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[2020] ZAGPJHC 214
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City Power Johanneburg (SOC) Ltd v Infinite Blue Trading 29 CC t/a Motau Projects and Others (2019/501) [2020] ZAGPJHC 214 (17 September 2020)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO: 2019/501
In
the matter between:
CITY
POWER JOHANNESBURG (SOC)
LTD
Applicant
and
INFINITE
BLUE TRADING 29 CC t/a MOTAU PROJECTS
1
st
Respondent
SIYANQOBA
PHAMBILI TRADING ENTERPRISE CC
2
nd
Respondent
JOLOBE
TRADING
CC
3
rd
Respondent
MAZIYA
GENERAL SERVICES
CC
4
th
Respondent
EXSERDEL
ENTERPRISES (PTY)
LTD
5
th
Respondent
CHOSEN
ENGINEERING (PTY)
LTD
6
th
Respondent
COLSTA
PROJECTS
CC
7
th
Respondent
F
AND J MECHANICALS AND ELECTRICALS
CC
8
th
Respondent
MATARELWA
ELECTRICAL SERVICES (PTY) LTD
9
th
Respondent
NOTHANI
ENGINEERING
CC
10
th
Respondent
CANAAN
ELECTRICAL CONTRACTORS (PTY) LTD
11
th
Respondent
MASTECH
GENERAL TRADING
CC
12
th
Respondent
WNS
PROJECTS
CC
13
th
Respondent
LEPHATA
LA BASHA TRADING AND PROJECTS CC
14
th
Respondent
TNJ
PROJECT SOLUTIONS
CC
15
th
Respondent
IMBAWULA
TECHNICAL SERVICES AND SUPPLIERS
16
th
Respondent
GROUP
(PTY)
LTD
BVELELA
ENGINEERING
CC
17
th
Respondent
MANDEWO
IMV PROJECTS
CC
18
th
Respondent
MUSTARD
SEED (PTY)
LTD
19
th
Respondent
CROMICO
TRADING & PROJECTS (PTY)
LTD
20
th
Respondent
SE
MAKROTI TRADING ENTERPRISES
CC
21
st
Respondent
MERVILLE
CIVILS
CC
22
nd
Respondent
LEFHUMO
LWA BAREMA TRADING ENTERPRISE
23
rd
Respondent
(PTY)
LTD
MOLOI
TECH (PTY)
LTD
24
th
Respondent
MAOPENG
ELECTRICAL (PTY)
LTD
25
th
Respondent
OAKANTSWE
CONSTRUCTION & PROJECTS CC
26
th
Respondent
THALUKANYO
TRADING
CC
27
th
Respondent
SOLID
MANAGEMENT SERVICES (PTY)
LTD
28
th
Respondent
MUNANDIS
ELECTRICAL
CC
29
th
Respondent
RT
TSHABALALA
CC
30
th
Respondent
TAMIBUZZ
(PTY)
LTD
31
st
Respondent
BUSSYNET
ADVANCED TRADING JV
32
nd
Respondent
JAKI
TRADING (PTY)
LTD
33
rd
Respondent
JUSBEN
CONSULTING ENGINEERS
CC
34
th
Respondent
METHORN
CC
35
th
Respondent
KP
TLAKS ELECTRICAL AND CONSTRUCTION
36
th
Respondent
(PTY)
LTD
CAPOTEX
TRADING ENTERPRISE
CC
37
th
Respondent
BIG
O TRADING 528
CC
38
th
Respondent
UMBUTHO
CIVIL & ELECTRICAL
CC
39
th
Respondent
MASEMIS
TLM (PTY)
LTD
40
th
Respondent
FUTURE
ENERGY ELECTRICAL (PTY)
LTD
41
st
Respondent
RONARATI
(PTY)
LTD
42
nd
Respondent
ONZA
CONSTRUCTION (PTY)
LTD
43
rd
Respondent
THENGA
HOLDINGS (PTY)
LTD
44
th
Respondent
YANDE
ENGINEERING & PROJECTS
CC
45
th
Respondent
NOLEWU
CONSTRUCTION ELECTRICAL
46
th
Respondent
CHEMICAL
SUPPLIERS
CC
MOHLAWE
TECHNOLOGIES (PTY)
LTD
47
th
Respondent
JTB
ENGINEERS SOLUTIONS
CC
48
th
Respondent
MVELEOZISO
ENGINEERING SOLUTIONS CC
49
th
Respondent
KENT
ELECTRICAL SERVICES
CC
50
th
Respondent
BARRY
BUYS PROPERTY
CC
51
st
Respondent
NKATEKO
BUSINESS ENTERPRISE
CC
52
nd
Respondent
MACHITE
ENGINEERING
CC
53
rd
Respondent
INDONISI
INVESTMENTS (PTY)
LTD
54
th
Respondent
MASHAU
SALPHINA ELECTRICAL
CC
55
th
Respondent
ZIZWE
DSD (PTY)
LTD
56
th
Respondent
MAFU
HOLDINGS (PTY)
LTD
57
th
Respondent
MUALU
JV MCCGRI (PTY)
LTD
58
th
Respondent
PSK
CONSTRUCTION (PTY)
LTD
59
th
Respondent
KHASELIHLE
CIVILS
CC
60
th
Respondent
MATHOHO
ELECTRICAL & PROJECTS
CC
61
st
Respondent
BASH
ELECTRICAL CONTRACTORS
CC
62
nd
Respondent
MALEBOSI
TRADING (PTY)
LTD
63
rd
Respondent
JUDGMENT
HEARD
REMOTELY VIA ZOOM PLATFORM ON 15 SEPTEMBER 2020]
FA
SNYCKERS AJ:
INTRODUCTION
AND HISTORY
1
City Power Johannesburg (SOC) Ltd is a state owned company
established under the
Local Government: Municipal Systems Act 32 of
2000
, to fulfil the constitutional mandate of the Johannesburg
Metropolitan Municipality to provide electricity and street lighting
to the areas governed by the municipality.
2
Its functions are discharged in terms of a service delivery agreement
concluded with the municipality.
3
In 2018
City Power issued an RFP for Tender 2285S, for a total value of R1,5
billion relating to various services to be performed
to enable City
Power to discharge its functions towards the municipality in terms of
its agreement. Tender 2285S entailed
three “
streams”
of service – network maintenance and capex, street lighting
maintenance and capex, and service connections.
4
Tender
2285S was awarded, apparently, to 56 respondents.
[1]
5
The first
respondent, Infinite Blue, had been providing services to City Power
at the time of Tender 2285S, and was one of the tenderers
for Tender
2285S. Its tender was, however, excluded on the basis of an
assessed failure to pass the functionality requirement.
6
In December
2018, City Power concluded contracts with the successful bidders of
Tender 2285S for a total amount of R1,5 billion
for services to be
performed over a period of three years expiring on 30 November 2021.
7
When
Infinite Blue came to learn of its failed bid, it instituted urgent
review proceedings in this court. The review came
before
Sutherland J and yielded a judgment on 30 May 2019. As emerges
from the judgment of Sutherland J, the main reason
why the urgent
review application took so long to be finalised was unconscionable
dragging of feet on the part of City Power, entailing
inter
alia
the need for a compelling application with respect to material
portions of the record.
8
Sutherland
J held that the disqualification of Infinite Blue was unlawful, and
in fact appeared from the papers to be so determined
and artificially
constructed as to reveal
mala
fides
on the part of City Power. In essence, a concerted effort on
the part of those who evaluated the bids for functionality managed
artificially, irrationally and unfairly to secure a functionality
score of 74 for Infinite Blue in circumstances where a functionality
score of 75 was required in order to qualify for a valuation on the
basis of price and BBBEE scores.
9
Sutherland
J set aside the award of Tender 2285S to the successful bidders and
also, significantly, set aside the contracts awarded
to the
successful bidders. The following orders were then also issued
on 30 May 2019:
“
(3) The tenders
submitted to City Power by the applicant (Infinite Blue) and all
other tenderers shall be resubmitted for evaluation
ab initio.
(4) The 6
th
to
61
st
respondents are authorised, as an interim measure, to
continue to render services to City Power for a period limited to 90
days
from the date of this judgment.
(5) City Power shall take
all necessary steps to expedite the fulfilment of order (3) within
the 90 days interim period.
(6) No unilateral
extension of the service of 6
th
to 61
st
respondents shall be made unless sanctioned by an order of the court,
on good cause shown.
(7) this judgment shall
be brought to the attention of the Chief Executive Officer of City
Power and of the Executive Mayor of the
City of Johannesburg who
shall take steps to enquire into the conduct of the personnel
responsible for the management and administration
of the bid with the
aim of detecting whether a lack of integrity or incompetence explains
the irregularities described in the judgment,
and a report on the
outcome of such enquiry shall be filed with the Registrar of this
court within 180 days of the date of this
judgment.
(8) City Power shall pay
the applicant’s costs on the attorney and client scale.”
10
The order in paragraph 4 was explained as follows in paragraph 25:
“
A period of
temporary continuation by the present successful bidders, i.e. the
6
th
to 61
st
respondents, whilst the tender bids
are re-evaluated honestly, can be accommodating in an order. A
period of three months
from date of the order is sufficient for such
an interim arrangement.”
11
Instead of performing and completing the “
honest
re-evaluation”
of the tender bids as ordered, City Power
came to the view that the process was so vitiated by irregularity
that a fresh tender
was in fact required. This, it felt, could
not be completed within the 90 days it had been ordered to complete
an honest
re-evaluation.
12
It accordingly approached the court urgently, on 27 September 2019,
for an application set down for the 8
th
of October 2019.
The 8
th
of October 2019 was the day on which the 90 day
period (reckoned as court days) in the court order expired. The
founding papers
in the application asserted that City Power had
identified material irregularities in the tender process “
in
the final stages”
of seeking to comply with the Sutherland
J order, which included the fact that “
some of the bid
documents were tampered with after the initial evaluation”
.
13
An order was sought from this court to the effect that the order of
Sutherland J did not preclude a cancellation of Tender 2285S
and the
commencement of a new tender process, relying,
inter alia
on
regulation 13(1)(d) of the Preferential Procurement Regulations 2017
to the effect that “
an organ of state may, before the award
of a tender, cancel a tender invitation if … there is a
material irregularity in
the tender process”.
14
City Power sought what it regarded as “
the extension of the
service of the panel members, pending the completion of the fresh
tender process”
. For some reason that never became
clear, the order of Sutherland J, that related to the 6
th
to 61
st
respondents before him, became an order relating
to the 2
nd
to 62
nd
respondents before the court
hearing this latest application launched on 27 September 2019.
15
Be that as it may, an order was sought and granted in essence
authorising the abandonment of the tender, the re-evaluation of
which
was the subject of the Sutherland J order, directing a new tender
process to be completed within six months and now authorising
the 2
nd
to 62
nd
respondents (ostensibly those successful under the
initial tender and the subject of the Sutherland J authorisation) to
continue
to render services in the following terms:
“
Pending the
completion of the new tender process contemplated in paragraph 2
above, the 2
nd
to 62
nd
respondents are
authorised, as an interim measure, to continue to render services
dealt with by the tender to City Power”.
(Order
8 October 2019, Yacoob J, paragraph 3)
16
The six month period during which this new tender process, which had
assumed the number 2366S, was to be completed as ordered
by Yacoob J
on 8 October 2019, was to expire on 8 April 2020. On 26 March 2020,
as a result of the Covid-19 pandemic, South Africa
(along with most
of the rest of the world) went into “
lockdown”
.
On 31 March 2020, eight days before the expiry of the six month
period directed by Yacoob J for the finalisation of the
new tender,
City Power brought another urgent application to this court to extend
the period ordered by Yacoob J for a period of
two months “
after
the end of the lockdown period”
.
17
It may be noted that, unlike the order of Sutherland J, the order of
Yacoob J did not contemplate its own extension. Nevertheless,
on 6 April 2020, Wright J, faced apparently with the same 62
respondents that served before Yacoob J, issued an order with
reference
to the order of Yacoob J extending the date “
for
completing the new tender process contemplated in paragraph 3.1 of
the court order”
“
by a period of two months from
the date on which the national lockdown ends”
. The
order of Wright J also contained the following order 2.2:
“
Pending the
finalisation of the new tender process, the 2
nd
to 62
nd
respondents are authorised, as an interim measure, to continue to
render services dealt with by the tender to City Power”.
18
Fortunately, the potential vagueness inherent in the notion of the
date “
on which the national lockdown ends”
does
not concern me as it was common cause before me that this was 30 June
2020.
19
By now perhaps unsurprisingly, come 26 June 2020, four days before
the expiry of the now extended period, it once again dawned
on City
Power that it would be “
unable”
to finalise the
tender process within the ordered period and would “
require”
a further extension, sought on a precipitously urgent basis.
Accordingly, on 26 June 2020 yet another application, with apparent
unconscionable self-created urgency, was launched once again seeking
an extension for the period to finalise tender 2366S and,
of course,
seeking authorisation for the incumbents to continue to provide their
services in terms of the contracts that had been
set aside by
Sutherland J of May 2019.
20
Apart from
several pages of filing notes and notices of motion (the length of
which was due mainly to the fact that there were 62
respondents, and
the fact that the affidavit set out a growing history of extensions),
the need for the further extension in the
26 June founding affidavit
was set out in a paragraph comprising 11 lines of text. Here
there was an intimation that before
the Bid Evaluation Committee
(BEC) could make recommendations to the Bid Adjudication Committee
(BAC) for the award of the tender
“
the
entire tender process must first be considered and analysed by City
Power internal auditing”
.
The court was told that the internal auditing had completed its work
and “
has
raised another of queries
(sic)
that the
BEC is working through and addressing”.
21
On 30 June
2020 another extension order was granted by this court.
[2]
The 30 June order referred back to the 6 April order and contained
the following two important orders:
“
2.1 The date for
completing the new tender process contemplated in paragraph 2.1 of
the order shall be extended by a period of two
months (i.e. to 30
August 2020).
2.2 Pending the
finalisation of the new tender process the 2
nd
to 62
nd
respondents are authorised as an interim measure to continue to
render services to City Power”.
22
It may be noted that, unlike previous orders, that authorised the
rendering of services by the incumbents as “
services dealt
with by the tender to City Power”
, this order on 30 June
2020 referred simply to rendering services to City Power.
23
By this stage, Infinite Blue had had enough. Its attorneys
directed a letter to the erstwhile attorneys of City Power on
6 July
2020. One of the subjects of the letter, to which I return
below, was the order in paragraph 7 of the Sutherland J
order of 30
May 2019, in terms of which the CEO of City Power and the Executive
Mayor of Johannesburg were directed to compile
a report relating to
the hitherto nameless and faceless individuals within City Power
responsible for what had been found to be
mala fide
conduct in
regard to Infinite Blue’s bid in Tender 2285S, and for this
report to be filed with the Registrar within 180 days
of the order of
30 May 2019. Infinite Blue pointed out that no such report had
materialised and expressed suspicions that
the enquiry directed in
paragraph 7 had not yet commenced. It made various demands in
this regard and threatened contempt
proceedings. The letter
went on to point out that it was by then 430 days after the order
that had contemplated the finalisation
of the evaluation process
within 90 days and “
City Power still continues to utilise
the services of the unlawful contractors”
. The letter
expressed the following sentiment:
“
The impression
that is created by the conduct of City Power is that there is a
deliberate attempt to stultify the order. The
effect of this
conduct of City Power is that the unlawful contractors remain in the
seat and continue to render services to City
Power”.
Also
the following:
“
City Power seems
to think that it will be entitled to utilise the services of the
unlawful contractors indefinitely on the basis
that they can
deliberately fail to do what is necessary to make an award in a new
tender”.
24
Various further demands were issued including a demand that, should
City Power again launch a further urgent application for
an extension
Infinite Blue be provided at least 10 days’ notice of any such
application and that City Power also provide
updates on the tender
process.
25
The answering affidavit in this application, which referred to and
attached this letter of 6 July 2020, does not indicate whether
any
response had been received to the letter. City Power’s
replying affidavit simply ignores the letter.
26
Back to the history. The reader might be forgiven for not being
surprised by what happened next. It may be recalled that
the
application for an extension to 30 June 2020 alluded to an internal
audit investigation that had raised queries that were being
addressed. On 20 August 2020, 10 days before the latest period
of extension was to expire, yet another application, the self-created
urgency of which went without saying, was launched. What was
sought was a rule
nisi
returnable on 15 September 2020.
Cause was to be shown why an order should not be granted extending
the order granted on
30 June 2020 for a period of nine months.
In the interim, the order dated 30 June 2020 was to be extended
pending the return
date.
27
An unsurprisingly indignant answering affidavit was delivered on 21
August 2020 to which a replying affidavit was delivered on
24 August
2020.
28
The rule
nisi
was granted on 28 August 2020 by Twala J.
For some reason that was not clear to me there were now 63
respondents, but the
order granted in terms of the rule
nisi
extended the order of 30 June 2020 which still related to the
rendering of services by the 2
nd
to 62
nd
respondents before the court at that time.
29
Despite the fact that the rule
nisi
was granted returnable on
the 15
th
of September ostensibly to allow for the filing
of comprehensive papers in relation to this new nine month extension
that was sought,
no further affidavits were filed and so all the
affidavits that were filed by the time the matter came before me had
already been
filed before the rule
nisi
was granted.
30
The matter had by now assumed disconcertingly grotesque proportions.
The internal audit that had been hinted at in the
application for an
extension that was granted on 30 June 2020 had yielded a “
probity
report”.
This probity report, one was told, was
tabled before the BAC on 20 July 2020 and it identified a series of
16 irregularities
and defects in the procurement process of Tender
2366S, including in the evaluation and recommendation by the BEC.
By that
stage the BEC had apparently recommended that the labour
contract be awarded to a panel of 105 service providers. This
is
what one reads in paragraph 25 of the founding affidavit. I
revert to this number below.
31
One is then told that the chairperson of the BAC produced a
memorandum which “
made a number of observations about the
effect of the probity report”
. That memorandum was
attached to the papers. The affidavit, deposed to by the acting
CEO, states the following:
“
The outcome of her
memorandum is that the BAC could not adjudicate the tender by
approving the recommendation of the BEC. And it
could not submit its
approval of that recommendation to me, as is required by the tender
procedures applicable to City Power.
She referred the matter to
me, as the accounting officer in terms of the MFMA, in order to seek
my intervention”.
32
This reference in the affidavit of the acting CEO to “
the
outcome of the memorandum”
does not appear accurately to
render the import and conclusion of the memorandum. The memorandum
under section 9 headed “
BEC Deliberations”
recommended as follows:
“
Bearing in mind
the findings raised by the probity team and the risk highlighted
during the procurements process, the BAC concluded
that the contract
be awarded, subject to the investigation results”.
33
There is a recommendation that SCMP processes and controls require an
urgent overhaul, that the matters need to be investigated
as a matter
of urgency and that the investigations should be concluded on or
before 14 August 2020 to enable the award and contract
process to be
finalised before the 30
th
of August 2020.
34
Be that as it may, the founding affidavit proceeded to allege that
legal opinion was then obtained to the effect that two of
the
irregularities pointed out in the probity report were sufficiently
material and serious to vitiate the whole tender process
2366S, and
to require its abandonment and the commencement of a fresh tender
process. I deal with these to the extent appropriate
below.
35
Accordingly, by 20 August 2020 City Power had adopted the attitude,
based on legal advice it said it had obtained, that it could
not
finalise Tender 2366S, despite the recommendation of the BAC to which
I referred above, because of the two serious irregularities
that
vitiated the whole process, and that it was simply compelled to start
the whole process afresh. This, it felt, would
take nine months
to complete.
36
And so, because it was unthinkable that City Power could be without
the seamless continuation of the performance of the services
at
issue, there was nothing to be done other than to retain the
incumbents in place, rendering their services, apparently in terms
of
the contracts that had been set aside in May 2019, for another nine
months, or, until such time, which might be several years
into the
future, when City Power finally decided that it was able to conclude
a regular tender process for their replacement.
37
It may be noted that the tender that was awarded in December 2018 was
to run until 30 November 2021. Were I to grant the
order sought
by City Power in its notice of motion, the contracts that had been
set aside in May of 2019 would run their course,
and the bidders
whose contracts had been set aside on the basis that they had been
irregularly awarded would be remunerated in
terms of those contracts,
for the full term of those contracts, save for a period of five
months.
38
This would of course be on the assumption that the terms upon which
the services would be authorised to be rendered would continue
to be
on the terms of the contracts that had been set aside, particularly
as far as remuneration was concerned.
ASSESSMENT
39
Infinite Blue’s basic contention was that granting the order
sought by City Power would seriously undermine the authority
of the
order granted by Sutherland J, and any court order granted in
similar circumstances.
40
I cannot avoid wholeheartedly agreeing with this central submission
of Infinite Blue.
41
The particular facts in the instant case entail some very
disconcerting features. The review papers that served before
Sutherland J did not form part of the papers before me. Nor did the
BEC recommendation in Tender 2366S, to which reference was
made in
the founding papers. Although I had recourse to the judgment of
Sutherland J in the review, I felt it was impossible
to consider the
appropriateness of granting the relief sought without at least
considering the contents of the review papers, and
I accordingly
asked for them and considered them. Furthermore, I asked for and was
provided with the BEC recommendation. It was
also necessary to have a
sense of who the entities were that had provided the services at
issue prior to Tender 2285S, what the
relationship was between the
60, or 61, or 62, incumbents of Tender 2285S and the 105 tenderers
said to have been recommended by
the BEC, and where Infinite Blue fit
into this picture. I asked for these particulars and was
provided them by way of spreadsheets.
42
It turned out that there were not 105 entities recommended in
relation to Tender 2366S, but 83, 22 of which were recommended
for
more than one “
stream”
, thereby reaching the total
of 105 referred to in the founding affidavit. Tender 2366S entailed
five streams.
43
41 of the 83 entities at issue in the BEC recommendation in Tender
2366S were also successful tenderers in Tender 2285S.
Infinite
Blue had rendered services prior to Tender 2285S, had been unfairly,
irrationally and deliberately “
disqualified”
in
Tender 2285S, and had then, although passed for functionality, lost
out in the three streams for which it bid, in Tender 2366S,
by the
time the tender reached the BEC recommendation.
44
I am in respectful agreement with the finding of Sutherland J that
the papers in the review application reveal a concerted effort,
in
apparent bad faith, to achieve the disqualification of Infinite
Blue. Sutherland J was sufficiently concerned with the
apparently inexplicable tendentious conduct of nameless and faceless
officials within City Power with respect to Tender 2285S to
direct
the investigation and report that he directed be compiled
inter
alia
by the CEO of City Power within a period of 180 days.
45
This was to identify any wrongdoing that could then be dealt with.
46
No report has been forthcoming. In the founding affidavit dated
20 August 2020, almost a year and three months after the
order of
Sutherland J that a report be compiled within 180 days, the following
is stated “
in the interest of disclosure to the court of all
facts relevant to this matter”
:
“
Following the
order granted by Sutherland J, City Power referred the matter to the
COJ’s group forensic and investigation
services (“GFIS”)
for investigation. It appears that there was some
investigation. I am not yet sure precisely
what was
investigated. I am currently looking into that matter. I
have initiated an investigation into that matter.
GFIS handed
the matter back to City Power. It did that without clear
direction as to what is to happen with the investigation.”
47
There is then a further paragraph stating that external attorneys,
the current attorneys of record, have now been appointed to
take the
matter further as far as investigation is concerned.
48
The contents of paragraph 73 of the founding affidavit, quoted above,
by way of a report back on the compliance with the court
order with
respect to the reporting, especially in the teeth of the threats of
contempt proceedings issued in the Infinite Blue
attorney’s
letter of 6 July 2020, borders on the contemptuous. It would be
difficult to achieve a more minimalist rendition
of an account, in
the style of Ernest Hemingway, with fewer facts contained in seven
sentences, than what is achieved in paragraph
73 of that affidavit.
49
One of the queries I directed at City Power prior to hearing the
matter was that, to the extent that any extant report, even
a work in
progress version, was in existence, such a report be produced for the
purposes of the hearing. The response came
by way of a practice
note to the following effect:
“
It is
unfortunately not possible at this stage to provide a preliminary
report of the investigation in terms of paragraph 7 of the
order
granted by Sutherland J. We are instructed that the
investigation is underway and that the M&S Attorneys are
analysing
the relevant documents and interviewing the relevant
personnel. The final report will be completed by 31 October
2020.”
50
I must therefore accept that there is no work in progress report of
any kind, and nothing along those lines has yet been produced.
51
Here one must note that Sutherland J in paragraph 21 of his judgment
remarked as follows:
“
In my view, the
pattern gives rise to a reasonable suspicions of deliberate
manipulation of the process to improperly exclude the
applicant, and
perhaps others too”.
52
Furthermore, I recall that part of the reason why Tender 2285S was
abandoned, despite the order of Sutherland J to complete the
evaluation process, was because it had been revealed that amongst
other unspecified “
material irregularities”
, there
had been deliberate manipulation of bids subsequent to their
submission.
53
Such unspecified but highly disconcerting conceded “
deliberate
manipulation”
of bids could only have occurred irregularly
within the walls of City Power. The explanation for the conduct
of City Power
officials, including the CEO specifically charged by
court order to compile the report, is either cavalier and brazen
disregard
for the seriousness of the order, or trepidation at what a
proper investigation and report might reveal. Neither is a salutary
foundation for yet another request to extend the tenure of the
incumbents, apparently on the same terms on which they were
irregularly
appointed, in terms of contracts set aside by the order
of Sutherland J in May of 2019, for a further period of nine months,
thereby
fully emasculating the effect and authority of the order of
Sutherland J.
54
And so, in these circumstances, a court might be forgiven for
approaching with scepticism the extent to which City Power found
itself helplessly confronted, on every occasion at the eleventh hour,
with the apparently insuperable and unavoidable need to abandon
whatever process it was finalising and to commence a new one afresh,
with the supposedly inevitable consequence of the continuation
of the
tenure of the incumbents.
55
The bases upon which it was suggested that Tender 2366S was vitiated
by irregularity to such an extent that it needed to be abandoned,
and
a new tender to be recommenced, were addressed in the founding
affidavit and in heads of argument. I engaged counsel
for City
Power on the cogency of these bases. Counsel submitted that it
was inappropriate for me to engage with the merits
of the legal
advice that had been furnished, and that I was constrained to accept
that the tender was fatally vitiated by irregularity
and needed to be
repeated, as there was no dispute raised in the papers in this
regard.
56
I do not believe this to be a tenable submission. To me, the
cogency of the apparently unavoidable need to repeat the tender,
once
again to jettison a process that had been ordered by the court to be
finalised within a period of time, lay at the core of
any decision to
determine whether it was appropriate once again to extend, this time
for nine months, the period during which the
incumbents would be
providing their services, apparently at the rates and on the terms of
the contracts that had been set aside
by Sutherland J.
57
There is a whiff of contrivance about the bases upon which Tender
2366S is said to be so fatally vitiated as to require yet another
tender which would take another nine months to finalise, particularly
given the history of this matter.
58
The two fatal irregularities can be captured thus:
58.1 The first relates to
the requirement that tenderers complete a full bill of quantities for
all streams, even if they were bidding
only for some streams and not
others. Tender 2285S had apparently worked on the basis that
one tendered for all streams,
and if one was successful one would
then be appointed as and when required for particular streams. Tender
2366S, however, asked
bidders to tender only for the streams that
they were interested in, thereby not rendering them eligible to be
appointed for other
streams. Yet, for reasons that were not
entirely clear, all tenderers were required to complete the bill of
quantities and
in effect to submit prices for all the services, even
those streams that they were not interested in. I agree that
this may
be said to be irrational. Whether, however, it was
sufficiently irrational or, as submitted, unfair, to require the
jettisoning
of the whole tender process despite the history of this
matter, is highly questionable. There was no danger that a
tenderer
would be considered for any stream in relation to which it
had filled in a price on the bill of quantities if it was not
tendering
for that stream. The notion that some tenderers did not
fill in the bills for those streams for which they were not tendering
and
were accordingly disqualified for having non-responsive bids,
given that they did not comply with the requirement, and that this
was fundamentally unfair, is also not clear to me. Although the
requirement did not appear to make much sense, it was nevertheless
a
clear requirement and one was required to comply with it to submit a
responsive tender. There was nothing unfair about
regarding
those bids that did not comply with what was stated to be an
essential requirement as non-responsive, whatever the merits
of the
requirement in question. It was submitted that the effect of
requiring all bidders to enter prices for all streams, even
those
that they were not interested in bidding for, might have been to
discourage some bidders from the bidding process on the
basis that
they were unable to provide prices for streams that did not lie
within their competency. This may be so, but by
itself it can
hardly be a sufficiently calamitous basis in the present
circumstances to require the jettisoning of the whole process
at this
stage.
58.2 The other
irregularity or irrationality related to the two competency tests
employed by City Power in relation to electricians.
There was a
test that electricians had to pass to display competence, that formed
part of the scoring towards functionality.
Failure of this test
did not necessarily result in failure of functionality because a
bidder might score sufficiently highly on
functionality and have a
failure of the test that was sufficiently marginal, still to pass the
functionality requirement.
This was said to be so fundamentally
irrational as to require the abandonment of the tender. I do
not agree. Furthermore,
there was a second test, an internal
test, that City Power required be passed before any electrician was
entitled to provide services.
This second test was a
sine
qua non
for being able to provide services. It was said
that the second test rendered the first test irrelevant, and if this
was
so, the relationship between the two tests was so fundamentally
irrational as to require the undoing of the tender as a whole.
Once again, I do not agree.
59
At worst for Tender 2366S, these suggested irregularities rendered it
vulnerable to challenge on review, perhaps again at the
hands of
Infinite Blue. But, having been ordered to finalise the process
within six months (a process that City Power had
decided to
substitute for the re-evaluation process that Sutherland J had
ordered be completed within 90 days), and having then
achieved
extensions of the six month period by another four months, one would
have thought City Power would adopt the attitude
that compliance with
the court order, to the best of its abilities, was more critical than
returning a process that was not vulnerable.
Or, at the very
least, to ensure that any vulnerabilities that might inhere in the
process be eliminated within good time to finalise
it. What
irks particularly is the fact that it appeared accepted as following
inevitably from City Power’s apparent
inability to finalise a
regular tender process and to comply with the series of court orders,
that it should be allowed, apparently
indefinitely, to undermine the
authority and effect of the Sutherland J order and to implement the
contracts that had been set
aside as irregularly awarded in May 2019.
60
It is only because of the fact that it appears to be unthinkable that
an order could be issued that leaves City Power, and accordingly
the
city that it serves, without these critical services for any length
of time, that this air of fatalism about the continued
tenure of the
incumbents attends these proceedings.
61
As Infinite Blue points out, whether a new tender is required is one
thing; what should be happening in the meantime is another.
62
It is difficult to disagree with the following allegations in the
answering affidavit of Infinite Blue:
“
City Power has
succeeded, in spectacular fashion, to stultify the order and judgment
of Sutherland J.
The conduct of City Power
in this matter illustrates just how difficult it is for an
unsuccessful tenderer to obtain effective relief
in review
proceedings. What was contemplated in the judgment and order of
Sutherland J and the current situation are the
exact opposite of each
other”.
63
I am of the view that matters have come to a point where granting the
relief sought in the notice of motion would undermine the
authority
of court orders and the very rule of law. It would serve as a licence
to invoke one’s own irregularity, or asserted
irregularity, and
inability to rectify procurement deficiencies, as a convenient and
cynical foundation for court-sanctioned implementation
of tenders
found to be irregularly awarded and set aside.
64
These situations would arise in those cases, like the instant, where
the functionality or organ of state at issue can plausibly
assert,
and a court must take judicial notice of the fact, that it is
critical for the services, the subject matter of an irregularly
awarded and set aside tender, to continue being provided pending the
rectification of the irregularity.
65
It was Infinite Blue’s main contention that the appropriate
route for City Power to have followed, if it really turned
out that
it was unable to complete the tender process it was ordered to
complete, was to embark upon an emergency procurement as
an interim
measure, rather than to accept the ostensible inevitability of an
indefinite continuation of the performance of the
services in terms
of the contracts that had been set aside.
66
City Power, for its part, contended that to resort to the emergency
procurement measures provided for in its Supply Chain Management
Policy was “
inappropriate”
. It maintained
that it would need to go out on a fresh tender in order to comply
with the requirements of its emergency procurement
procedures and
that this would take a number of months and again require competency
tests once suitable bidders had been identified,
that themselves
would take several weeks to finalise.
67
The bases upon which City Power resisted the appropriateness of
resort to its emergency procurement processes were not persuasive.
68
It is difficult to avoid the conclusion City Power has failed to make
out a case that it is appropriate in any world that respects
the
authority of court orders to grant the relief that had been sought in
its notice of motion. Yet, simply dismissing the application
would
leave City Power and the city that it serves potentially without any
procurement of critical services until at least emergency
services
could be procured, and this achieved without further irregularity,
pending the finalisation of a regular tender process
to substitute
Tender 2366S.
69
The appropriate order to grant in this application is a matter of
ascertaining and granting an order that is just and equitable
in
terms of section 172(1)(b) of the Constitution of the Republic of
South Africa Act 108 of 1996.
70
Counsel for Infinite Blue submitted that the only court that was
faced with a “
constitutional matter within its power”
and that made an order in terms of section 172(1)(b) was the court
constituted by Sutherland J and that later courts, including
this
court in this application, were constrained either to extend the
remedy extended by Sutherland J or to decline it.
71
I do not agree. First of all, the order and remedy granted by
Sutherland J was superseded by the order and remedy granted
by Yacoob
J on 8 October 2019. This is so even if one leaves aside the
apparent discrepancy relating to the identity of the
respondents
authorised to continue providing services. More fundamentally,
however, this court is undeniably considering
a constitutional matter
within its power in the present circumstances and it need not in my
view be faced with any fresh review
before this is the legal reality
that confronts it.
72
The importance of crafting an appropriate remedy that doesn’t
in any particular way flow dogmatically from a declaration
of
invalidity, in the context of tender awards, appears sufficiently
clearly from several decisions of the highest courts including
in
particular
State Information Technology Agency v Gajima Holdings
(Pty) Ltd
2018 (2) SA 23
(CC) and
Buffalo Metropolitan
Municipality v Asla Construction (Pty) Ltd
2019 (4) SA 331
(CC).
73
The fact that I am now faced with the need to fashion an order more
than a year after the original remedy fashioned by Sutherland
J,
subsequently radically upended and superseded by several further
orders, does not change the fact, in my view, that it is still
now a
matter of what falls to be done in terms of section 172(1)(b), in the
unfortunate circumstances of the present case.
74
As a starting point, whatever order is granted must avoid rendering
the authority of the order granted by Sutherland J nugatory,
or,
perhaps, further entrenching the extent to which City Power has
already achieved this lamentable end. Avoiding further harm
to the
rule of law should be a priority.
75
Confronted with this imperative, counsel for City Power during
argument no longer pressed for the relief in the form sought in
the
notice of motion – i.e. continuing with the incumbents in place
in terms of their current contracts for a period of nine
months,
pending the hoped for finalisation of the tender that was to replace
Tender 2366S.
76
I do not believe it is appropriate for this court to direct City
Power to award a tender in terms of the BEC and BAC recommendation
under 2366S as the appropriate order. As counsel for City Power
pointed out, nobody asked for this. This is not decisive,
but
certainly not ideal. Furthermore, City Power, for better or for
worse, has adopted the attitude on oath that it is required
to run a
fresh tender and that the irregularities in Tender 2366S are such as
to be irreconcilable with the proper discharge of
its statutory
functions, that in turn serve constitutional functions. Ordering the
award of a tender to bidders recommended by
the BEC (and tentatively
by the BAC) would amount to rather radical substitution of the
functions of the BAC and the City Power
executive by this court. If
possible, the court should be slow to do this.
77
For reasons
already enunciated, however, an order to be avoided is an order that
simply places the incumbents in continued occupation,
especially upon
the terms of their current contracts that have been set aside.
78
It was
suggested by Infinite Blue, in supplementary heads of argument
submitted on the day of the hearing, that it might be appropriate
to
authorise the incumbents to continue providing the services but not
at any profit. I was referred to
Allpay
2
[3]
, in particular paragraph 67, for the submission that it was
constitutionally impermissible to allow a situation where the
incumbents
continued to benefit by way of a profit from their
unlawful contracts.
79
I do not
read the confirmation in
Allpay
2
of
the principle, to be taken into account in the fashioning of an
appropriate order, that nobody should profit from his own wrong,
as
amounting to precluding an order as an appropriate order following
the setting aside of contracts, that would entail the continued
rendering of services that were going to be rendered in terms of the
contracts that were set aside, on a basis that is profitable.
80
Although
the solution suggested by Infinite Blue is tempting, I cannot ignore
the undeniable fact, as submitted by counsel for City
Power, that
authorising the incumbents to provide the services, but not allowing
this to be done on any commercial or profitable
basis, would tend to
lead to a situation where the services end up not being provided, or
at the very least would severely endanger
the continued critical
integrity of the provision of such services. I can hardly
appropriately order the incumbents to continue
to provide the
services, especially if this would be on a no-profit basis.
81
Part of the
difficulty in the instant case derives from the fact that the orders
“
authorising”
the
incumbents to continue to provide the services (whether they refer
back to the tender as did the orders from 8 October 2019
onwards, or
whether they did not, as was the case with the order on 30 June) did
not make clear on what basis and for what remuneration
such services
were “
authorised”
to be rendered. Despite submission from counsel for Infinite
Blue to the contrary, it seems to me that, once a court authorises
a
service provider to render services but does not direct that such
services be rendered, the only sensible basis upon which such
services would be envisaged to be rendered would be by way of
agreement with the employer, and such agreement would have to include
terms as to remuneration.
82
I am also
mindful of the fact that it is undesirable for the court, and not its
proper province, to be crafting contracts, and in
particular to be
setting prices, as an appropriate remedy flowing from an award
declaring a tender process irregular and setting
it aside.
83
I enquired
from City Power whether it was practically feasible to have the
services in question performed, pending the finalisation
of a fresh
tender, by the 83 service providers that had been recommended by the
BEC under Tender 2366S, less the 41 service providers
amongst these
83 that formed part of the incumbent service providers successful
under Tender 2285S or, if not, whether it was feasible
to have the
services performed by the remaining 42 service providers and those
who, in substitution of the 41 incumbents among
the BEC 83, would
have been “
second
in line”
.
84
City
Power’s response was that this was not feasible and that the
required work could not safely be entrusted to the remaining
42
service providers. It also struck me that, to the extent that
the 41 incumbents amongst the 83 recommended service providers
under
Tender 2366S were successful on price, an order that disqualified
them for the interim period pending finalisation of a fresh
tender
would have the effect of compelling City Power to have the services
rendered at higher rates than they would have been rendered
in terms
of the BEC recommendation based on the most competitive surviving
bids. This would amount to requiring inefficient and
expensive
service delivery as a way of salvaging the authority of the order of
Sutherland J.
85
Once City
Power adopted the attitude that it could not responsibly simply
exclude the 41 incumbent service providers that formed
part of the
panel of 83 under aborted tender 2366S, it became a perilous task for
this court, in an effort to save the authority
of the court order of
Sutherland J, to craft an order in terms of which the interim
services would be provided by a panel comprising
those who were
recommended by the BEC (and it appears the BAC) under Tender 2366S,
less the 41 incumbents amongst the number, plus
such further service
providers as passed the functionality test under Tender 2366S and
were next in line for award (deeming the
41 incumbents to have been
disqualified).
86
I was
sorely tempted by such an order as the most sensible way to save the
authority of the Sutherland J order. I was, however,
concerned
that there was insufficient material before me by which to be
satisfied that this was an appropriate order that would
not endanger
the ability of City Power to fulfil its functions.
87
City Power
moved towards urging me to adopt, as the most sensible interim
solution, provision of services by the 83 service providers
recommended by the BEC on the terms that they would have had
contracts concluded with them in terms of Tender 2366S.
88
Of course,
whatever happens in this regard, there would have to be some period
during which the incumbents continued to provide
the services pending
the appointment of, and handover to, the new “
interim”
service providers.
89
Infinite
Blue contended that it would be highly inappropriate for me to direct
an interim solution that in effect amounted to the
awarding of Tender
2366S. Of course, Infinite Blue was unsuccessful in Tender
2366S although it passed the functionality
hurdle.
90
As an
alternative, I was urged by Infinite Blue to direct City Power to
employ the 83 recommended 2366S bidders as a closed list
from which
an emergency procurement exercise was to be undertaken, akin to the
accredited list from which such quotations could
be taken in terms of
the emergency procedures under the supply chain management policy of
City Power.
91
If this
were to be done, it would amount to restricting City Power to choose
among the 83 recommended bids for 2366S, when it is
urging me to
authorise services to be provided by these very bidders. This would
amount to directing the award of Tender 2366S,
on the BEC
recommendation, something Infinite Blue was adamant I should not do.
92
Of course,
as counsel for City Power pointed out, such an accredited list
provided for in its emergency procedures does not exist
and was in
the ordinary course the product of a competitive process itself.
93
Infinite
Blue also urged me to consider the possibility of directing those who
provide the interim services to be providing them
at the lowest
quoted rate of the rates in Tender 2366S, and to direct that City
Power appoint for interim services only those prepared
to provide the
services at the lowest quoted rate.
94
In my view,
there are several severe difficulties with such an approach.
First, that comes perilously close to crafting a
contract for the
parties. Second, the fact that one was dealing with five
different work streams will entail a sufficient
degree of
differentiation in the services to be provided that any order
purporting to direct any kind of flat “
lowest”
rate would likely fall foul of several unintended inefficiencies even
if such an order were in principle to be appropriate, which
I highly
doubt.
95
It really
is a matter of choosing the least amongst several evils. The most
important evil to avoid is continued undermining of
the authority of
the order of Sutherland J.
96
I have
settled upon the following as the most appropriate order, and one
which, when put to counsel for City Power, did not as I
understood it
elicit any objection on the basis of its unworkability or
incompetence. It seems that, pending the finalisation
of a
tender process to replace Tender 2366S, the City should embark upon
an emergency procurement process to fulfil its current
service needs
that were addressed by Tender 2366S. It should employ for
purposes of this process as eligible bidders only
all those tenderers
that passed functionality in Tender 2366S. They should tender
for specific work streams and for the rendering
of month to month
services pending an award under the new tender that is to replace
Tender 2366S.
THE
REPORT
97
Something must be done to protect the authority of paragraph 7 of the
order of Sutherland J.
98
It appears to me,
prima facie
, that the Chief Executive
Officer of City Power is in contempt of such order.
99
The order was directed at the Chief Executive Officer of City Power
and the Executive Mayor of Johannesburg. Neither was
(at least
personally) a party to the proceedings before Sutherland J. It was
not even made clear to me in the papers whether the
order was brought
to the attention of the Executive Mayor of Johannesburg, as was
ordered by Sutherland J. As for the Chief
Executive Officer of
City Power, he or she is captain of the ship. As such, he or
she must bear responsibility. I am
told that the investigation
now being conducted by the attorneys for City Power is to be
finalised by the end of October.
So be it. It seems
appropriate to me that a rule be issued calling upon the CEO to show
cause by the end of October why he
or she should not be held in
contempt and potentially committed for contempt. It is also
appropriate for any affidavits to
be served in this process to be
served on Infinite Blue, for it to put in such response as it may
deem appropriate to assist the
court in adversarial proceedings.
COSTS
100
Infinite Blue submitted that, whatever the outcome of this
application, City Power should be ordered to pay the costs.
101
The order granted is not the order that was sought by City Power.
It is more closely aligned with the initial central
submission of
Infinite Blue than with various incarnations of a wishlist of orders
that developed during the course of argument.
In my view,
Infinite Blue’s intervention and opposition were critical to
salvage what was left of the authority of the order
of Sutherland J.
It also achieved what can only be described as substantial success in
the application. I cannot see why
it should not have its costs.
ORDER
102
The following order is made:
1. Pending the
finalisation by the applicant of any tender process in substitution
of Tender 2366S –
the
applicant is directed to embark upon an emergency tender
procurement process, in respect of the monthly rendering of the
services envisaged in Tender 2366S, utilising as a closed list of
eligible tenderers for such emergency procurement all bidders
that
were assessed to pass functionality in Tender 2366S;
1.2
the emergency process envisaged in 1.1 above shall be completed by
no later than 31 October 2020, and whatever the state
of the
recommended or final outcome by 31 October 2020 shall be employed
as the outcome of such emergency procurement process
and shall be
accordingly implemented;
1.3
until 31 October 2020, the 2
nd
to 63
rd
respondents are authorised, as an interim measure, to continue to
render services to City Power as envisaged in Tender 2285S.
2. A rule
nisi
is
issued, returnable on 2 November 2020, in terms of which the Chief
Executive Officer of the applicant is directed to show cause
why he
or she should not be held in contempt of paragraph 7 of the order of
Sutherland J of 30 May 2019 issued in Case No. 501/2019,
and should
not be committed to prison for contempt.
3. Any affidavit seeking
to show such cause shall be delivered to the first respondent and
uploaded on Caselines under this case
number by 9 October 2020.
4. Any answering
affidavit in response to such affidavit showing cause shall be
delivered by 23 October 2020 and any replying affidavit
by 28 October
2020.
5. The applicant is to
pay the costs of this application including the costs occasioned by
the employment of two counsel.
FA
SNYCKERS AJ
17
September 2020
Date
of Hearing:
15 September 2020
Judgment
Delivered: 17 September 2020
APPEARANCES:
On
Behalf of the Applicant: TJ Bruinders SC
N
Stein
Instructed
By: Mncedi Ndlovu & Sedumeni Attorneys
Johannesburg
On
Behalf of the First Respondent: NGD Maritz SC
APJ
Els
Instructed
By: Albert Hibbert Attorneys
Pretoria
[1]
I say “
apparently”
because the judgment of Sutherland J in the review application, to
which I refer below, in paragraph 25 refers to these bidders
as the
6
th
to 61
st
respondents before the court in that application, and its applicable
relief regarding the continued performance of services related
to
the 6
th
to the 61
st
respondents at issue in that application. By the time of the
order of Yacoob J in October 2019, referred to below, there
were 62
respondents and the provisions of services ordered in terms of that
order related to the 2
nd
to the 62
nd
respondent – i.e. 61 respondents. By the time of the
order of Twala J on the 28
th
of September, the order in relation to which this application was
the return date, 63 respondents were at issue, but the relief
in
question still related to the 2
nd
to the 62
nd
respondents. Before me it appeared to be common cause that
there were 62 “
incumbent”
respondents at issue. In the report of the Bid Evaluation Committee
relating to Tender 2366S, referred to below, in the background
section one is told: “
City
Power awarded a contract of R1,5 billion to 62 service providers in
December 2018 for a period of three years that expired
on the 30
th
of November 2021”
. This confusion is regrettable, but, in light of the order I make,
not material for present purposes. I refer throughout
to the
entities to whom Tender 2285S was awarded as the “
successful
bidders”
and/or to the “
incumbents”
,
except where it is appropriate to draw a distinction amongst the
fluctuating population of these respondents
.
[2]
I cannot make out from the court order who granted the order.
[3]
Allpay
Consolidated v CEO SASSA
2014 (4) SA 179
(CC).