Damning report into review of Oracle job
The Ministry of Health has bowed to pressure and publicly released a damning audit into a dubious review of a failing multimilliondollar IT project.
The National Oracle Solution has been so beset by problems, including blowouts to both deadlines and budgets, that even a review into what went wrong has been left mired in controversy and accusations of a serious conflict of interest.
Health Minister David Clark has welcomed the ministry’s release of the Audit NZ report, into consultancy firm Deloitte’s appointment to review the Oracle project. But National associate health spokesman Shane Reti has accused him of initially trying to bury it and said the cost of the report had still not been released.
The Oracle project was still expected to eventually replace District Health Boards’ ageing finance and supply chain systems, but when costs began to rack up and the project starting missing crucial deadlines, the ministry eventually brought in consultancy firm Deloitte to review the project.
That was despite Deloitte owning the IT company, Asparona, chosen to help implement the project.
Audit NZ was called in to investigate earlier in the year and returned a scathing report back to the ministry, in June. Released late on Monday evening, the audit report detailed a series of failures to comply with best practice to manage that conflict.
Among its findings, auditors said the conflict of interest ‘‘had been poorly considered and managed by the ministry at the time it engaged Deloitte’’.
While Audit NZ accepted Deloitte’s advice that the firm did make declarations about Asparona’s work, auditors also noted Asparona was not actually referred to by name in the contract document.
‘‘It is not clear to us whether the Ministry was aware at the time it engaged Deloitte of the role that Asparona had with [oracle project]. We note that the Ministry’s initial reaction to the recent references to Asparona was one of surprise.’’
Audit NZ noted there was no evidence of any management plan to manage any conflict of interest.
‘‘We were advised during interviews that there had been discussion about the risk of perceptions of conflict of interest. We concluded that there appeared to be some awareness of this risk but apart from a communications protocol to manage external media contact no other plan was developed as a response to managing the risk of perceived conflicts of interest,’’ the report said.
‘‘We found the communications protocol to be a wholly inadequate response to managing the risk of potential or perceived conflicts of interest.’’
However, auditors were advised of steps taken by Deloitte to mitigate the risk of a conflict of interest, which included appointing staff that had not previously engaged with the District Health Boards that were working on rolling out the project.
Deloitte also brought in a partner from Australia to provide an outside perspective on the review and performed checks with the ministry and relevant agencies to satisfy the criteria outlined in the Consultancy Services Order.
‘‘Deloitte assessed the scale of work it had undertaken on [the Oracle project] and the nature of the recent services and concluded that the scale was ‘not material’ and therefore did not represent a potential conflict of interest,’’ the auditor’s report said.
Reti had lodged a number of questions with the Minister in Parliament over the last few months, to gain insight into the previously withheld Audit NZ report.
The Ministry of Health released it in response to a request from the Health Select Committee of which Reti is a member.
Clark said he welcomed the return of the Audit NZ report and its precursor, the Deloitte report, which had ‘‘been a window into a troubled project’’ long before the time his party took hold of Government.
‘‘The whole point of the review was to salvage a project that was going off the rails,’’ he said. ‘‘I’m advised the Ministry has accepted Audit New Zealand’s findings and has acted to address them.’’
Reti said the handling of the review had been ‘‘shambolic’’ and called into question Clark’s leadership. ‘‘It now comes as no surprise that David Clark played political games and tried to avoid releasing the AuditNZ report. The project could require millions more to be completed, but Cabinet could not rely on the Deloitte review to make that decision,’’ Reti said.
‘‘We support the objectives of the National Oracle Solution. And this crucial review, which informs how many millions Cabinet will need to inject into the Oracle project, now needs to be redone and overseen by someone other than the Health Minister.’’