KEY POINTS:
The most astonishing aspect of Justice Raynor Asher's decision cancelling the contract for the supply of laboratory services to three Auckland health boards was that he had been asked to rule on the matter at all. The High Court judge found that Dr Tony Bierre, who led the company that won the contract, had used inside knowledge gained as a health board member to his advantage during the tender process.
Justice Asher's finding was inevitable and, needless to say, correct. But the issue should never have gone as far as the High Court. It cost prodigious amounts of money that would have been better spent providing health care and it added a disturbing second layer to the bad management of the entire tender process: the failure of the people responsible to admit early on that they had made an obvious mistake and to rectify it immediately.
Dr Bierre, a pathologist, was a member of the Auckland District Health Board until last August, when he resigned to set up Labtests, the company which had just been awarded the contract to provide laboratory services to a collective of the three Auckland-region boards.
But, as Justice Asher found, he had by that time been in a conflict of interest for around 20 months, sitting on the board whose multi-million-dollar business he was trying to secure and "making use of information that he had acquired in his capacity as a [board] member that would not have otherwise been available to him".
Plainly, Dr Bierre was in possession of inside information not available to Diagnostic Medlab (DML), the incumbent provider of lab services, which was being asked to tender for a new service. Justice Asher found that the health boards were seeking a fundamental change and that DML was, for a crucial period, unaware of this. It was not so much that the goalposts had moved but that the rules of the game had been changed and only one team had been told.
Indeed, it is as plain to any reasonable person reading the sorry history of this matter as it was to the judge that the awarding of the contract was shonky. It is beyond belief that no one in a position to call a halt to the process did so before litigation commenced.
Ross Keenan, the deputy chairman of the regional grouping, has brushed aside calls for anyone's resignation, although the Auckland board chairman Wayne Brown does not seem to enjoy the support in the Beehive he once had. Mr Brown has been popular with both National- and Labour-led governments because he takes a hard line when it comes to cutting costs - the idea of the tender process in the first place. But the fact that he has apparently presided over a process both manifestly unfair and vulnerable to legal challenge raises questions that he cannot easily brush aside.
Tuesday's judgement takes the combined boards back to square one in terms of securing the supply of laboratory services from the end of June. There is no reason why Labtests should be barred from re-tendering provided that DML can have access to all the same information as its competitor. On the face of it, there may be savings to be made - it seems odd, for example, that DML has three sample collection points in Howick - and DML seems to have accepted as much, having at one stage presented a proposal cutting its 84 centres to 50 and shaving $24 million a year off its bid.
But when medics manage our health system, the letting of health contracts that will be paid for with public money calls for a far higher degree of transparency and accountability than might be expected in the commercial sector. The potential is rich for such conflicts of interest as have occurred here. It must not happen again.
