Tendering

Public Sector Procurement after the Court of Appeal decision in Problem Gambling

On Tuesday, 14 November 2017, I was asked to present a paper at a Legalwise seminar on Public Decision Making and Reason Writing.  The focus of my paper was on the relevance of the Government Rules of Sourcing, the WTO Government Procurement Agreement (GPA), which New Zealand acceded to on 13 July 2015, and recent case law on importing public law issues into challenges of Government procurement projects.

The accepted position, outlined by Lord Hoffman in Pratt Contractors v Transit [2003] UKPC 83, is that internal government rules are a matter of compliance for the procuring body, but are not a basis for challenge by disappointed contractors.  That position was largely confirmed by the NZ Court of Appeal in 2008 in the case of Lab Tests v Auckland District Health Board [2008] NZCA 385.  In relation to the availability of judicial review, the Court of Appeal held that such review was really only available in cases of fraud, corruption and bad faith.

In Ririnui v Landcorp [2016] NZSC 62, the Supreme Court opened the door slightly on judicial review, however that case would seem to be relatively fact specific.

This approach was confirmed by the Court of Appeal, in A-G v Problem Gambling Foundation of New Zealand [2016] NZCA 609, overturning the decision of Woodhouse J in the High Court (Problem Gambling Foundation v A-G [2015] NZHC 1701).  Winkelmann J made a number of important findings in the Court of Appeal:

  • the narrow test for judicial review outlined by the Court of Appeal in Lab Tests is to be preferred, being available only in cases of fraud, corruption, bad faith and similar circumstances, and not as an avenue for disappointed bidders to challenge procurement processes
  • the Government Rules of Sourcing may bind Government agencies, but they do not impose a procedural obligation enforceable by potential contractors
  • fairness and good faith are requirements in procurement processes, however they only require honesty and a willingness to consider information which might change a reasonable and honestly held view – those evaluating tenders are not required to leave their previous experience at the door
  • if a request for proposals excludes the intention of creating legal relationships during the tender procedure, then a process contract cannot be implied
  • in order to establish a breach of legitimate expectation, the claimant must establish – (1) the nature of the commitment by the public authority, whether by promise, settled practice or policy; (2) that the reliance on the promise, practice or policy was legitimate; and (3) the appropriate remedy

Notably, the Court of Appeal has widened (slightly) the grounds for judicial review from the narrow test proposed in Lab Tests by the reference to similar circumstance, but that will really be factually specific for each case.  The Problem Gambling Foundation failed, in the Court of Appeal’s view, to make out that case.

In relation to the Government Rules of Sourcing, while they cannot be used a basis for challenge, as outlined by Winkelmann J, if a process contract can be implied, and if those Rules are incorporated into the tender procedures, either directly or by reference, then clearly they can be used as a basis for challenge.  That challenge would, then, be in contract, rather than by judicial review.

In relation to the GPA, while this is a State to State agreement, the NZ Government is required to establish a review board to hear complaints from suppliers from other States over breaches of the GPA.  The review board has the power to direct the contract to be set aside, the procurement process to be run again and/or to award damages for breach of the GPA.  While the Government Rules of Sourcing are broadly consistent with the GPA, the latter is more prescriptive.  Much like the current discussions over ISDS, it will be interesting to see if any foreign corporates take the opportunity to challenge a public procurement process in NZ.

A copy of my paper is available here:

Government Procurement – Legalwise

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Securing Positive Project Outcomes using NEC3

The NEC3 suite of contracts is growing in use in New Zealand.  The contracts were used with apparent success for the development of the stadium and other facilities for the London Olympics in 2012, and it is the preferred form of contract by the Office of Government Commerce for all public private partnerships in the UK.

In NZ, the engineering and construction contract was used for the development of the Northland Events Centre for the Rugby World Cup in 2011.  At $16.5 million, the development was more modest that some others, but it was on time, within budget, and effective.

This paper was prepared for the NEC Users’ Group Australasia conference in Christchurch on 27 August 2013.

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Transparency & good governance in public sector procurement

Despite twenty years of public sector reforms and the corresponding reduction of the state sector, the purchasing power of central and local government, and their respective agencies, remains an important part of the New Zealand economy.

Core government expenditure[1] for the 2004 year is forecast to be $35,367 million, which represents 26.39% of GDP for the same period, of $134,034 million[2] (compared to 11% of European Community GDP in 1996, the most recent figures available[3]).  The most recent figures for local government expenditure[4],for the 2002 year, total $1,779 million[5].  Based on these figures, procurement procedures adopted at all levels of government, and the policies reflected in them, have real significance to a wide range of interest groups.

This research paper was submitted for my Master of Laws degree subject on Comparative Administrative Law in 2004

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Navigating the tender process

It is the very nature of a tender process that all parties are in competition with each other and, within certain bounds, each is fully entitled to act in their own interests.  The tenderers compete not only with each other, but also with the invitor to protect their profit.  The successful tenderer scoops the pot, leaving nothing for those whose bids were unsuccessful.  Increasingly, tenderers have shown an unwillingness to play the game, either by simply ignoring the rules or by challenging the process.  This is almost certainly as a result of the cost and uncertainty that is inherent in any competitive process.

This paper was originally published in the New Zealand Law Journal in 2000.

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