Contracts awarded to firms associated with family members of Labour minister Nanaia Mahuta are under scrutiny. Photo / Mark Mitchell
Questions about contracts to firms linked to relatives of Cabinet Minister Nanaia Mahuta have also shone a light on how government agencies go about buying services, and what taxpayers get in return, writes Kate MacNamara.
A succession of four public-sector contracts awarded to two consultancies tied to the Ormsby family, relatives of Cabinet Minister Nanaia Mahuta, have raised obvious questions about real and apparent conflicts of interest. Last month these issues, so far as they relate to public servants, were taken up by the Public Service Commission.
The commission's probe — its parameters now being worked out — will not cover politicians. But the Government says it has every faith in Mahuta's good conduct, and Mahuta herself has said that where there were conflicts, these were handled "assiduously" by her, and in line with the Cabinet Manual. (At the time, she was associate minister, with limited responsibilities, for three of the four agencies.)
An examination of the work government agencies bought through the contracts, and the value for money that has been obtained is not in the commission's sights. Nor is it expected to be covered in the internal reviews of the contracting processes underway at all four agencies (the Ministry for the Environment's review is complete).
The details of both the procurement and the work it bought, however, raise further questions in three areas: the sole-source nature of the contracts; the absence of written work produced even where written work was clearly anticipated, and the quality and utility of the work produced.
From October 2020 to April 2021, four government agencies — housing agency Kāinga Ora; the Ministry for the Environment; the Department of Conservation; and Te Puni Kōkiri (the Ministry of Māori Development) — contracted $237,000 (excluding GST) of services from two consultancies: Ka Awatea Services, owned by Mahuta's husband Gannin Ormsby, and Kawai Catalyst, owned by Tamoko and Waimirirangi Ormsby, Gannin Ormsby's nephew and his nephew's wife respectively.
The work included a $28,000 grant but the three other contracts were all awarded on a sole-source basis.
Competitive bidding processes are the norm (with specific exceptions) for government contracts worth over $100,000; they apply to government departments and most Crown entities. In August 2020, Kāinga Ora engaged Ka Awatea Services to facilitate a series of meetings and workshops with 13 Auckland iwi over the course of that spring and summer (the agency said the parties had a verbal contract when the work began in August; a written contract was signed in October).
The estimated value of the work reached $100,000 (incl GST). While officials recognised that government procurement rules required a competitive tender process, they concluded that the contract qualified for an exemption because only one provider could fulfil the work.
Ka Awatea's consultant Rama Ormsby, a relative of Gannin Ormsby and until recently a principal adviser in tikanga (Māori customs) at Auckland Council, was the only person capable of facilitating the meetings to apprise local iwi of Kāinga Ora housing development work and seek their input, officials said in procurement documents.
The agency said the job also entailed the provision of "specialist advice" and attending Kāinga Ora team meetings. The spokesman declined to disclose Rama Ormsby's hourly rate, but the total cost (for an undisclosed number of hours of work) came to $66,800 (excluding GST).
Sole-source contracting was also used by the Ministry for the Environment (MfE) when it hired Gannin, Tamoko and Waimirirangi Ormsby, through their consultancies, to constitute the bulk of a five-member rōpū, or group, hired to contribute a Māori view to the ministry's revised waste strategy.
The work totalled $90,000 (excluding GST) and the ministry said that tight timelines and the very limited number of experts in the field of Māori knowledge on waste justified the sole-source approach.
In November 2020, the Department of Conservation (DoC) also awarded Ka Awatea a contract worth some $52,000 (excluding GST) on a sole-source basis. The department asked Ka Awatea to: "look at shaping and influencing how to embed Rangatahi [young people] representation within Te Papa Atawhai [DoC] and scope opportunities to influence change ..." The contract was not completed.
Simeon Brown, National's spokesperson for the public service, said sole-source contracting was clearly a problem, both in these cases and more broadly: "departments justify the sole-source contracting based on the fact that there're very few people out there to provide this work, but the reality is they don't know if they don't test the market."
Brown doesn't buy the argument that departments are too pressed for time to test the market: "the other side of the coin is that they've grown a significant team of people within their department who should also be able to do this work."
At the time it hired Ka Awatea, Kāinga Ora had 12 staff in its Māori outcomes team. The agency said the contractor was required because the team was short-handed.
The three contracts all entail unique details, but their use of sole-source contracting is not extraordinary, according to Barbara Allen, a senior lecturer in public management at the School of Government at Victoria University of Wellington. Across the public service, "sole-source contracting is very common, above and below [the $100,000 threshold]."
Allen also noted that it was common for public agencies to use exemption 9(c) as Kāinga Ora did: "this is not necessarily about avoiding competition. There are many reasons to do this and it is often the case that only one supplier fits the requirement. Knowing the market is a critical skill for procurement officers."
A $28,000 grant to Ka Awatea, made by Te Puni Kōkiri last year, to deliver a three-day series of workshops, wānanga and excursions for 40 rangatahi, from its suicide prevention fund, has also raised questions.
While the ministry's guidelines for the funding stipulate that funds cannot be used to pay consultants' costs, Ka Awatea's application document proposed using more than half of TPK's grant money, $15,500, to pay a group of panellists and experts (project funds were also provided by Waikato Tainui).
The funds would cover koha for time, travel and accommodation, the application said. Three experts were to be paid $3000 each ($7500 from TPK funds) and four panellists were to be paid $2000 each ($8000 from TPK funds).
Questions have been put to the department, but it has not confirmed whether the spending went ahead as planned. An internal review of the grant is currently underway at TPK. While Minister Mahuta was among the project's proposed panellists, a spokesperson said she did not attend and was not invited to.
The contract between Ka Awatea and DoC was the least productive. It delivered only a "preliminary scoping report" according to Minister of Conservation Poto Williams, and remained largely unfulfilled.
In response to recent written parliamentary questions, Williams described the scoping as the contract's first deliverable milestone, for which the department paid out $11,800 (excluding GST).
However, the "Payment Schedule" contained in the contract document released under the Official Information Act shows that the $11,800 was due "upon signing". And while the document also contained a "proposal for scoping a rangatahi engagement and advisory framework for the Department of Conservation", the write-up appeared to be the work of DoC, not Ka Awatea.
A department spokesperson declined to answer questions about the contract outside the OIA process, and questions put to the department in early September remain unanswered.
No written work was required, or produced, under the Kāinga Ora contract, although it included "specialist advice, support and resources" to "facilitate" 17 workshops and hui. The agency originally put the number of hui and workshops facilitated by Ka Awatea at 20; a spokesman recently revised the figure.
The agendas for the meetings were written up and distributed by Kāinga Ora staff and the constituent presentations were also delivered by staff. Though Rama Ormsby attended the meetings, his work appears to have been confined to a co-ordinating role with iwi.
Tony Burton, a freelance economist and policy analyst and former deputy chief economic adviser at the Treasury, called it "frankly weird" that Kāinga Ora was "paying that much to someone to access their existing network of contacts and to attend some meetings".
Burton said the Ka Awatea contract "appears to replace the informal contacts you would expect to already exist within Auckland Kāinga Ora with money. You would expect Kāinga Ora to have those contacts with Auckland iwi, and in any case, if they didn't, they could surely be obtained easily with a few phone calls to [Auckland Council's] local boards. This kind of consultation is very ordinary, day job work."
The MfE signed contracts with both Ka Awatea and Kawai Catalyst, and in this case, the paucity of written work is more puzzling.
Ministry documents show that in order to seek a Māori view on waste, a rōpū (group) of three "wise heads" was agreed.
Only subsequently, and at the request of the "wise heads" (one of whom was Gannin Ormsby), was a second contract conceived.
While Ormsby was to be paid $25,000 (excluding GST) through his consultancy Ka Awatea Services, the additional contract, some $65,000 (excluding GST), added the younger couple — Tomoko Ormsby and Waimirirangi Ormsby — to write up the group's ideas. The contracted rate was $1000 per person per day.
The procurement document, released under the OIA, said the job was to "hold the pen" because the "wise heads" would "need support to carry out more detailed research, and prepare documents and supporting visual material". But despite this clear anticipation of a range of written work, only one document was produced in the course of the rōpū's work.
It ran to seven pages and was submitted in two drafts. The second draft was described as a progress report. A ministry spokesperson said no final report was required, although at several points the progress report notes that further information is "to come". A ministry spokesperson said, "the nature of the work and interactions evolved. The pair [Tamoko and Waimirirangi Ormsby] continued to contribute to meetings and discussions".
Allen said it was common for actual work to deviate from what was described in procurement documents. However, she noted that in her view, there may be issues of deficient contract management given that there was a progress report but no final report from the group and it was unclear if and how the rōpū's thinking was used to inform the revised waste strategy.
The report submitted by the rōpū identified three "key foundations" of a "conceptual framework" for thinking about waste from a Māori point of view. The first is a set of three values: mauri, mana and whakapapa.
The second foundation was Takarangi, "the navigation instrument on our voyage toward a circular economy for Aotearoa". Nothing further is said on this concept (which refers to an intersecting spiral pattern) except: "Further information regarding the Takarangi to come".
The third foundation was pūrākau, or, roughly, stories and legends. The stories proposed for use in the waste strategy were those of Maui: "this story ultimately depicts our expedition to discover a new Aotearoa for future generations".
The remainder of the report was largely given over to "the narrative of the strategy", which consisted of outlining the tales of Maui and distilling a set of principles or "guiding winds" to fill the "sails" of the waste strategy.
These principles were: "equitable solutions", "resilient communities", "regenerate natural systems", "radical innovation", and "intergenerational education".
An MfE spokesperson said the interim report was never meant as a "stand-alone" document.
Burton said the use of Māori stories for the purpose of framing or augmenting policy has been used, though with mixed success, within government for years. He said a useful way to understand whether the exercise achieved any value was to ask: how has it helped to incorporate a Māori view into the ministry's waste policy?
"If the MfE thinks there are important Māori views to be sought on waste, you have to ask yourself, how has this work brought us any closer to incorporating them into what the ministry does? Yes, they [the ministry] have obligations under the Treaty. But again, you have to ask: does this work help the Ministry meaningfully meet those Treaty obligations?"
Indeed, it is difficult to see how the rōpū's work was used. The purpose of the work was to underpin a "conceptual framework" to update the waste strategy. However, an MfE spokesman confirmed that no framework document was produced. The framework, he said, referred to: "principles", "thinking" and "concepts".
There is not yet a final waste strategy, but when the draft strategy was released last year, rōpū member Jacqui Forbes wrote a scathing letter to the Minister for the Environment, David Parker. "[The] process by which this strategy and legislation reform was developed, its content, and the ways in which it is planned to be implemented are in breach of Te Tiriti o Waitangi," she wrote.
Gannin, Waimirirangi and Tamoko Ormsby, and Forbes have all been approached for comment, but none have responded.
For the two parties — Act and National — which have consistently objected to much of the Ka Awatea work and the way it has been carried out, the Treaty throws up an uncomfortable tension.
Many government departments are required to make special efforts not only at consulting Māori in the course of their policy work but at seeking a "partnership".
Act Party leader David Seymour said if given the opportunity, he would change course, and through a piece of legislation (which the party has already drafted), abandon the current approach to the Treaty and confer on all New Zealanders the same political rights and duties.
This, he said, would eliminate the parallel process in policy-making that seeks both a specific Māori view (an area where both Ka Awatea and Kawai Catalyst specialise) and a general community or stakeholder view.
However, the National Party, Act's political ally and larger partner when in Government, has not yet responded to this contentious plan.
Simeon Brown preferred to stress that the problem stems from spendthrift contracting and inefficient government departments: "government departments still have a role to play in terms of making sure that they respect and work with iwi in regards to their interests. But what you're seeing with these particular contracts is that instead of those departments using existing staff, they're contracting out ... These are big government departments which should have people who can do this work."
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