"The practical outcomes of a system over the long-term reveal something important of the the true-preferences of the various interests which control that system, and these interests may be very different from the system's stated goals."
I don't see the contradiction here. The purpose of a cancer hospital is to cure as many patients as possible. "What it does" is cure as many patients as possible. The fact that as many patients as possible is currently (presumably) two-thirds is irrelevant. If major advancements in medicine or new types of cancer emerged which changed the percentage of people cured it wouldn't matter at all. "What it does" and "the purpose of the system" is still unchanged.
(Although there is another message, there, too: “the purpose of a system, insofar as it can be said to exist separate from what it actually does, has no weight in justifying the system’s existence or design”.)
You can make a lot of claims and they can match to reality a lot - normally people think of evaluating things in terms of a strict "does this fit or does this not", but it's often the meta-style (why do you keep bringing up that argument in that context?) that's important, even if it's not "logically bulletproof".
The follow-up is slightly better. But still not very convincing, IMO. They get far too stuck on a literal interpretation. Of something that self-describes as a heuristic.
The phrase does not make more sense even if we go all the way back to Beers. I certainly don't feel alone in not understanding how he went from his (fair) observation that "[There's] no point in claiming that the purpose of a system is to do what it constantly fails to do" to his more controversial conclusion: "The purpose of a system is what it does (aka POSIWID)".
Surely, there were many more sensible (but perhaps less quippy) stops between the two.