KEY POINTS:
Diagnostic Medlab claims it was held to a different standard when it bid for the laboratory services contract ultimately won by newcomer Labtests Auckland.
Medlab's statement of claim alleges that when the Auckland, Waitemata and Counties-Manukau health boards accepted Labtests' tender, they also accepted a level of service lower than had been expected from Medlab.
The claim cited "significant" changes to the contract held by Medlab, including:
* A 30 per cent reduction in the number of full-time equivalent pathologists, from 25 to 16.
* A reduction in the number of sample collection staff and collection sites.
* A requirement that GPs take more medical samples themselves.
* An increase from 12 to 48 hours in the turnaround time for "non-urgent test results".
But the health boards' lawyer, Grant Illingworth, QC, yesterday told Justice Raynor Asher in the High Court at Auckland the services required of both bidders "are essentially the same", particularly in the need for the contract winner to provide "a comprehensive service".
The boards did not set a minimum number of collection and testing staff, or collection sites.
Medlab was wrong when it assumed that the demand for service "as currently provided" - mentioned in the boards' tender invitation - referred to the level of service it had been providing.
"As currently provided" referred to the availability of medical testing, not the standard of service.
That Medlab had tried to have the phrase "as currently provided" inserted into the boards' original invitation for tender, showed the company had an inkling the boards did not necessarily want a continuation of the service they were getting from Medlab, Mr Illingworth said.
Medlab also knew that its contract with the boards contained no requirement for a set number of medical collection staff.
"Any contention that the new contract requires a standard of service that is substantially different from the current contract is, thus, unsustainable," submissions from the boards say.
Any suggestion that the boards acted unfairly by negotiating variations with Labtests was answered by the terms of the tender invitation, which entitled them to negotiate modifications to the draft contract.
Mr Illingworth also rejected a Medlab claim that it did not know it was supposed to be open about its financial position during the tender process.
The tender invitation made it clear the boards wanted a contract provider that would "operate on the basis of financial transparency".
"This was a message that [Medlab] plainly did not want to hear, however," Mr Illingworth said.
"It blocked its ears to it and eventually paid a heavy price."
The hearing is expected to finish tomorrow.
The Case
* Medlab is seeking a judicial review of last July's decision to award Australian-backed Labtests Auckland the contract to provide laboratory testing services in the Auckland region.
* When Labtests takes up the eight-year, $560 million contract - due to begin on July 1 - it will halve the number of sample collection points for the region's 1.4 million people and reduce the number of testing staff.
* Medlab says the boards changed their expectations of a medical testing provider without telling it.
* It also alleges then-Auckland District Health Board member Dr Tony Bierre used his inside knowledge of changing board tender requirements to secure the contract for Labtests.
