17 September, 2012

 

Legal News & Analysis – Asia Pacific – Australia – TMT

 

On 13 August 2012, a successful but aggrieved tenderer for the provision of IT services lost an appeal against an earlier decision by the Supreme Court of Victoria that it had not been misled by data contained in the Request for Tender documentation: Ipex ITG Pty Ltd v Melbourne Water Corporation [2012] VSCA 169.
 
At first instance, the tenderer, Ipex,  argued that it had costed the tender to provide outsourced help desk services to the customer, Melbourne Water Corporation, at a fixed price for three years, in reliance upon data regarding the customer’s historical call patterns.  However the number of help desk calls taken by Ipex were much higher than the data provided in the documentation. Ipex sought payment for the extra costs involved in servicing the higher number of help desk calls, but this was rejected by the customer principally because the contract was a lump sum contract and Ipex bore the risks.
 
The trial judge concluded that there had been nothing to lead the tenderer to believe that the customer’s IT environment would remain constant over the term of the contract.  The trial judge further held that there had been no “misrepresentation by silence” arising from the customer’s refusal to provide additional information regarding its earlier help desk call history in view of the fact that its IT environment had materially changed and the earlier figures would be irrelevant. 
 
The trial judge’s decision was upheld by the Victorian Court of Appeal.  Specifically, the Court considered that “there was no evidence that anyone on behalf of [the tenderer] considered or believed or acted upon the basis that the provision of the data… conveyed a representation that the data constituted a representative sample”.  In addition, the Court held that the customer had not engaged in false and misleading conduct by refusing to disclose additional call history information because the figures were not comparable as between “fundamentally different environments”.
 
Though the customer was successful in this case, it highlights the need to ensure the accuracy of tender documents and to avoid misrepresentations during the tender process. IT service tenderers should also consider seeking an agreement to be paid on a sliding scale according to the number of helpdesk calls taken in an agreed period.
 
To view the judgment click here.

 

 

For further information, please contact:

 

Gordon Hughes, Partner, Ashurst

gordon.hughes@ashurst.com 

 

 

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