NZ Procurement Update - Lab Tests wins back lab services contract

The recent decision of the Court of Appeal has quashed the decision of the High Court which invalidated not only the decision of the Auckland Regional District Health Boards (ARDHBs) to award the contract to provide primary referred pathology services to Lab Tests but also the contract itself which was due to commence on 1 July 2007.

The Court of Appeal has ruled that Lab Tests’ contract be reinstated and that it commence to supply services under its contract for the remainder of the term. Having said that, Diagnostic Medlab Limited has indicated that it is considering seeking leave to appeal to the Supreme Court.

The decision is a rejection of what the Court of Appeal described as a broad based ‘probity in public decision-making approach’ and is a return to the more traditional approach to judicial review. It will provide board members of public sector organisations, procurement managers and their advisers with a greater degree of certainty around their procurement and tendering processes where commercial contracts are involved, and will hopefully reduce the ability of an unsuccessful tenderer to challenge the award of a commercial contract using the judicial review process.

We briefly highlight the important aspects of the case.