Local tech companies have always been shut out of government contracts

A long history of bias

“Why don’t New Zealand companies win government tenders?” asks Ian Apperley at the IITP Techblog.

He writes about the institutional bias government departments and agencies have when it comes to buying technology.

More often than not they’ll choose an overseas supplier when there are perfectly good and better value alternatives available here in New Zealand.

A flawed process

Apperley recalls working on a major government tender for IT services.

Several years ago I was doing some work for a large government agency. Part of that work included setting up a tender for a major services contract, managing it through, then choosing and recommending a vendor to the CIO. What we didn’t know was that the CIO had already chosen the vendor.

The process to complete that RFP took nearly a year. We made a number of mistakes along the way. That included having only two IT people on the panel, the rest were accountants, contract managers and the CIO’s patsies. We were watched by an auditor from New Zealand Audit, a man of much credibility and experience.

As it transpired we chose two vendors to take through to the next level. The NZ Audit man signed off on the process. Then the CIO threw our findings out and went with the vendor they had already chosen. The final result was three years of pain for that agency because they chose the wrong organisation to support them.

Echoes from the late 1980s

A former managing director of a local software firm once shared a similar story from the late 1980s. His company built a world-class application — not unique, but advanced for its time — that found success with local businesses and overseas agencies.

Despite this, the firm couldn’t make headway with New Zealand’s government departments. Even when its software matched official requirements, Wellington wouldn’t bite.

When global brands take the credit

The company’s software was resold through a large multinational vendor, which marketed it under its own brand.

When a major New Zealand government tender came up, the local firm’s bid was quickly dismissed. The multinational, offering the same software bundled with its hardware, won the contract.

Officials even flew to the US to “see the system in action” — unaware, or unconcerned, that the technology originated in New Zealand.

The price of bias

The local firm earned a modest return from the deal, but the multinational took a much larger share — and charged the government a premium.

To add irony, the overseas company had no one in New Zealand qualified to support the system. It quietly subcontracted the ongoing work to the original developers.

The taxpayers paid more, while the local company did the real work.

Same old story

These stories, decades apart, tell the same tale.

New Zealand’s public sector has long favoured global names over local innovation. The pattern persists even as officials claim to support the domestic tech sector. Until that mindset changes, home-grown companies will keep fighting uphill for the right to serve their own government.