When Good Procurement Fails

In New Zealand’s public sector, procurement is taken seriously. Yet what happens after a contract is signed remains one of the weakest points in service delivery and governance. Despite rigorous procurement planning and evaluation stages, contract monitoring is often informal, inconsistent, or entirely missing. The result is a systemic vulnerability: contracts that begin with strong commercial intent can quietly fall apart during delivery.

A 2024 report from the Office of the Auditor-General (OAG) outlines this clearly. Drawing lessons from procurement audits across agencies, the report makes one thing evident: public organisations frequently fail to implement active contract monitoring strategies once delivery begins. Where monitoring exists, it is often based on perceived risk rather than formal performance frameworks. Contracts under $100,000, which make up the majority of spend by volume, are typically managed without structured performance reports, real-time tracking, or milestones tied to supplier obligations.

The Auditor-General’s advice is blunt: “It is not enough to just have a contract in place. Public organisations need to monitor and manage the supplier’s performance to ensure they are getting what they paid for.” Yet in practice, only high-risk or high-value contracts receive this attention. Even then, post-signature accountability is often scattered across departments with no single view of delivery status.

This gap isn’t hypothetical, it is expensive. Missed performance targets, unverified deliverables, and unclear responsibilities lead to scope creep, payment without delivery, and unresolved underperformance. Agencies also weaken their ability to extract learnings for future procurement rounds because outcomes are poorly documented or subjective.

Compounding this, contract managers frequently rely on Excel sheets, PDFs, or email chains to track obligations. These methods are not only inefficient, they are invisible to auditors, boards, and directors who need to ensure compliance, value for money, and risk mitigation.

What is required is a step-change in how public contracts are managed after award. Contract monitoring must be reframed not as optional, but as a core part of institutional governance. Tools like real-time dashboards, milestone alerts, compliance checklists, and supplier performance scoring need to be embedded from the outset. For the taxpayer, this means better public value. For agencies, it means operational clarity and reputational safety. For boards and leaders, it provides the oversight they are legally and ethically accountable for.

In short, good procurement is only half the job. Without contract monitoring, even the best-planned engagements can turn into financial and political liabilities.

https://oag.parliament.nz/2024/procurement-lessons/docs/procurement-lessons.pdf