Northland MP Winston Peters says the ailing Kaikohe economy has missed out on a "huge boost" because a local firm was not considered for the $15 million rebuild of Northland College.

Mr Peters used question time this week to quiz the Government on the rebuilding contract. He said a major building firm in Kaikohe had not even made the shortlist in the tender process, despite its solid record, a Master Builders award and experience in big contracts.

"They were not even given an explanation. There was a dire need for Northland College's ghetto-like buildings to be replaced, and it was essential that the work was distributed to Northland firms, particularly in Kaikohe which has high unemployment and a continued decline in economic activity."

The Kaikohe company the NZ First leader was referring to is Henwood Builders, which is based opposite Northland College on Mangakahia Rd. The firm is building the $10 million Museum of Waitangi, due to open at the Treaty Grounds in February.

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It is understood the firm submitted an expression of interest but was not invited to take part in the next stage of the tender process. The contract has not yet been awarded but companies from Whangarei and Auckland are thought to be on the shortlist.

Mr Peters said it was not good enough for Education Minister Hekia Parata to say a minister had to be hands-off during the procurement process.

"The point is that a key consideration in deciding the winning tender should have been local benefit. The Government has responsibility for the procurement policy. It's common sense that awarding the project to a local contractor would give the local economy a huge boost."

Associate Education Minister Nikki Kaye said she did not get involved in individual procurement contracts because it was important to ensure fairness and independence.

"However, I do understand this rebuild is a really big deal and a large investment for Kaikohe.

"I can say that the ministry has confirmed with me that the procurement process is being carried out in accordance with ministry guidelines and the Government rules of sourcing, and this includes publishing an open invitation to all organisations interested in undertaking the work.

"All responses received will be assessed against defined criteria set down in the tender," she said.

"Ultimately we want the best possible rebuild of Northland College and it's important a competitive process is in place to make that happen. However, I've also been assured that irrespective of who the main contractor is, a portion of the redevelopment work will be performed by local subcontractors and products provided by local suppliers."

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Ms Kaye announced the $15 million rebuilding of Northland College in August. It followed months of headlines about the poor state of the school buildings.

It emerged that police had asked to use the college as a training ground because it was in such poor condition they coud use it to simulate a "ghetto environment".

Other current projects by Henwood Builders, apart from the new museum at Waitangi, include upgrades of Broadwood School and Paihia Mall. The company was founded 13 years ago and has 50 full-time staff.