations, he said.

Latest Articles