Telco Technology Services Limited v Ministry of Education [2014] NZHC 213 [19 February 2014]

In a highly unusual move, the High Court last week granted Telco Technology Services Ltd (Telco) an interim injunction to prevent the Ministry of Education (the Ministry) from appointing another company to exclusively implement the final phase of The Schools' Network Upgrade Project which is designed to provide 97.7% of schools with ultrafast broadband by the end of 2015.

In its RFP for the final phase of the Project, the Ministry highlighted its intention to select two or three suppliers to deliver the services and asked tenderers to answer questions related to capacity on the basis of winning a contract for a maximum of 50% of the available schools. 

Despite this intention, the Ministry has since commenced contract negotiations with a single preferred tenderer on the basis that tenderer will receive a 100% allocation of all remaining schools.

Telco claims that the pricing in its proposal was based on a 50% share of the available schools, and that had it known only one provider would be appointed by the Ministry, it would have significantly changed the basis upon which it priced its proposal.

The High Court found that there was a serious question to be tried in relation to Telco's application for judicial review.  Collins J asserted that “judicial review is available in a commercial tendering context where the Crown may have breached procedural expectations in a material way to the detriment of the tenderer”.  He then went on to state that “it is reasonably arguable that the Ministry breached its fundamental procedural obligations when it failed to give Telco the opportunity to be assessed on a fair and equal basis with the successful tenderer”.

Given that the Courts are usually reluctant to judicially review commercial decisions, this interim decision is quite interventionist.  The substantive proceeding is due to be heard in March.