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NZ Government promotes a Trojan Horse that will eliminate competition

NZRise holds the view that the procurement process MBIE and DIA followed to establish a Common Capability for all-of-government Human Resource (HR) systems is fundamentally flawed. We are further concerned the only option presented to agencies is a single supplier – SAP.

NZRise strongly promote transparency in government procurement. To this end we propose a policy that requires DIA to publish all contracts awarded under common capability agreements, including value of the contract.

If the original Horse had been transparent, the Trojans would not have lost the war.

What is the problem?

DIA and SSC are promoting SAP’s HRIS as the Human Resource Management system for all government agencies, which is acting as a “Trojan Horse” that locks government agencies into a technical platform that extends well beyond Human Resource Management Information Systems (HRMIS).

Why should Government be concerned?

By installing the product, an agency subscribes to a pseudo-monopoly of the SAP software ecosystem reducing competition for suppliers of additional functionality. This has a significant impact on New Zealand companies that provide HR related software solutions.

How did this come about?

MBIE issued a Request for Registrations of Interest (RoI) – Human Resource Information System (HRIS) in May 2014. The RoI was focused on MBIE requirements and included provision of the HRIS as a syndicated procurement; MSD and SSC were identified as potential users of the syndicated procurement arrangement. GETS contains no information on the original RoI documentation, any subsequent RFP or a notification of the award.

There is no published information on the procurement process, or the steps that government took to move from the initial RoI to the current position where HRIS is offered as an officially endorsed all-of- government product. The first public information is from an archived version of the ict.govt.nz website that was released between April and December 2016 announcing:

The ICT Common Capability Cloud HRIS Agreement was signed on 23 March 2016. The agreement is for the supply of a cloud-based Human Resources Information System (HRIS) offering a suite of tools to manage and analyse employee records and automate HR processes.

While the initial contract with SAP was for three years, it was extended for a further two years in January 2019 without any market consultation; we understand that this was because cancellation would adversely affect agencies who were part way through a 3 year commitment.

Agencies in the market for a new Human Resources System are encouraged to use products and services offered by digital.govt.nz, and the only option they are presented with is SAP. The overall effect is to substantially reduce the potential for NZ software companies to compete. This is in direct opposition to government policy, which is to increase the opportunities for NZ companies to secure government contracts.

NZRise view is that the procurement process whereby this contract was established as a Common Capability for all of government HR systems is fundamentally flawed.

Why is this a problem?

When an agency tenders for additional functionality, they require that bidders can demonstrate their systems can interface to the HRIS. However, the technical documentation to provide the interfaces to SAP are not published, and so Kiwi suppliers are locked out.

In addition, the agency is not required to go through a tender process for additional SAP functionality that falls well outside the core HR service, because of the exemption in the Government Procurement Rules that allows the tender-free acquisition of additional goods, services or works from an incumbent supplier.

Over time, SAP software provides an increasing proportion of functionality each agency requires, and effectively restricts the opportunity for other suppliers to compete.

Examples

Some examples NZRise members have experienced are below, these are a subset only:

The Department of Corrections issued a tender for a Rostering system, including the requirement that bidders must have multiple instances of their system interfacing with SAP Payroll.

The Ministry of Social Development extended their initial implementation of the HRIS to the Success Factors suite of products without an RFP.

New Zealand Police selected and implemented SAP SuccessFactors without an RFP.

WorkSafe decided to adopt SuccessFactors (supplied by SAP) and issued a tender for a Payroll system which must already be running in conjunction with SuccessFactors.

What future plans do government have?

We contacted DIA to get their input on the situation. We were told that the current position is a legacy arrangement, and that they plan to move the contract to the Cloud marketplace in 2021 when the current contract ends.

NZRise support all moves that support more competition and transparency in ICT procurement, and expect that software from multiple HR providers will be available on the Cloud marketplace.

How can this be fixed?

NZRise strongly promote transparency in government procurement. In this situation, we propose a policy that requires DIA to publish all contracts awarded under common capability agreements, including value of the contract.

As we said at the outset of this article – If the original Horse had been transparent, the Trojans would not have lost the war – transparency is key.

Any questions on this feel free to comment on this post below or contact the NZRise Co-Chairs.

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