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Asset sale contract 'broke rules'

DANYA LEVY
Last updated 08:03 20/06/2012

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The Government broke its own rules around the awarding of a lucrative contract to advertising company Clemenger BBDO to sell state-owned assets, the Greens say.

Clemenger won the contract after Treasury issued a Request for Proposals (RFP) on December 15. Tenders closed on January 9.

The limited timing of the process and the fact it was held over Christmas raised advertising industry concerns at the time.

Treasury said yesterday the timeframe was unavoidable and that the process did not have a pre-determined outcome.

Greens co-leader Russel Norman said best practice guidelines issued by the Department of Prime Minister and Cabinet (DPMC) said the Government must consider the timing of advertising tenders.

The guidelines state: ''Unless it is unavoidable, government entities should be sensitive to the needs of busy people and not initiate tendering processes in the three weeks before Christmas, the week after Christmas and around Easter.''

Dr Norman said timing made it difficult for agencies to compete for the contract because staff were on holiday.

''That's not really good enough. This is public money; there are guidelines in place for a reason which is to make sure the public sector is accountable.

''This may well be one of the biggest advertising contracts the Government puts out this term.''

Treasury spokeswoman Chris Major said Treasury was mindful of DPMC's guidelines.

''Those guidelines note that RFPs should be avoided at Christmas if possible; in the case of the Mixed Ownership Model programme it was deemed necessary and unavoidable to proceed with procuring advertising and communications services in December/January.''

The tender process for the advertising contract met the Government's procurement standards and 21 bids were received, she said.

''That level of respondents would suggest the timeframe was not a deterrent.''

Treasury did not have a pre-determined outcome and a probity adviser oversaw the process.

State-Owned Enterprises Minister Tony Ryall said Treasury made decisions about contracts.

Legislation to enact the Government's controversial plan to sell up to 49 per cent of state-owned enterprises Mighty River Power, Genesis, Solid Energy and Meridian, and to reduce its stake in Air New Zealand from 74 to 51 per cent, was back in Parliament yesterday.

The Government has said it's spending about 2 per cent of the estimated $5 billion-$7b the sales will generate on advertising and marketing, public relations company Senate Communications, investment company Goldman Sachs, internet company Computershare Investor Services, banking and legal services, and administration.

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The Government has refused to say exactly how much is being spent on those associated costs but if it gets $6bn for the partial sale of the five companies, it would reach $120 million.

The Greens objected to the government spending which Norman said was a ''terrible waste of money''.

''We are trying to campaign against asset sales with our meagre budget.''

The Greens had been open with the public that they were spending $75,000 of their taxpayer-funded leaders' budget on gathering signatures to force a citizens' initiated referendum on asset sales.

Finance Minister Bill English yesterday told Parliament the cost of the contracts were commercially sensitive but the Government would release figures ''in due course''.

''It is a significant spend because we want widespread ownership of these shares by New Zealanders.''

- Fairfax Media

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