1 June 2022

Gregory Soar
[FYI request #19266 email]

Tēnā koe Gregory Soar

On 3 May 2022, you emailed the Ministry of Social Development (the Ministry)
requesting, under the Official Information Act 1982  (the Act), the following
information:
Your Manuals & Procedures website states two differing maximum (unless
certain circumstances apply) amounts payable as advance for the
purchase of glasses.  One amount applies to purchase from a preferred
supplier and the other amount applies to purchase from a non preferred
supplier if non are local.
1.  Why are there the above two differing maximum advance amounts?
2.  Is there any discount of product cost from glasses suppliers in return for
clients of MSD being forced to use a preferred supplier (as compared
someone not in a preferred supplier area) thus supporting said suppliers
more than otherwise?
3.  If there are contracted prices holding discount as in question 2 how does
the client know this when buying and be able to ensure the lower prices
were charged?
4.  What are ALL the benefits to government/MSD and MSD clients from
“preferred supplier” agreements?

For the sake of clarity, I will respond to your questions in turn:
1.  Why are there the above two differing maximum advance amounts?
Prior to the implementation of a preferred supplier arrangement for optical goods
and services in 2014, the guideline amount for an advance payment for glasses
was $1000. Under the preferred supplier arrangement, clients can access $280
for glasses. This is because through the preferred supplier arrangement clients
are able to have their immediate and essential needs met at the competitive
prices these suppliers offer. For more context, you can access the Direction on
Advance Payments of Instalments of Benefit  on  the  Work  and  Income  website

here:
www.workandincome.govt.nz/map/legislation/ministerial-directions/
advance-payment-of-benefits-direction/index.html.
As per Clause 4:
The amount of an Advance should be the least amount required to meet the
Beneficiary's Particular Immediate Need.
Where a preferred supplier arrangement is in place, the amount of the grant
should be the least amount required under the optical goods and services
contract to meet the client’s particular optical need. In this instance that amount
is $280. There is a legislative requirement for clients to use a preferred supplier
when there is one available in the area where they live. See Section 368 1(c) of
the Social Security Act 2018 here: www.legislation.govt.nz/act/public/2018/
0032/latest/DLM6783876.html?search=sw_096be8ed81c126e9_368_25_se&p=1
&sr=3.
Where a client has high clinical needs, and the optical goods and services they
need cannot be provided at the standard contract price of $280, hardship
assistance can be provided at a higher amount for these situations.
If a client lives in an area without a preferred supplier, they have the choice to
travel to a preferred supplier at their own cost or visit a non-preferred supplier in
their area. In this instance, if they choose a non-preferred supplier, they are
unable to utilise the benefits of the competitive pricing that the preferred
supplier arrangement offers, and the guideline amount for optical goods and
services is $1000.
As stated earlier the payment amount should be the least amount required to
meet the client’s need. The $1000 is a guideline and the cost to a client will
depend on their individual needs. However, the maximum amount of an Advance
Payment of Benefit is six times the weekly net rate of benefit a client is receiving
and cannot be exceeded unless there are exceptional circumstances, e.g. a client
has high clinical needs and staff exercise discretion.
For more context, you can access Clause 4 (Amount of Advance) and Clause 6
(Exercise of Discretion) of the Direction on Advance Payments of Instalments of
Benefit  at  www.workandincome.govt.nz/map/legislation/ministerial-directions/
advance-payment-of-benefits-direction/clause-4-amount-of-advance.html
and
www.workandincome.govt.nz/map/legislation/ministerial-directions/advance-
payment-of-benefits-direction/clause-6-exercise-of-discretion.html respectively.
2.  Is there any discount of product cost from glasses suppliers in return for
clients of MSD being forced to use a preferred supplier (as compared
someone not in a preferred supplier area) thus supporting said suppliers
more than otherwise?
The Ministry has completed three open tender processes for  Optical  Services
since 2014. Open tender processes are open to any supplier. To be successful,
suppliers must meet certain criteria such as being able to provide national or
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local coverage and competitively price their services. Suppliers must also meet
specified requirements relating to vision testing and types, and quality of lenses
and frames. The current preferred suppliers’ prices are assessed by the Ministry
as offering the best public value.
Pricing for optical services is set during the tender process. The suppliers are
given a price parameter and the base service requirements. Suppliers can
provide different pricing for service components provided they stay within the
upper limit ($280).
Ministry clients can access eye tests and glasses at lower than market pricing by
choosing from Ministry-preferred optical suppliers. If there isn’t a preferred
supplier operating in their area, clients  may be able to use another optical
supplier not contracted by the Ministry.
3.  If there are contracted prices holding discount as in question 2 how does
the client know this when buying and be able to ensure the lower prices
were charged?
While suppliers must meet the criteria of being able to competitively price their
services, there are not Ministry-specific discounts that must be accessed by
clients  in a particular way to be applied.  As previously mentioned, pricing for
optical services is set during the tender process.
To apply for hardship assistance for glasses costs, clients call 0800 559 009 to
discuss their situation. The request may be granted over the phone. In the
instance where the client needs to see us in person, we will tell them what they
need to bring. The Ministry will take the client through the process and provide
them  with a list of approved optometrists or opticians in their area. If a client
does not wish to go to a preferred supplier, they will have to pay for the glasses
themselves.
The Ministry ensures that the clients can receive a base level of assistance  to
meet immediate need,  up to a maximum of $280. The final cost to a client
depends on what type of glasses they need but won’t cost more than the
maximum limit.
4.  What are ALL the benefits to government/MSD and MSD clients from
“preferred supplier” agreements?
Preferred supplier arrangements operated on behalf of all Ministry clients include
whiteware  and  optical services. The potential numbers of Ministry clients
requiring such goods and services means preferred suppliers can offer attractive
commercial pricing. The benefits of such preferred supplier contracts can include:
•  More transparent pricing
•  Fixed prices for goods and services
•  Certainty of supply of agreed quality goods and services
•  Continuity during supply chain disruption
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•  Warranties at no additional cost to the protections guaranteed under the
Consumer Guarantees Act
•  Relationship and contract management with suppliers for better
performance
•  Ability to meet volumes and a wide range of client need
•  Suppliers that meet or exceed minimum levels of service and quality
The principles and purposes of the Official Information Act 1982 under which you
made your request are:
•  to create greater openness and transparency about the plans, work  and
activities of the Government,
•  to  increase  the  ability  of  the  public  to  participate  in  the  making  and
administration of our laws and policies and
•  to lead to greater accountability in the conduct of public affairs.
This Ministry fully supports those principles and purposes. The Ministry therefore
intends  to  make  the  information  contained  in  this  letter  and  any  attached
documents available to the wider public. The Ministry will do this by publishing
this letter on the Ministry’s website. Your personal details will be deleted, and the
Ministry will not publish any information that would identify you as the person
who requested the information.
If you wish to discuss this response with us, please feel free to contact
[MSD request email].
If you are not satisfied with this response  regarding preferred supplier
arrangements for glasses, you have the right to seek an investigation and review
by the Ombudsman. Information about how to make a complaint is available at
www.ombudsman.parliament.nz or 0800 802 602.

Ngā mihi nui
Bridget Saunders
Manager
Issue Resolution
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