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[2010] ZAECPEHC 34
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Vodacom (Pty) Ltd and Another v Nelson Mandela Bay Municipality and Others (137/10) [2010] ZAECPEHC 34; 2012 (3) SA 240 (ECP) (17 June 2010)
FORM A
FILING SHEET FOR EASTERN CAPE
HIGH COURT, PORT ELIZABETH JUDGMENT
ECJ:
PARTIES
:
VODACOM (PTY) LTD +1
AND
NELSON MANDELA BAY MUNICIPALITY +3
Registrar:
137/2010
Magistrate:
High
Court:
EASTERN
CAPE HIGH COURT, PORT ELIZABETH
DATE
HEARD:
27/05/10
DATE
DELIVERED:
17/06/10
JUDGE(S):
GROGAN
AJ
LEGAL
REPRESENTATIVES –
Appearances:
for
the Applicant(s):
ADV:
RA Solomon SC
for
the Respondent(s):
ADV:
RG Buchanan SC +Ms Z Lallie
ADV:
M Basslian
Instructing
attorneys:
for
the Applicant
(s):
for
the Respondent(s)
:
CASE
INFORMATION -
Nature
of proceedings
:
INTERDICT
IN THE HIGH COURT OF
SOUTH AFRICA
(EASTERN
CAPE. PORT ELIZABETH)
REPORTABLE
CASE
NO.: 137/10
In
the matter between:
VODACOM
(PTY) LTD
(Registration
no. 1993/003367/07) First Applicant
MFULENI
INVESTMENT CC Second Applicant
and
NELSON
MANDELA BAY MUNICIPALITY First Respondent
MTN
SERVICE PROVIDER (PTY) LTD Second Respondent
NASHUA
MOBILE (PTY) LTD Third Respondent
3V ICT SOLUTIONS
CC Four Respondent
JUDGMENT
GROGAN AJ:
[1] This matter arises
from the disputed award of tender 188 of 2009 for the provision of
mobile voice cellular and related services
by the First Respondent
(“the municipality”) to the Second Respondent (“MTN”).
At the outset, this application
was brought on an urgent basis for
interim orders interdicting and restraining MTN and the municipality
from concluding a contract
for the provision of the said services or,
if agreement had been reached, restraining them from implementing it.
These orders were
to be made pending the final determination of
further prayers seeking
inter
alia
orders
reviewing and setting aside the municipality’s decision to
award the tender (prayer 5), and substituting that decision
by an
order of this Court or, alternatively, remitting the matter for
reconsideration by the municipality (prayer 6).
[2] An interim order
restraining the municipality from concluding a contract was granted
by consent on 29 January 2010. Subsequently,
the municipality
conceded in its answering affidavit that the procedure followed by
the tender committee was “inappropriate”,
and agreed that
the award to MTN could not stand. In the light of this concession,
MTN agreed, albeit reluctantly, that it found
itself in the situation
“where it as the successful tenderer is not in a position to
oppose the application as initially
intended”.
[3] Both the municipality
and the applicant (“Vodacom”) approached the present
hearing on the understanding that the
only issue to be determined was
whether this Court should substitute for the award to MTN an order
that the tender be awarded to
Vodacom, or whether the Court should
refer the matter back to the municipality for reconsideration, and,
if so, on which terms.
In oral argument, Mr
Basslian
SC, who appeared for MTN, had second thoughts on that issue. As I
understood his submissions, Mr
Basslian
contended
that a further option open to the Court was to uphold the award of
the tender to MTN. This would effectively amount to
the dismissal of
prayer 5, and the upholding of the tender. Since that submission adds
a further and considerable dimension to
the issues before this Court,
it needs to be dealt with at the outset.
[4] Vodacom contends,
correctly, that in advertising for and considering the tenders the
municipality was bound by the Constitution,
the Promotion of
Administrative Justice Act 3 of 2000 (“PAJA”), the
Preferential Procurement Process (“PPPFA”),
its own
tender policy and the common law (see
inter
alia Du Toit v Minister of Transport
(2006)
1 SA 297
(CC)). A requirement of the PPPFA is that only “acceptable”
tenders may be considered (on the meaning of this term see
Millenium
Waste Management (Pty) Ltd v Chairperson, Tender Board: Limpopo
Province & others
2008
(2) SA 481
(SCA) at para. [18-19];
Chairperson:
Standing Committee & others v JFE Sapela Electronics (Pty) Ltd &
others
[2005]
4 All SA 487
(SCA) at para. [14]). It is common cause that MTN and
the other unsuccessful bidders failed to complete parts of the
obligatory
questionnaires, and that the bid evaluation committee
noticed this before the adjudication process and allowed the bidders
concerned
to supply the omissions after the closing date for the
tenders. In this regard, the acting municipal manager explains in the
following
terms why the municipality decided not to oppose the
“principal relief” sought (i.e. an order reviewing and
setting
aside the award):
“
The decision which
has been taken [i.e. not to oppose that prayer] is based upon an
acceptance, after careful consideration, that
it was inappropriate
for the relevant committee of the Municipality to permit [
sic
]
a
number of the original tenderers a further opportunity to correct and
supplement their tenders to ensure compliance with the original
tender conditions. In particular it is now conceded that it was
inappropriate to afford the Second, Third and Fourth Respondents
an
opportunity to complete and rectify essential supporting
documentation and information to ensure valid tenders. Although it
is
accepted that immaterial, unreasonable or unconstitutional tender
conditions may be overlooked in the interests of fairness,
transparency and competitiveness, it is now conceded on behalf of the
First Respondent that fundamentally defective tenders should
not be
considered for adjudication. To do so would constitute non-compliance
with the relevant constitutional and statutory provisions
applicable
to the processing and consideration of tenders by a local authority
... and would establish an undesirable precedent.”
[5] In the face of these
remarks, it is difficult to conceive of any basis on which the Court
could effectively sanction the process
by confirming the award of the
tender to MTN. Insofar as it may be necessary, I merely observe that
the municipality’s concession
is well made. Authority need not
be cited to support the obvious proposition that allowing competing
bidders to correct fundamentally
defective tender proposals after the
date on which tenders have closed is unfair to those competitors who
have submitted proper
tenders. To do that, as the municipal bid
evaluation committee did in this case, was more than “inappropriate”.
It
rendered the process fundamentally defective and unlawful, and
subject to review by a competent court. In the present circumstances,
I find and hold that the award to MTN was irregular, and cannot be
confirmed. Even if I am wrong in this regard, it would be highly
inappropriate for this Court to foist on the municipality an award
which its responsible officer considers irregular.
[6] There is a further
reason why the contention that the award to MTN should be confirmed
cannot be accepted. This is that MTN
has laid no basis in its
answering affidavit for such an order. The main concern of the
deponent to the answering affidavit (its
head, Mr M Magadla) was to
dispel allegations of fraud or dishonesty that may be inferred from
Vodacom’s founding affidavit.
Mr Magadla avers that MTN did not
realise that there was anything irregular about the process followed
by the bid committee, and
that “having regard to the wording of
certain paragraphs of the policy, it would appear that the
[municipality] may well
have been entitled to do as it did”. Mr
Magadla does not refer to the paragraphs of the policy he had in
mind.
[7] The high-water mark
on the papers of MTN’s submissions in this regard are the
averments directed at resisting the prayer
that the Court should
direct the municipality to remit the matter to the municipality. Mr
Magadla states in this regard:
“
In the light of
what the Applicant alleges in its founding affidavit as well as in
its supplementary affidavit, Second Respondent
envisages that should
this happen and should Second Respondent again be awarded the tender,
Applicants will then again raise the
same complaints in relation to
the tender process conducted by the First Respondent. Therefore under
the said circumstances, it
is the Second Respondent’s humble
submission that in the event that the court grant an order to refer
the matter back to
the First Respondent for evaluation and
adjudication and unless such an order is to the effect that the First
Respondent must decide
the tender on the basis of information or
documents currently at its disposal and that such information and or
documents are to
be regarded as having been properly and completely
submitted in accordance with the tender requirements and that there
has been
no dishonest, fraudulent, irregular behaviour and/or actions
on the part of the First and Second Respondents, the alternative to
prayer 6 cannot be granted.”
[8] None of this equates,
as Mr
Basslian
contended
in oral argument (but not in his written heads), to a contention that
the Court should dismiss the “main prayer”.
Nor in my
view does the passage just quoted amount to a
reservatio
that, if the Court does not grant either alternative to prayer 6
(i.e. to determine the matter itself or to remit the matter),
MTN’s
tender should be confirmed. The passage above certainly does not
serve to contradict or qualify the express statement
by Mr Magadla at
the beginning of his affidavit that “[i]t will be noted from
what is recorded hereunder that the Second
Respondent’s
opposition to the Applicant’s application for the relief sought
in part B of its notice of motion
is
restricted to the order sought in prayer 6 of Part B
....”
(my emphasis). Nothing whatsoever is said in the answering affidavit
about prayer 5.
[9] It is trite that
litigants in motion proceedings are bound by the facts and averments
set out in their respective affidavits.
In my opinion, MTN’s
answering affidavit, properly construed, suggests that it was
content, if somewhat less than enthusiastically,
to accept the
municipality’s stance. It follows again that MTN could not seek
after the close of pleadings to revive its
opposition to prayer 5.
And it also follows that the award of the tender to MTN must be
deemed withdrawn.
[10] In the result, and
ex
abundant cautela
,
I intend confirming that the order sought in prayer 5 has been
granted by agreement, and that the award of the tender to MTN falls
to be reviewed and set aside.
[11] I turn now to the
remaining issue before this Court. As indicated above, this is
whether the Court should substitute its own
finding for that of the
municipality or remit it to the municipality for reconsideration.
[12] As Mr
Solomon
SC
, who
appears for Vodacom, pointed out, the law relating to whether and
when courts of review should substitute their findings for
those of
administrative functionaries has received judicial consideration in
many cases (see
inter
alia Johannesburg City Council v Administrator, Transvaal
1969
(2) SA 72
(T) at 75-76;
Gildenhuys
v Parys Liquor Licensing Board & another
1957
(4) SA 152
(O) at 51;
Vries
v Du Plessis N.O.
1967
(4) SA 469
(SWA);
Maske
& Gilbert v Aberdeen Licensing Court
1930
D 30 at 45;
Norman
Anstey & Company v Municipality
1928
WLD 235
at 242.
[13] The principles to be
distilled from these and other cases are now to an extent codified
and given statutory expression in the
PAJA. Section 8(1) of that Act
reads:
“
The court or
tribunal, in proceedings for judicial review in terms of section
6(1), may grant any order that is just and equitable,
including
orders:
....
....
Setting aside the
administrative action and—
Remitting the matter for
reconsideration by the administrator, with or without directions; or
In exceptional cases—
(aa) substituting or
varying the administrative action or correcting a defect resulting
from the administrative action; or
(bb) directing the
administrator or any other party to the proceedings to pay
compensation.”
[14] It is common cause
that the municipality is an organ of state and as such bound by the
PAJA. It is also well established that
the process of adjudicating
tender procedures constitutes administrative action (
Du
Toit v Mnister of Transport
2006
(1) SA 197
(CC)). It is clear that the courts retain a wide
discretion when deciding whether to remit decisions that have been
set aside or
to substitute, vary or correct the defect. The sole
statutory limitation is that it may do the latter only in
“exceptional
cases”. The Supreme Court of Appeal had
occasion to consider the meaning and effect of this limitation in
Gambling
Board v Silverstar Development Limited & others
2005
(4) SA 67
(SCA). Heher JA wrote for a unanimous court (at para [28]):
“
The power of a
court on review to substitute or vary administrative action or
correct a defect arising from such action depends
upon a
determination that a case is 'exceptional':
s 8(1)(c)(ii)(aa)
of the
Promotion of Administrative Justice Act 3 of 2000
. Since the normal
rule of common law is that an administrative organ on which a power
is conferred is the appropriate entity to
exercise that power, a case
is exceptional when, upon a proper consideration of all the relevant
facts, a court is persuaded that
a decision to exercise a power
should not be left to the designated functionary. How that conclusion
is to be reached is not statutorily
ordained and will depend on
established principles informed by the constitutional imperative that
administrative action must be
lawful, reasonable and procedurally
fair.”
[15] The
Silverstar
court
quoted
in
extenso
the following extracts from
Commissioner,
Competition Commission v General Council of the Bar of South Africa
and Others
2002 (6) SA 606
(SCA):
“
[14] . . . (T)he
remark in
Johannesburg
City Council v Administrator, Transvaal, and Another
1969 (2) SA 72
(T) at 76D -E ‘that the Court is slow to assume
a discretion which has by statute been entrusted to another tribunal
or functionary’
does not tell the whole story. For, in order to
give full effect to the right which everyone has to lawful,
reasonable and procedurally
fair administrative action,
considerations of fairness also enter the picture. There will
accordingly be no remittal to the administrative
authority in cases
where such a step will operate procedurally unfairly to both parties.
As Holmes AJA observed in Livestock and
Meat Industries Control Board
v Garda
1961 (1) SA 342
(A) at 349G
‘
. . . the Court
has a discretion, to be exercised judicially upon a consideration of
the facts of each case, and . . . although
the matter will be sent
back if there is no reason for not doing so, in essence it is a
question of fairness to both sides.’
[See also
Erf
One Six Seven Orchards CC v Greater Johannesburg Metropolitan Council
(Johannesburg Administration) and Another
[1998] ZASCA 91
;
1999 (1) SA 104
(SCA) at 109F - G.]
[15] I do not accept the
submission for the respondents to the effect that the Court
a
quo
was
in as good a position as the Commission to grant or refuse exemption
and that, for this reason alone, the matter was rightly
not remitted.
Admittedly Baxter
Administrative
Law
at
682 - 4 lists a case where the Court is in as good a position to make
the decision as the administrator among those in which
it will be
justified in correcting the decision by substituting its own.
However, the author also says at 684:
''The mere fact that a
court considers itself as qualified to take the decision as the
administrator does not of itself justify
usurping that
administrator's powers . . .; sometimes, however, fairness to the
applicant may demand that the Court should take
such a view.''
This, in my view, states
the position accurately. All that can be said is that considerations
of fairness may in a given case require
the court to make the
decision itself provided it is able to do so.'
[16] The
Silverstar
court
added the following caveat (at para. [29]) before turning to the
facts before it:
“
An administrative
functionary that is vested by statute with the power to consider and
approve or reject an application is generally
best equipped by the
variety of its composition, by experience, and its access to sources
of relevant information and expertise
to make the right decision. The
court typically has none of these advantages and is required to
recognise its own limitations.
See
Minister
of Environmental Affairs and Tourism and Others v Phambili Fisheries
(Pty) Ltd
;
Minister
of Environmental Affairs and Tourism and Others v Bato Star Fishing
(Pty) Ltd
2003 (6) SA 407
(SCA) at paras [47] - [50], and
Bato
Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Others
[2004] ZACC 15
;
2004 (4) SA 490
(CC)
(2004 (7) BCLR 687)
at paras [46] - [49]. That
is why remittal is almost always the prudent and proper course.”
[17] However, in
Silverstar
the court was not persuaded that prudence called for remittal. It
found on the facts that the board had overlooked an objection
of
substance by the respondent, and that fairness demanded that the
court decide the matter because of the delay caused by the
appellant’s misguided opposition to the application (see paras.
[38]-[40]).
[18] To summarise: a
court, having set aside a defective or unfair administrative act, may
take the decision itself only if the
circumstances are so exceptional
as to warrant departure from the normal practice of remittal and if
the applicant has established
that it is just and equitable to do so.
[19] It is accordingly
necessary to set out the circumstances insofar as they can be
established from the papers.
[20] On 2 June 2009 the
municipality issued an invitation to tender for the provision of
mobile voice and data services. At the
time, Vodacom was party to a
contract with the municipality for the provision of mobile voice
cellular services for 2 138
active lines on various packages.
MTN was then providing the municipality with about 560 active data
lines on a corporate plan.
The tender was for the provision of these
combined services. The closing date was 6 August 2009. Vodacom,
together with its approved
business partner, which trades under the
name of Imbicom (the second applicant in this matter) submitted its
tender before the
closing date. On 8 July 2009 the municipality
convened a briefing session, which the applicants attended. In terms
of the tender
rules bids were to be evaluated on the basis of points
allocated for various items, and bidders were required to have at
least
30% “HDI” (historically disadvantaged individuals)
ownership. In September 2009, the bid evaluation committee discovered
that each bid save that of Vodacom was defective or incomplete in
various respects. The respective bidders were permitted to correct
their tenders, and the adjudication process continued after that was
done. The tender was referred to the bid adjudication committee,
which awarded the tender to MTN on or about 28 October 2009. The
following month, Vodacom objected to the tender, as it was entitled
to do under the municipality’s supply chain management policy,
and the municipality referred the matter for mediation. The
mediator
recommended that the matter be referred to the provincial treasury,
an option provided for in the municipality’s
procurement
policy. That recommendation was almost immediately overtaken by this
application.
[21] Vodacom contends
that the matter should not be remitted for the following reasons: (i)
no purpose would be served because the
municipality would have to
reconsider the bids as they stood before being corrected; (ii) the
municipality acted fraudulently and
dishonestly and can no longer be
trusted to deal with the matter fairly; (iii) it would be just an
equitable to award the tender
to Vodacom because it was the only
bidder to submit a valid tender. I deal with each of these
submissions
seriatim
.
[22] The substance of
Vodacom’s objection, now confirmed by the municipality, is that
the bid committee erred by permitting
the competing bidders who had
not completed the tender forms to do so after the closing date.
Vodacom submits, in short, that since
it was the only bidder to
comply with the rules, it was entitled to be awarded the tender, and
that, since MTN’s bid did
not comply with the rules of the
tender process, the award of the tender to MTN was unlawful. That
Vodacom’s bid was the
only one which complied with the tender
rules is now common cause between it and the municipality. MTN has
made some attempt to
argue that it was entitled to amend its bid, but
concedes that rectification was necessary. I accept, as the
municipality has conceded,
that it was impermissible to permit
bidders to rectify incomplete tenders after the close of tenders.
[23] This Court is now
confronted with the following contentions: (i) once the date for the
submission of bids had passed, the bid
committee was obliged to
consider only those (or in this case that) tender which complied with
the tender rules; (ii) the bid committee
was entitled to terminate
the process and start it afresh. If (i) is correct, it follows that
Vodacom should have been awarded
the tender and that remittal would
be futile because the bids would have to be adjudicated on the tender
documents as they stood
at the closing date for the tenders. If (ii)
is correct, this Court cannot or should not anticipate the results of
a fresh tender
process by directing the municipality to award the
tender to Vodacom because the municipality is merely exercising the
right it
always had, but inadvertently failed to exercise, to cancel
the tender.
[24] Mr
Solomon
argued
vigorously
in support of the first contention. Both Mr
Basslian
and Mr
Buchanan
SC
(who
appeared with Ms Lallie on behalf of the municipality) argued equally
vigorously in support of the latter. During the debate,
the
representatives accepted that the matter could be simplified by
analogy. This was of a running race in which four of the five
competitors were found to have inadvertently taken banned enhancing
substances before the start. The issue would then be whether
to
cancel the race and run it afresh when all the runners were in normal
physical condition, or to allow the only runner who was
free of
steroids to run alone.
[25] Mr
Solomon
contends
that the proper course in such a case is to award the victory cup to
the runner who ran in accordance with the rules. He
also contends
that, if the race were to be re-run, it would have to be by the same
rules. This would mean that all the runners
save the original winner
would remain disqualified. There would accordingly be no purpose to a
re-run, as the result would inevitably
be the same. Messrs
Buchanan
and
Basslian
argued
the contrary. According to them, the purpose of a race is to
establish the fastest runner, which can only be done if there
are
competitors. If the analogy is applied to the present dispute, it
would mean that an award of the tender to Vodacom would deprive
the
municipality of its right and duty to award the tender in a
competitive bidding process.
[26] This dispute is not
about athletics. But the analogy is apposite. The question is whether
the tender rules allowed the municipality
to call off the tender
process when it was established that four of the five bidders had not
complied with the rules. These rules
are to be found in the
municipality’s supply chain policy. That policy requires all
services above a transaction value of
R200 000.00 to be procured
through a competitive bidding process. The procedure is split into
the following stages: compilation
of bidding documentation; public
invitation for bids; briefing sessions; handling of bids; evaluation
of bids “as detailed
in paragraph 28”; award of
contracts. A committee system for the processing of competitive bids
is established, consisting
of a bid specification committee, a bid
evaluation committee and a bid adjudication committee. Paragraph 28
of the policy is pertinent.
It reads:
“(1) A bid
evaluation committee must—
Evaluate
bids in accordance with—
the
specifications for a specific procurement;
the
points system set out in paragraph 27(2)(f)
evaluate
each bidder’s ability to execute the contract;
check
in respect of the recommended bidder whether municipal rates and
taxes and municipal service charges are not in arrears;
and
submit
to the adjudication committee a report and recommendations regarding
the award of the bid or any other related matter.
In
the case of formal tenders being discovered that they have failed
[
sic
]
to comply with the tender specification or any general tender
requirement, the Evaluation Committee has a right to issue
instruction
[
sic
]
for retendering.”
[27] The decision to
allow correction of the defective tenders was taken in this case by
the bid evaluation committee. Whether it
was entitled to do so in
terms of sub-paragraph (e) need not be decided in view of the
municipality’s concession that it
could not.
1
[28] But that provision
has a bearing on the issue now under consideration. If the bid
evaluation committee was indeed entitled
to call of the tender
process, Vodacom’s contention that remittal would be futile
because the bids would have to be evaluated
on the respective tenders
as they were before correction cannot stand. The municipality now
wishes to have the process aborted.
The question is whether it is
entitled to do so.
[29] Paragraph 28(1)(e)
may not be a model of legal drafting. On one possible reading, that
provision appears to support MTN’s
contention that the
evaluation committee was entitled to permit correction of the
defective tenders. On the other possible reading,
in my view the more
plausible, the phrase “has a right to issue an instruction for
retendering” signifies that in the
event of it being discovered
that a bidder or bidders have failed to comply with a tender
specification or any general requirement,
the only permissible
“instruction” can be to commence the process afresh. That
meaning is supported by paragraph 36
of the policy, which empowers
the accounting officer (the municipal manager) to “ratify any
minor breaches of the procurement
processes by an official or
committee acting in terms of the delegated powers which are of a
purely technical nature”. The
municipality accepts that the
defects in the bids of MTN and the other bidders in this case were
not minor or of a technical nature,
which is presumably why
section
36
was not invoked.
[30] The municipality now
contends that the bid evaluation committee could at any stage have
aborted the tender process and issued
an instruction to commence the
process afresh, or declined to award any tender. In either case, the
bidders could have corrected
their bids and all could have
retendered. The municipality would then have had before it a
competitive tender. That being the case,
so the argument now goes,
this Court should cure the irregularity of the disputed process by
simply remitting it to the municipality
to issue a fresh invitation
for tenders, as the municipality now says it should have done in the
first place.
[31] I accept that the
municipality was entitled to abort the tender process when the bid
evaluation committee established that
there was only one compliant
bidder. Vodacom’s submission to the contrary is based on the
premise that, in every tender,
a bidder which happens to be the only
one to comply with the tender provisions and specifications is
entitled to be awarded the
tender once the date for the submission of
tenders is passed. This is not as I understand the law. If the
municipality was entitled
to abort the process, the mere fact that it
proceeded to award a tender to an unqualified bidder cannot deprive
it of its right
to call for fresh tenders after deciding to reverse
the award. Still less does it entitle the only compliant bidder to be
awarded
the tender. It follows that the submission that remittal is
inappropriate because it would inevitably result in the award of the
tender to Vodacom cannot be sustained.
[32] It is appropriate in
this context to deal briefly with MTN’s submission, quoted
above, that the only basis on which the
matter can be remitted is a
direction to the municipality to reconsider the tenders on the
information currently at its disposal
as reflected in documents
already submitted, coupled with a declaration that the previous
process was not tainted by irregular
or dishonest conduct on the part
of either the responsible municipal officials or MTN. Apart from the
fact that this suggestion
begs questions considered below, upon which
the Court must make findings, such an order would be tantamount to
condoning a process
which the responsible official has categorised as
unlawful. This a court cannot do.
[33] The finding that the
municipality was entitled to abort the tender process and call for
fresh tenders also disposes of the
ancillary reason that Vodacom
advances against remittal: that the Court is in as good a position as
the municipality to decide
the matter in Vodacom’s favour. Once
it is accepted that, as a matter of law, Vodacom was not entitled to
the award simply
because it was “the last man standing”
(to borrow Mr
Buchanan’s
expression),
it must follow that the Court would have to decide the matter on the
merits of the respective bids. In my view, there
is insufficient
information on the papers before the Court to enable it to take that
step. It may well be that the municipality
does not aver in terms
that Vodacom is incapable of providing the services, or that its bid
was in other respects unacceptable.
It may also be that Vodacom
currently provides some of the services to the municipality. But it
is also clear that the municipality
is of the view that it should be
given the opportunity to assess a range of bids. I am of the view
that the municipality’s
acknowledged errors should not
disentitle it to its right (and duty) to entertain a competitive bid.
[34] I accordingly find
that the mere facts that the rival tenders were found to be flawed
after the close of the date of tenders
and that the award was
erroneously made to an unqualified bidder does not in itself
constitute an exceptional circumstance that
warrants an order that
the tender be awarded to Vodacom.
[35] I turn now to the
submission that the matter should not be remitted because the
municipality has exhibited bias and cannot
be trusted to consider the
matter afresh. Vodacom’s submissions in this regard go further
than allegations of mere bias.
They include allegations of fraud and
corruption on the part of the municipal officials concerned (thereby
by implication tainting
the conduct of MTN). Vodacom alleges in this
regard that the process was flawed in a number of respects beside the
procedural defect
just discussed. Some of these alleged flaws are
listed in the founding affidavit in support of the contention that
the award should
be set aside. But a number remain relevant to the
issue presently under consideration—i.e. whether the matter
should be remitted
to the municipality for reconsideration. Mr
Jarana, Vodacom’s executive director, alleges in the founding
and supplementary
affidavits that the process was tainted because the
members of the bid evaluation committee accepted gift packs from MTN.
Each
consisted of a T-shirt, a scarf, a vuvuzela, a ballpoint pen a
folder and a soccer ball. Mr Jarana says the impression of bias
created by the giving and acceptance of these gifts is aggravated by
the irrational manner in which points were allotted by the
committee
members, which he alleges indicates further bias towards MTN. In the
supplementary affidavit, Mr Jarana makes more serious
allegations. He
says that MTN was fraudulently permitted to supplement its bid papers
after the close of bidding, that the committee
resolved to delete the
entry recording receipt of the aforementioned gifts, and that MTN was
awarded a high score for its HDI partnership
when it had submitted
proof thereof only after the close of bidding.
[36] Whether these
alleged irregularities would independently or cumulatively warrant
setting aside the award to MTN is one question.
Whether they are
sufficient to prove that the municipality is so biased towards MTN
that it cannot be trusted to impartially reconsider
the tenders is
quite another. I accept that it was imprudent for the bid evaluation
committee members to accept gift packs from
MTN. However, the code of
conduct for the municipality’s supply chain management
practitioners prohibits acceptance of rewards
in excess of R350.00.
The value of the gift packs is not stated. But since they were
apparently part of leftover stock from last
year’s COSAFU
tournament, MTN’s averment that they were below that value must
be accepted. But the point here is not
whether the members of the bid
committee were entitled to accept the gift packs; it is whether their
receipt was such as to warrant
the inference that the officials
concerned have become so favourably disposed to MTN that they cannot
be trusted to apply their
minds fairly to a fresh tender. I hesitate
to draw that conclusion, still more to attribute such favouritism to
every official
in the municipality’s corporate structure.
[37] As far as the
scoring is concerned, the municipality states that the committee
members were properly impressed by the greater
flexibility of rebate
structures offered by MTN. Both the municipality and MTN claim that,
since MTN was already fully “HDI
compliant”, it was not
required to attach documents proving that subcontract work to the
value of 30% of the total contract
value would be awarded by MTN. The
late submission of the documents by MTN does not
per
se
indicate
fraud; the late changes are consistent with the municipality’s
concession and explained as a well intentioned if
misguided attempt
to avoid the delay and inconvenience that would have been occasioned
by aborting the process and calling for
fresh tenders.
[38] I do not deem it
necessary for present purposes to choose between these conflicting
views on what may be inferred from the
bid evaluation committee’s
actions. What matters, to my mind, is that the municipality has shown
its
bona
fides
by
acknowledging that the process was flawed, and by undertaking to
reopen the tenders. Should it prove that the municipality is
not
bona
fide
,
Vodacom’s right to challenge the outcome of the fresh process
internally or by a further application to court will remain
intact.
In short, I am not convinced that the applicants have shown that the
municipality was biased in favour of MTN for reasons
that would in
law preclude remittal.
[39] This brings me to
the applicants’ submission that justice and equity favours an
order that the tender be awarded to Vodacom.
While the PAJA requires
the courts to make “any order that is just and equitable”,
section 8(1)(c)
clearly indicates that remittal is the favoured
remedy, and that substitution is permissible only in “exceptional
circumstances”.
Considerations of justice and equity cannot
override that limitation. I have already found that the circumstances
are not so exceptional
in this case as to warrant substitution.
Furthermore, the power of the court to remit with such directives as
it deems fit is plainly
designed to ameliorate concerns that the
decision maker may be disposed to simply confirm the contested
decision without genuine
consideration. As will be seen, I have
attempted to forestall any such possibility with appropriate
directions.
[40] A further
consideration is that the administrative act at issue in this case is
a tender for a commercial contract. While the
constitutional
guarantee of fair and lawful administrative action may give rise to
substantive rights, a procedural lapse such
as that at issue in this
case need not necessarily do so. Vodacom was entitled to have its bid
fairly adjudicated. But that does
not confer upon Vodacom an
automatic right to the tender. At most, Vodacom is entitled to take
part in a fair bidding process.
An order that the municipality call
for fresh tenders and adhere strictly to the terms of the relevant
legislation and guidelines
will vindicate that right.
[41] Vodacom has proved,
and the municipality has accepted, that the award to MTN cannot
stand. In the meantime, both parties continue
to provide their
services in terms of the existing contracts. Consideration of the
possible disastrous consequences of setting
aside a confirmed tender
and restarting the process, referred to in
Millenium
Waste Management supra
at
para. [23], does not arise in this matter. As is stated at paragraph
[22] of that judgment:
“
[E]xercising its
discretion the court below dismissed the application with costs. In
so doing the court overlooked the provisions
of
s 8
of the PAJA which
requires that any order granted in matters such as this be just and
equitable. This guideline involves a process
of striking a balance
between the applicant’s interests, on the one hand and the
interests of the respondents, on the other.
Furthermore, the section
lists a range of remedies from which the court may choose a suitable
one upon consideration of all relevant
facts.”
[42] The range of
remedies referred to by the Court include, apart from an order that
the decision be remitted for reconsideration
“with or without
directions”, those set out in
section 8(2)
of the PAJA, to wit:
“[A]ny order that
is just and equitable, including orders—
directing
the taking of the decision;
declaring
the rights of the parties in taking the decision;
directing
any of the parties to do, or to refrain from doing, any act of thing
the doing, or the refraining from doing, of which
the court ...
considers necessary to justice between the parties.”
(Section
8(2)).
These discretionary
remedies are clearly designed to empower the court, when remitting a
matter, to ensure a fair outcome and, as
far as is possible, to allay
fears of bias. I accordingly find that an order in terms of
section
8(1)(c)(i)
of the PAJA is appropriate.
[43] There remains the
question of costs. The municipality has conceded as well that the
applicants should be awarded costs relating
to the relief sought in
Prayer 5—i.e the setting aside of the award. That concession is
also well made. As to the costs of
the subsequent proceedings—i.e.
those relating to Prayer 6—I am of the view that justice and
equity should properly
be taken into account. The present application
would have been unnecessary had the municipality conducted the tender
process properly.
The issue of remittal or substitution was part and
parcel of the proceedings initiated by the original application.
While the municipality
acknowledged that the procedure was
“inappropriate”, the applicants were nevertheless
compelled to seek judicial determination
of the consequences of that
concession. MTN was inevitably drawn into that process. Vodacom has
not obtained the relief sought
at this stage of the proceedings, and
the municipality has in a sense succeeded. MTN, similarly, has failed
in its endeavours to
persuade the Court that the matter should be
remitted with the conditions it suggested. MTN is also the “loser”
in
a technical sense. The setting aside of the award has been
confirmed in these proceedings. It is therefore impossible to
disentangle
the costs relating to that order from those relating to
the relief finally granted. I am of the view that in these
circumstances
the municipality should pay the costs incurred by the
applicant in the entire proceedings, and that MTN should carry its
own costs.
Since the third and fourth respondents have not entered
appearance, they need not be considered in this regard.
[44] The following order
is accordingly issued:
The award to the second
respondent of tender 188 of 2009 is reviewed and set aside.
The tender is remitted
to the first respondent for reconsideration on the following
conditions:
2.1 the tender shall be
re-advertised in accordance with paragraphs 19, 20, 21, 22 and 27 of
the municipality’s Supply Change
Management Policy;
the tenders shall not
be restricted to parties who previously bid for tender 188, and
those parties who previously bid may
do so again;
tender documents
previously submitted by bidders for tender 188 shall be
disregarded;
in considering the
fresh tenders, the first respondent shall comply strictly with the
provisions of paragraphs 21, 23, 26, 28
(as interpreted in this
judgment), 29 and 48 of the aforesaid policy;
the accounting officer
shall, in accordance with paragraph 26(3) of the policy, appoint a
neutral and independent observer agreed
to by the bidders to attend
all committee meetings concerned with this tender;
should the parties not
agree on the choice of the aforesaid neutral and independent
observer, they may approach the Court for
a directive in that
regard.
The above orders shall
not be deemed to derogate from the rights of bidders under
section
50
of the aforesaid policy.
The first respondent
shall pay the first applicant’s costs, such costs to include
the taxed fees of two counsel, when utilised.
___________________
J G GROGAN
ACTING JUDGE OF THE
HIGH COURT
Date Heard: 27 May 2010
Date issued:
1
This
was the basis for Mr
Basslian’s
belated
contention, considered above, that the municipality may have been
entitled to allow correction of the defective bids as
and when it
did.