Govt to centralise digital investment and procurement

NEWS - eHealthNews.nz editor Rebecca McBeth 

The government plans to centralise digital investment and procurement decision-making within the Government Chief Digital Officer (GCDO), aiming to save up to $3.6 billion over  five years.

The chief executive of the Digital Health Association (DHA) says creating a centralised capability for common applications will provide value for money, but it is important to recognise that health has unique application needs.

Minister for digitising government Judith Collins presented the proposal to Cabinet in August, seeking approval to change how government agencies invest in and procure technology solutions.

The government estimates potential savings of 15 to 30 per cent from its $13 billion five-year digital investment pipeline, equating to between $1.2 billion and $3.6 billion over five years by adopting modern digital practices.

"A coordinated, efficient approach to digital government can deliver significant performance and efficiency gains for public services," Collins says in the Cabinet paper. 

"However, the government continues to procure high-cost ICT solutions that take years to deliver and often deliver poor quality outcomes."

Under the new system, the GCDO will operate as the government's chief technology officer and be responsible for lowering overall ICT costs whilst supporting better digital services. 

The role will involve developing and maintaining a Digital Government target state, directing central decision-making over agencies' investment and procurement, and procuring ICT on behalf of most agencies.

The minister says the current fragmented approach means agencies procure high-cost ICT solutions in silos and compete with each other for digital skills and capability.

"This creates wasteful duplication and disconnected systems, misses the opportunity to achieve significant economies of scale, wastes resources, and drives up costs," the cabinet paper says.

Treasury data shows 59 per cent of core digital projects are behind schedule and 85 per cent of digital investment in the planning and delivery stages are rated "high risk."

Stella Ward, DHA chief executive, says having a centralised capability for purchasing common applications will enable better value for money due to the combined buying power of government. 

“It will be essential to have strong digitally relevant leadership and expectations set for good clear architecture and standards adoption such as FHIR APIs to provide more interoperability across government systems for elements such as identity,” she says.

However, Ward says it will also be important to recognise that health has unique application needs such as electronic health records, medicines management and specialist systems, such as radiology, oncology and genomics.

This means health will need a mandate to be able to procure these systems to avoid unnecessary bureaucracy which can be costly in both time and money.

“We also need to ensure we provide a mechanism for innovation to come from within the New Zealand data and digital sector to support local solutions, economic growth and export potential,” she tells eHealthNews.

The proposal presented to Cabinet includes exemptions for large agencies with significant capability, who will continue to administer their own procurement functions under GCDO guidance, and for specialised systems such as Defence.

Implementation will be phased, starting with the GCDO reporting to Cabinet in December 2025 with a Digital Government target state supported by a three-year programme of annual priorities, targets, and milestones.

Image: Minister for digitising government Judith Collins

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