ICT procurements in the government sector can be complex and fraught. In our experience, agencies generally work hard to try to find the best solution for Government while adhering to good procurement principles (including fairness and playing by the rules). In recent years in relation to ICT projects, we've detected an increased nervousness about adopting processes which are not viewed as 'standard' or making changes to processes mid-procurement. This can include reluctance to use the flexibility already provided for within many RFP documents in a manner that could lead to better results (such as running commercial clarification sessions if responses are unclear).

Such reticence may have been in part due to a High Court decision that went against the Ministry of Health (the Ministry) in 2015, although the case did not relate to an ICT procurement. In 2013 the Ministry put out a tender for services to in relation to problem gambling. The long-time incumbent, the Problem Gambling Foundation, put in two responses but was largely unsuccessful. The Foundation took the Ministry's decision to the High Court for judicial review. The High Court reviewed the Ministry's decision against the requirements for decision-making when exercising public powers and found that Ministry's decision was deficient against those requirements.

However, just before Christmas last year the Court of Appeal in the decision of Attorney-General v Problem Gambling Foundation of New Zealand [2014] NZHC 213 released a decision that is likely to have been welcomed by a number of government agencies.

The Court of Appeal held that commercial decisions in the public sector are only able to be reviewed by the courts if:

  • there is some extra public law feature (e.g. preventing settlement of a Treaty claim)
  • the agency has failed to follow statutory requirements
  • there is fraud, corruption, or bad faith.

Procurement decisions are then generally safe from judicial review, unless one of those exceptional factors applies. The Court of Appeal also determined that the test for bias which the High Court had applied was incorrect and too restrictive and that the mandatory procurement rules (now replaced by the Government Rules of Sourcing) are not legally enforceable by unsuccessful tenderers. A more detailed summary of the case can be found here. We hope that this decision may give agencies some confidence in designing processes which adhere to good procurement practices and the Rules of Sourcing but are sufficiently flexible to ensure best results.