Friday, February 08, 2013

The Novopay contract

Last week, the Ministry of Education dumped a large pile of documents relating to Novopay onto the web to head off repeated OIA requests. Buried among them was Novopay's contract: the Education Service Payroll
Outsourcing Agreement (part 1a, 1b, 1c and variations).

The key thing anyone will be looking at in the contract is the penalties for breaching it. Sadly, we're not allowed to know them. Likewise, we are not allowed to know Talent2's key performance indicators, which of them are agreed to be critical, or what the government considers to be a "severe impact service failure". Though in the latter case, if the ongoing problems aren't one, then you have to wonder what the hell is.

The secrecy around KPIs is crucial in undermining accountability. It means that we have no way of telling whether Talent2 is meeting its obligations. More importantly, it also means we have no way of telling whether our elected representatives and public servants met their obligations to us, by negotiating a strong contract with high performance standards. Past outsourcing agreements (e.g. Serco's private prison contract) have contained soft targets so Ministers could declare the project a success no matter how many prisoners escaped or were unlawfully detained past their release date. But secrecy means we have no way of telling whether this has happened with Talent2.

What the contract does reveal is quite depressing. Talent2 has no liability for compensation costs for its fuckups (23.4(b)), and its total liability to the government for any failure is capped at an agreed but secret amount (23.5), which may or may not be $15 million (the level of insurance they are required to carry). So, in the event of a catastrophic failure, the government pays. So much for all that rhetoric about outsourcing leading to reduced risk...

When all this is done, we need to change the way our government does outsourcing. Most importantly, we need open contracts, so everyone can see that the public is getting a good deal and that the supposed efficiencies actually exist. Anything less, and we are letting politicians screw us.