Judicial review offers practical lessons on commercial tendering

by Miklos Bolza19 Aug 2015
A recent judicial review of the Ministry of Health’s tender for problem gambling services could have far-reaching repercussions for both tenderers and Crown agencies, a release from a top tier firm says.
 
Chapman Tripp’s latest Brief Counsel, compiled by the firm’s public law team, said that in July 2013, the Ministry issued a request for proposals (RFP) for the provision of problem gambling services regionally and nationally.
 
They received 32 proposals, two of which were from the Problem Gambling Foundation (PGF).
 
The PGF had provided these services since 1988 and was the largest service provider of its type in New Zealand. Despite this history, their primary bids were unsuccessful.
 
The case, Problem Gambling Foundation v Attorney-General, was then taken to the High Court. After careful review, the final judgment was that the decision to reject PGF’s proposals should be set aside after the Court found fault in both procurement and decision-making processes.
 
The Court also found that the Ministry had departed from initial procedures laid out in the RFP and that there was some apparent bias in the evaluation panel.
 
This judgment will create a potential ripple effect in that it shows:
 
  • The High Court is willing to interfere in and closely review commercial tendering decisions made by the government
  • Legal concepts and remedies will be applied when government agencies fail to stick to the stated tender and evaluation processes
  • A material breach of the Government Rules of Sourcing (3rd edition) can legally result in a procurement decision being set aside
  • Anyone involved in a tender evaluation process will be subject to rigorous standards especially with regards to bias and conflicts of interest
 
This decision presents several practical reminders to tenderers and Crown agencies:
 
  • Procurement documents have to contain all details required by the Government Rules of Sourcing including assessment and evaluation criteria
  • If an agency departs from this criteria, it must inform all participating tenderers and adjust the response deadline as necessary
  • Agencies should implement policies to identify, notify and manage conflicts of interest in their staff (as outlined in the Government Rules of Sourcing)
  • Conflict checks should be carried out with actual or potential conflicts managed prior to the commencement of review or assessment
  • All documents provided to evaluators must be consistent with the methods and processes laid out in the initial procurement conditions

COMMENTS