By TONY GEE
KAIKOHE - Streetsmart, an Auckland-based community facilities and town maintenance contractor, is suing the Far North District Council for more than $2.2 million.
The company lodged a statement of claim in the High Court at Whangarei last week, seeking $2,261,000.
The claim relates to the award of a new Far North community maintenance contract to a district council-linked company, Impact Services, after an unexpected second round of tendering was called.
After the first tender round, in which Streetsmart was named as the preferred contractor, council lawyers and others acting for Impact Services raised legal doubts about aspects of the tendering process.
The council then dumped an evaluation panel's firm recommendation favouring Streetsmart and called for fresh tenders.
This round was won by Impact Services, a local company one-third of whose shares are owned by the Far North District Council through its wholly owned local authority trading company subsidiary, Far North Holdings.
Work under the contract involves litter control and town maintenance in communities throughout the Far North district. It also includes mowing and toilet maintenance.
Four separate actions are included in Streetsmart's claim for relief. The first alleges breach of tender contract by the council in which $11,000 is sought for tender preparation; $75,000 for loss of profits and $1.5 million for loss of opportunity.
Streetsmart's remaining three actions against the council allege a breach of the Fair Trading Act, a breach of fiduciary duty and negligence.
The council has 30 days to file a defence against the claims.
The court move follows discussions in Auckland by Streetsmart and council representatives after the company said it should have been awarded the tender on the evaluation panel's initial recommendation.
Impact was finally given the job last month for $3,080,493 after re-tendering more than $500,000 less than its lowest alternative price in the aborted first tender round.
Its first tendered price was already $2 million less than what it was charging the council as the existing contractor, causing some councillors to express astonishment and concern.
After the council first sought tenders for the contract, a three-member tender evaluation panel, consisting of two senior council staff and a consultant, recommended that Streetsmart should win the job in all wards of the Far North. It had the lowest overall tender at $3,484,192.
This price was more than $2 million less than the council engineer's estimate over the three-year contract period. His estimate was based largely on what Impact was charging now.
Company sues Far North over lost contract
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