‘Opt-out’ clause used to explain Gumboot Friday’s lack of funding for procurement process

Health officials had to invoke a special “opt-out” clause to ensure $24 million donated to Mike King’s “Gumboot Friday” program complied with government contracting rules.

Officials also suggested reducing funding first and then expanding it, but this was unsuccessful.

The chairman of the charity that launched the initiative said the level of scrutiny it faced was “devastating” and some suggested the group must have done something “fishy”.

The government announced in May that the I Am Hope Foundation would receive $6 million over four years to provide counselling services to young people aged five to 25. The funding was pledged last year as part of the coalition agreement.

Documents obtained under the Official Information Act show health department officials are struggling to find ways to make the contract comply with public procurement rules.

“We acknowledge that we did not use an open competitive process and that other non-governmental mental health and addiction service providers also felt that this was an unfair process,” Robyn Shearer, deputy director general for clinical community and mental health, wrote in a memo to her boss, director general Diana Sarfati, in June.

Because the government had “instructed” the department to fund the contract without going through the usual public tender process, a frequently used exemption clause – known as “Clause 14” – was “not appropriate” in this case because “there are other organisations providing youth mental health services”, Shearer wrote.

Instead, she asked Sarfatti to agree to a “direct source contract” with the I Am Hope Foundation, using a special “opt-out” rule that exempts the government agency from the usual procurement process.

Rule 12.3.k of the Public Procurement Manual allows for certain types of health, education and welfare services (usually with only one supplier) to be circumvented from the normal procurement process.

For example, the rule is sometimes used in the creation of tribal service contracts where a particular tribal organization can best meet the needs of its population.

It will often apply to specific health services, such as dementia services, where there may be vulnerable patients who require ongoing services and an open tender process would disrupt their care.

While there are other youth mental health services, the I Am Hope contract still merits a waiver because the program already has a platform and operating model and “can scale up services more quickly than an organization that needs to build out an entire service,” Shearer wrote.

“Inappropriate” exemptions

Labor’s mental health spokeswoman Ingrid Leary said the opt-out rule should not apply in this case.

“It is inappropriate to spend millions of dollars to deliver effective services across multiple providers, as is happening in the youth mental health field.

“By predetermining the outcome and picking winners, the government forced officials to exploit a legal loophole they knew was never designed for this type of procurement in a desperate attempt to fit a square peg into a round one.”

Children’s Commissioner Dr Clare Ahmad also criticised the way Gumboot Friday was funded.

“I hope we can ensure that when we make funding decisions in the area of ​​youth mental health, we do it in a holistic way.”

Asked if that was the case with the funding, she said: “I don’t think so.”

“It’s a little unusual to see an organization appear in a coalition agreement.

“I hope we can stop and listen to children and young people. What do they need? What services do they find useful? Where do we need to invest more energy and money? So I hope we’ll see that approach from now on.”

‘Strong monitoring’

Health documents show that while there is no procurement process, “all practicable steps” are being taken to ensure key public procurement principles are adhered to.

The contract will have “clear performance indicators” and “rigorous monitoring and reporting requirements” to ensure the government gets value for money and the right outcomes.

The department will monitor the number of new mental health counsellors added to charities, the number of free mental health counselling sessions provided and the number of individuals receiving counselling services.

“Through contract monitoring, we can also anticipate average costs per treatment course and average costs per person, which will support assessments of value for money,” Shiller wrote.

The contract is funded by the Ministry of Health but will be managed by Health New Zealand (HNZ), with the two agencies signing a memorandum of understanding in May setting out each other’s responsibilities.

The memo said Housing New Zealand would monitor the contract on a monthly and quarterly basis and share the results with the Ministry of Housing and Urban Development.

The contract was signed at the end of June and took effect on July 1.

Officials suggest funding to be provided in phases

I Am Hope will receive $6 million a year for four years, but ministerial briefing documents show health officials initially recommended slowly increasing the funding, with just $2 million in the first year, $3 million in the second year and $6 million in the third year.

“The phased determination of the contract value will allow the Gumboot Friday organisation to more gradually expand its infrastructure and service capacity,” it said in a report to Mental Health Minister Matt Doocey in December last year.

“However, this option may not be consistent with the public’s current expectations of a full $6 million investment from the first year,” it noted.

In March this year, Department of Health officials expressed concerns about the charity’s clinical management, noting that “it does not fully meet the expectations we have for other mental health providers”.

The funding will be used to pay for private counselling, providing young people with a counsellor of their choice.

The Department for Education also wants all counsellors to be subject to police safety checks under the Children Act 2015, noting that a statement of qualifications alone would not satisfy this requirement.

The “enhancement” approach

Naomi Ballantyne, chair of the I Hope Foundation, said the charity had recently made some changes to address the ministry’s concerns.

These include Concerns about its clinical leadershipShe said charity staff would now double-check the qualifications and registration of every adviser on its platform and carry out annual criminal record checks.

It also requires consultants using the platform to declare annually whether they have been hit with any sanctions or problems with their registration.

The charity will also have to report to the ministry any complaints from young people about counselling services they receive. Regular audits will check whether contract funds are being used for actual counselling services.

Ballantyne said the newly appointed clinical psychologist will handle complaints and policy but will not provide clinical supervision of counselors.

“Her role is to make sure the checks and balances we have in place are appropriate. We don’t come between the client and the consultant, but we oversee the process.”

Fiona Clapham Howard, director and trainer of mental health peer support, said the Gumboot Friday scheme was “innovative” but she had concerns about the “stand-alone” supervision arrangements within its model.

She said the Gumboot scheme acted more like a matchmaker, connecting young people with private counsellors, meaning all the risk was borne by the counsellors, not the charity.

“We have traditionally expected mental health services to provide the same reassurances.”

Ballantyne said the charity was not a mental health provider and therefore should not be subject to the same conditions as mental health providers.

“We are very different, and it’s hard to articulate that in the midst of the media storm over our financing,” she said.

“Our job is to raise awareness among young people about the importance of talking about feelings and ‘Gumboot Fridays’ provides a platform for this.”

“The counselling itself is provided by registered counsellors who are authorised and supervised by professional bodies.”

The initiative has faced “devastating” public scrutiny since the funding was announced in the coalition deal.

“The Gumboot Friday initiative, the I Am Hope charity, Mike King and even myself have become collateral damage in this process. The focus has been… ‘You must have done something fishy to get this funding.'”

“It’s devastating for Kim. He’s done so much but no one is paying attention to him. He’s trying so hard to be a good person but now he’s the bad guy.”

Asked whether it was fair to be awarded a $24 million contract without going through the usual public procurement process, Ballantyne responded: “What is fair? Is the end result good for the children? Was the procurement process sound and did the money go somewhere else?”

“From our perspective, we’re very grateful,” she said.

“So is it fair that we get the money? I think it is fair. But is the process fair? That’s not my question, that’s the government’s question.”

Mental Health Minister Matt Doocey was not available for an interview, but he said in a statement that “health service exit rules were followed” in signing the contract with I Am Hope.

“Strengthening the focus on prevention and early intervention is one of my priorities and it’s something we all have a role to play. Gumboot Friday helps young people with mild to moderate mental health needs access counselling services earlier.”

“The ministry did not consider the $2 million option as its first choice but went through the standard budget bidding process,” he said.

He said an estimated 15,000 young people would receive free mental health counselling services through the funding.