Auckland City successfully defends $15.5 million
claim over rubbish contract tender

The High Court has endorsed the Auckland City Council's handling of the tender process for the City's rubbish collection, rejecting a $15.5 million claim by one of the unsuccessful tenderers and ordering that it pay the council's legal costs.

In 2001, Onyx Group Limited failed in its bid to win either of two seven-year contracts worth approximately $80 million to carry out the City's kerbside rubbish collection. It challenged the tender process in Court in an attempt to recover the $15.5 million profits it claimed it would have made from these contracts.

The case was heard in the Auckland High Court last month and the key issue was whether the tender process had been managed fairly and particularly whether the council was entitled to consider tenders offering extra price discounts for the disposal of rubbish. The successful tenderers, Auckland Waste and Metropolitan Waste, each bid for separate areas of the City and offered disposal discounts that would apply if they were both successful in their bids.

The Court has found in favour of the council on all points.

The council's Group Manager of recreation and community services, Cameron Parr, says the City had complete faith in the fairness of its tender evaluation and decision-making process.

“The Court's decision vindicates our management of the tender process, the robustness of our tendering conditions and the legal advice we received," he says.

The ruling makes it clear that the drafting of the council's Requests for Tender meant it had no legal obligations to Onyx or any other unsuccessful tenderer. Even if there had been any obligations, the council conducted the tender process properly and treated all tenderers equally.

Anne Callinan of the council's lawyers Simpson Grierson says: "This is an important decision for all local authorities and principals conducting tendering processes. We believe it makes it more difficult for tendering processes to be challenged in future. It preserves important flexibility for councils in managing tender processes in order to get the best results on behalf of their ratepayers".

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