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[2019] ZAECPEHC 68
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WBHO v Nelson Mandela University and Another (2121/19) [2019] ZAECPEHC 68 (1 October 2019)
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE LOCAL DIVISION, PORT ELIZABETH)
Case
No: 2121/19
In
the matter between:
WBHO
/ PRO KHAYA
JV
Applicant
v
THE
NELSON MANDELA UNIVERSITY
First
Respondent
AVENG GRINAKER – LTA
Second Respondent
Coram
:
Swanepoel AJ
Heard
: 12
September 2019
Judgment
delivered
: 1 October
2019
JUDGMENT
[1]
Seven
hundred and thirteen pages of motion papers and a redacted record of
407 pages (which was then supplemented by an additional
bundle) was
before me on motion court roll in Port Elizabeth on Thursday, 12
September 2019. In court, seven more ringbinders
[1]
comprising the actual record awaited me.
[2]
Unsurprisingly, the subject-matter was a tender review, with two
reputable
construction companies and the local university the
parties. The applicant is the unsuccessful tenderer, whose tender was
disqualified
for non-responsiveness. The university, first
respondent, is defending its tender award to the second respondent,
which abides
the outcome of the proceedings.
[3]
The applicant is a joint venture comprising WBHO Construction (Pty)
Ltd
and Pro Khaya CC, which challenges a tender for the construction
of student housing awarded by Nelson Mandela University (the first
respondent), a public higher education institution, to the second
respondent, Aveng Grinaker – LTA (described as a “
division
”
of the public company Aveng (Africa) Limited) as the successful
tenderer.
[4]
During July
2018, the first respondent had invited tenders for the design,
engineering, procurement and construction of new student
accommodation comprising 500 beds, at the first respondent’s
campus situated in Summerstrand, Port Elizabeth. The invitation
to
tender
[2]
further provided that
“
[A]s
more funding becomes available, the contract and works may be
extended to accommodate additional students as well as additional
student accommodation facilities, to a total of 1800 beds
”.
[5]
This tender
invitation was extended in the context of a substantial lack of
availability for student accommodation at Higher Education
Institutions,
[3]
compared to the
demand for such accommodation. The Department of Higher Education and
Training (“
the
Department
”)
and universities such as the first respondent, find themselves
politically, socially, morally and financially under pressure
to meet
such demand.
[6]
According
to the first respondent, it developed a funding model (record pages
467 and 468, paragraph 44) that would allow the phased
construction
of 2000 beds, comprising 1800 beds at its Port Elizabeth campus and
200 beds at its George campus, which
model was
approved by the Minister of Higher
Education
and
Training (“
the
Minister
”)
during 2018.
[4]
During the
period preceding ministerial approval, total funding of approximately
R225 million had been transferred to the first
respondent during the
period from 2015 to 2019.
[5]
[7]
On 6 July
2018, the Minister of Higher Education and Training (“
the
Minister
”)
notified the first respondent that an amount of R268 million had been
approved from the Infrastructure and Efficiency Grant
(“
the
IEG
”)
over the three year period 2018/19 to 2020/21.
[6]
Approval for projects being funded through the IEG, was
inter
alia
conditional
on all the student housing projects meeting the requirements of the
Department’s policy and the minimum norms
and standards for
student housing at public universities. Any projects in which the
cost exceeded R300 000 per bed required the
Department’s
approval prior to
commencement.
[8]
During
March 2018, the Department made R1.1 billion available towards IEG
funding to all universities to support student housing
infrastructure
projects from 2017/18
[7]
. These
funds may be accessed by all the universities, subject to the
approval of the relevant funds and the IEG fund not being
depleted.
[9]
The
Minister approved a release of R50 million to the first respondent
during March 2018 as funding for the construction of accommodation
providing 1850 new beds on the first respondent’s Summerstrand
campus and 150 new beds on the first respondent’s George
campus, subject to the first respondent contributing a minimum of 10%
to the project; compliance with the applicable minimum norms,
and the
first respondent submitting plans by 30 June 2018 showing how the
funds were to be used. Such plans were duly submitted
by the first
respondent.
[8]
[10]
However,
first respondent realised that the IEG funding would not suffice and
proposed a funding model encompassing not only IEG
funds, but also
loan funding from independent financial institutions “
in
order to scale the model and accelerate the roll out of
beds
”.
[9]
[11]
The
Department
[10]
supported the
funding model, which was approved by the Minister on 6 March 2019. A
first tranche of R33.5 million was advanced
on 21 March 2019,
conditional upon progress reports being submitted and subject to the
exclusive allocation of the funds
towards the beds project. A
predetermined timeframe for the rollout of beds was planned, to be
synchronised with funding being
made available. The handover of
completed student accommodation units was scheduled to occur from May
2021 to July 2022.
[11]
[12]
The first
respondent’s papers indicate that the first respondent has
already paid an amount of R28 million to the second respondent
during
July 2019 in order to secure formwork and materials.
[12]
[13]
The first
respondent’s deputy-director for infrastructure projects
emphasises in first respondent’s answering affidavit
[13]
that if the project is to be discontinued for whatever reason, “
the
amount of R28 million already paid by the first respondent to the
second respondent may well be forfeited or lost
”,
and “
the
basis for the IEG funds being paid to the first respondent will
fall way, without any departmental approval for any alternative
project. Absent such approval, the DHET is entitled to request
the
repayment
of
funds
already
transferred
or
to
re-allocate
such
funds
”.
Potentially,
a huge “
grant
loss
”
will confront the first respondent should the project not be
implemented.
[14]
[14]
The first respondent has raised concerns about any delay arising from
re- procurement,
which, according to the first respondent, will not
only cause financial harm, but will also impact on the student
accommodation
“
crisis
”.
[15]
This is then the factual context of this review brought under the
Promotion of Administrative
Justice Act 3 of 2000 (“
PAJA
”).
The evaluating criteria are section 217 of the Constitution of the
Republic of South Africa Act 108 of 1996 (“
the
Constitution
”), the Preferential Procurement Policy
Framework Act 5 of 2000 (“
the PPPFA
”) and its
regulations; the Public Finance Management Act 1 of 1999 (“
the
PFMA
”), and last but not least, the tender invitation and
documentation: compare
Westinghouse Electric Belgium SA v Eskom
Holdings (SOC) Ltd and Another
2016 (3) SA 1
(SCA)
at
paragraph [43].
[16]
In an administrative review, the lawfulness issue and the remedy
issue should not be conflated:
Allpay Consolidated Investment
Holdings (Pty) Ltd and Others v Chief Executive Officer, South
African Social Security Agency and
Others
2014 (1) SA 604
(CC)
,
paragraphs [24] to [26].
[17]
Once a ground of review under PAJA has been established “
there
is no room for shying away from it
”. (
Allpay
,
paragraph [25]). Section 172(1)(a) of the Constitution makes this
clear:
“
172.
Powers of courts in constitutional matters.—
(1)
When deciding a constitutional matter within its power, a
court—
(a)
must
declare that any law or conduct that is
inconsistent with the Constitution is invalid to the extent of its
inconsistency;
and…
”.
Once
an applicant establishes non-compliance with the legality criterion,
the consequences of such unlawfulness must then be dealt
with in
terms of section 172(1)(b) of the Constitution, which provides:
“
172(1)
When deciding a constitutional matter within its power,
a court:
(a)
…
.
(b)
may make any order that is just and equitable, including:
(i)
an order limiting the retrospective effect of the declaration
of invalidity; and
(ii)
an order suspending the declaration of invalidity for any
period and on any conditions, to allow the competent authority to
correct the defect
”.
The
remedy cart should therefore not be placed before the legality horse,
even if the cart is full of costly apples.
[18]
Certain features of the tender in this matter are important to the
applicant’s disqualification
for non-responsiveness:
1.
the
tender documents made it clear that the project was to be a “turnkey”
project and incorporated the terms of the
Silver Book of the FIDIC
suite of contracts
[15]
–
the description of the tender as a FIDC EPC / Turnkey project meant
that price certainty was material to the first respondent;
2.
Part
C2.3
[16]
required tenderers
“
to
price as accurately and without omissions, the following
pricing schedule. A full bill of quantities
is not
required at this stage, but may be requested in order to facilitate
later negotiations
”.
This part continues further:
“
The
purpose of the schedule is to provide a basis for further
negotiations as follows:
·
The Employer has limited funds and the scope of pricing may need
to be re-negotiated prior to tender award, so that the project can
be
awarded and completed within the available funding envelope
·
As more funding becomes available it is the Employer’s
intention to negotiate the construction of additional beds and
facilities.
The schedule will provide a basis to negotiate this
additional scope.
This
schedule is not binding and is purely indicative of the indicative
construction costs
” (a two page itemised price schedule is
then attached).
3.
Clause 13.8
of the Contract Data (Part C1.2)
[17]
,
cross-refers to the General Conditions of Contract for EPC / Turnkey
Projects, First Edition, 1999 published by the
Federation
Internationale des Ingénieurs-Conseils
(FIDIC)
and provides:
“
The
Contract shall not be adjusted in terms of this Sub-clause
”.
4.
The South African National Standard: Construction Procurement –
Part 3: Standard Conditions of
Tender, specifically SANS10845-3, were
incorporated as Standard Conditions of Tender (Part T1.2, record
pages 60 to 71).
5.
The wording
of clause B1 of Part 3 of SANS10845-3
[18]
makes
it clear that these conditions are binding on the employer and
tenderer to behave in a particular manner; to “
establish
what a tenderer is required to do in order to submit a compliant
tender
”;
to make known the evaluation criteria to tenderers, and to “
establish
the manner in which the employer conducts the process of offer and
acceptance and provide the necessary feedback to tenderers
on the
outcomes of the process
”.
Clause 2.17
[19]
makes it clear
that a written offer must be “
capable
of acceptance and conversion into a binding contract
”.
6.
Clause 4.8
of the incorporated SANS10845-3,
[20]
which relates to the pricing of the tender offer,
inter
alia
requires
the following of tenderers:
“
Provide
rates and prices that are fixed for the duration of the contract and
not subject to adjustment except as provided for in
the conditions of
contract identified in the contract data
” (which contract
data, as pointed out above, exclude price adjustments).
Further,
clause 4.10
[21]
requires that
the rates and prices should be stated in the “
monetary
value of the contract unless otherwise instructed in the contract
data
”.
7.
If clarification of the tender documents was sought, this was a
“
tenderer’s obligation
” (clause 4.8, record
volume 2, page 231), whilst clause 4.14 (record volume 2, page
233) reads that tenders must “’
[A]ccept that tender
offers which do not provide all the data
or
information
requested, completely in the form required, may be regarded by the
employer as being non-responsive
”.
8.
SANS10845-3
then sets out the test for responsiveness in clause 5.8,
[22]
which
falls under the heading “
Employer’s
undertakings”:
5.8
Test for responsiveness
Determine,
after opening and before detailed evaluation, whether each
tender offer that was properly received
(a)
complies with the requirements of the standard conditions of
tender in this part of IS010845
(b)
has been properly and fully completed and signed, and
(c)
is
responsive to the other requirements of the tender documents.
A responsive tender is
one that conforms to all the terms, conditions and scope of work of
the tender documents, without material
deviation or qualification. A
material deviation or qualification is one which, in the employer’s
opinion, would
(d)
detrimentally affect the scope, quality or performance of the
works, services or supply identified in the scope of the work;
(e)
significantly change the employer’s or the tenderer’s
risks and responsibilities under the contract, or
(f)
affect the competitive position of other tenderers presenting
responsive tenders, if it were to be rectified.
Reject
a non-responsive offer, and do not allow it to be subsequently made
responsive by correction or withdrawal of the non-conforming
deviation or reservation
”.
[19]
The first
respondent appointed an expert panel to assess tenders submitted,
comprising of professional architects; its director
for
infrastructure; a professional engineer; a representative of its
department of architecture as well as a sustainability engineer.
[23]
This panel also obtained the views of an expert, one Jacquet,
[24]
on the materiality of deviations.
[25]
[20]
Four tenderers, including the applicant, were found to be
non-responsive. This is apparent
from the November 2018 Tender
Evaluation Report (redacted record pages 222 to 234). The reason
provided by the first respondent’s
panel was given as “
material
deviation
”.
[21]
The reason
for applicant’s non-responsiveness was ascribed to a
qualification expressed by the applicant with respect to clause
13.8
of the Contract Data, as follows:
[26]
“
8.
13.8
Our
price
includes
for
escalation
for
the
contract
duration,
provided that the contract is awarded
within two months of the date of the tender; failing which Haylett
provisions will apply from
the date of tender submission until the
award of the contract. If the contract completion is delayed beyond
the end of May 2020,
through no fault of our own, escalation of the
work completed beyond this date will apply
”.
[22]
The first respondent’s panel and the expert Jacquet (review
record, volume 2, page
385) regarded this as a material deviation.
The first respondent regarded this proposal from the applicant as
effectively proposing
an amendment to the tender conditions or
envisaged contract terms, which is prohibited in the tender
documentation incorporating
SANS10845-3.
[23]
According to the first respondent, the applicant’s tender
provided for escalation
both in the event of not being awarded
within two months of the tender, or if the contract completion was
delayed beyond the end
of May 2020. The first respondent was also
concerned by the applicant’s attempt to transfer risk back to
the applicant in
the event of a delay in completion beyond May 2020
“
through no fault of their own
” (pleadings record
court file 2, pages 516 and 517).
[24]
In the first respondent’s answering affidavit, paragraph 171
(pleadings record court
file 2, pages 517 and 518), the first
respondent’s stance is explained:
“
171.
By doing so the applicant was seeking to introduce price adjustments
specifically not contemplated
by the FIDIC Silver
Book and was attempting to transfer risks that the first respondent
had specifically transferred to the successful
bidder. Moreover,
there is a significant difference between delays caused by the
employer, and that caused through “no fault
of the contractor”.
In terms of the FIDIC Silver Book, if the employer through its fault
causes a delay, there would be a
claim for the contractor. However,
there are numerous circumstances beyond the control of both the
employer and the contractor,
such as labour strikes, unrest, weather,
etc. Under these circumstances the contractor has no claim in terms
of the FIDIC Silver
Book. The applicant, in terms of its amendment,
specifically sought to transfer these risks back to the first
applicant in direct
conflict of the terms of the
tender
”.
[25]
That the applicant has priced its bid to incorporate escalations is
common cause and was
confirmed in the applicant’s founding
affidavit (see paragraphs 30 and 31 of the founding affidavit –
pleadings record
pages 24 and 25).
[26]
That the Haylett Formula is a formula used by the South African
Institution of Civil Engineering
as being a formula for escalations,
is well known and is also common cause between the parties. The first
respondent’s stance
was that the unilateral incorporation of an
escalation formula in its tender submission by the applicant was
impermissible. The
proposal was also inconsistent with the
incorporated FIDIC Silver Book conditions. The applicant disagrees.
[27]
It is for the first respondent, as employer or institution inviting
the tender, and not
for this Court, to decide the prerequisites for a
valid tender.
Vide
:
Dr JS Moroka Municipality &
Others v Betram (Pty) Ltd & Another
[2014] 1 All SA 545
(SCA)
at paragraph [10], applied in
WDR Earthmoving
Enterprises & Another v The Joe Gqabi District Municipality &
Others (392/2017)
[2018] ZASCA 72
(30 May 2018)
at paragraphs
[29] and [30].
[28]
Whether or
not the applicant’s tender offer was correctly declared as non-
responsive, has to be evaluated from
such
a
perspective. A failure to comply with prescribed conditions –
or as
in
casu
,
to seek to unilaterally amend the terms and conditions of the tender
- would result in a tender being disqualified as an acceptable
tender
under the PPPFA,
[27]
unless
those conditions were immaterial, unreasonable or
unconstitutional (
WDR
Earthmoving
,
supra
,
paragraph [30]).
[29]
In casu
,
these conditions
[28]
which the
applicant sought to amend unilaterally, were evidently material,
reasonable and not unconstitutional. The first respondent
further had
no power to condone non-responsiveness – this is clear from the
test of non-responsiveness itself.
[29]
In any event, the incorporated SANS provisions make it clear in
paragraph 5.8
[30]
that it is
for the first respondent to decide whether in its
opinion
(and
not in the opinion of this Court) a material deviation as described
in paragraph 5.8, has occurred or is proposed.
[30]
There is no
irrationality in the first respondent’s view that the
applicant’s escalation proposal, and the insertion
of the rider
(relating to a delay) - “
through
no fault of our own
”
- significantly changed the employer’s risk. This is
objectively so, but it is not for this Court to second-guess
the first respondent’s assessment on
the basis
of correctness – the first respondent’s assessment was
bona
fide
and
honestly arrived at, was rational and
intra
vires
the
tender invitation, and was further lawful, reasonable and
procedurally fair, as contemplated by section 33(1) of the
Constitution.
This is moreover a review, and not an appeal. The focus
is on the process, not on the merits:
Shidiak
v Union Government
1912 AD 642
at
651 to 652. Whether or not the first respondent was correct or not,
is accordingly not the test.
[31]
[31]
In Part T2: “
Returnables
” (redacted record pages
97 and 98), any tenderer who wanted to record deviations or
qualifications was specifically referred
to clause
5.8
of SANS10845-3 “
regarding the employer’s handling of
material deviations and qualifications
”. As shown above,
clause 5.8 makes it clear, in imperative terms, that non-responsive
tenders should be
rejected
and that the first respondent had
no discretion in this regard.
[32]
The applicant does not explicitly challenge the finding or
declaration that its tender
offer was non-responsive in its notice of
motion. (Compare
WDR Earthmoving
,
supra
, in
which matter the finding that the appellant’s tender was non-
responsive, was pertinently challenged (see paragraph [10]
of the
judgment)).
[33]
The relief sought by the applicant in its notice of motion dated 29
July 2019 sought leave
that the matter be heard as one of urgency and
interim interdictory relief (which was neither attained, nor
agreed to at
the time of the postponement of the application to the
date of the hearing on 12 September 2019), which was aimed at:
(i)
interdicting and restraining the first respondent from “concluding
an agreement with the second
respondent pursuant to the award
of the tender (tender number T702/2270) in respect of the
engineering, procurement and construction
of student residences, July
2018, or implementing any agreement concluded between the respondents
pursuant to the award of the
tender, or instructing the second
respondent to carry out any work pursuant to the award of the tender;
(ii)
interdicting and restraining the second respondent from carrying out
any work pursuant to the award of the
tender, pending the
“
finalisation of the application
”.
[34]
The relief sought in paragraphs 7 to 10 of the applicant’s
notice of motion reads
as follows:
“
7
THAT
the decision of the First Respondent to not accept the
tender offer of the Applicant in respect of the tender,
Contract
No. T702/2270, for the engineering, procurement and
construction of student residences, and the failure to award the
tender to
the Applicant, be reviewed, set aside and substituted with
an award of the tender to the Applicant, be reviewed, set aside and
substituted with an award of the tender to the Applicant in terms of
Section 8(1)(c)(ii)(aa) of the Promotion of Administrative
Justice
Act No. 3 of 2000 (“PAJA”) and that this Order serves as
the First Respondent’s acceptance of the Applicant’s
Form
of Offer and
Acceptance.
In
the alternative to paragraph 7 above
-
8
THAT
the decision of the First Respondent be reviewed, set
aside and remitted back to the First Respondent for reconsideration
in terms
of Section 8(1)(c)(i) of the Promotion of Administrative
Justice Act No. 3 of 2000 (“PAJA”), subject to the
following
directions:
8.1
the First Respondent shall within five (5) days of this Order,
request all Tenderers who submitted responsive tender offers, to
extend to the validity period of their tender offers for such period
as the First Respondent considers necessary to reconsider the
tender
offers;
8.2
such further directions as this Honourable Court may deem
appropriate.
9
THAT
the First Respondent be ordered to pay the costs of this
Application.
Alternatively
–
10
In the event of the Second Respondent opposing this
Application, that the Respondents, jointly and severally, be ordered
to pay
the costs of this Application, the one paying, the other
to be absolved
”.
[35]
Applicant’s counsel, Adv Beyleveld SC assisted by Ronaasen SC,
intimated at
the commencement of their address that the
applicant no longer sought a substituted award in terms of section 8
of PAJA; only the
setting aside of the tender award was sought, with
the process having to commence afresh if the applicant succeeded.
[36]
The first respondent’s counsel, Adv Du Plessis SC, assisted by
Adv Thobela- Mkhulisi,
indicated that:
(i)
the first respondent never agreed to any interdictory relief and only
agreed to truncated time periods for
the exchange of affidavits in
order to facilitate an expedited hearing – the applicant itself
then decided not pursue the
interdictory relief sought (see paragraph
3(c) on page 559);
(ii)
the second
respondent, which does not oppose the review, made it clear through
its attorneys Baker McKenzie that the second respondent
refused to
agree “
to
the suspension of the award made under the tender
”.
The second respondent motivated its stance by referring to
engagements with suppliers (including overseas suppliers) to
manufacture and deliver materials, requiring a long lead time if the
tender deadlines are met; to municipal approvals having already
been
obtained and to a workforce which was already mobilised, which
included “
increasing
its staffing complement for purposes of carrying out the Tender as
per the fixed time period and price
”;
[32]
(iii)
With
reference to a further Baker McKenzie letter of 15 August 2019
(record page 559), it was confirmed that the first and second
respondents have already entered into a contract,
[33]
recorded in a letter from the first respondent’s attorneys
dated 27 August 2019 (pleadings record pages 562 to 563);
(iv)
the applicant has declined an invitation to cover the damages which
the respondents might suffer “
caused directly by the
application being launched
” – see the pleadings
record pages 562 and 563 read with the applicant’s response on
page 566;
(v)
to add to the existing financial and litigation pressures, second
respondent’s attorneys added oil to
such simmering fire, by
recording that costs running into millions of rands have already been
incurred by the second respondent,
or were to be incurred
“
imminently
”, which included R8 million in respect
of project design; R15 million in respect of formwork and another R15
million in respect
of plumbing and sanitaryware.
[37]
Not only did the applicant not persist in seeking interdictory
relief, but it did not pertinently
seek:
(a) the
review of its disqualification on the ground of being non-responsive;
(b) the
setting aside of the award to the second respondent
(c)
the setting
aside of the concluded contract between the first and second
respondents.
[34]
[38]
Paragraph 7 of applicant’s notice of motion is aimed at seeking
the review of the
first respondent’s “
decision to not
accept the tender offer of the applicant in respect of the tender
”.
The further component of paragraph 7 of the applicant’s notice
of motion, namely aimed at being awarded the tender,
was abandoned at
the hearing, as previously mentioned. The relief in paragraph 8 is in
the alternative to paragraph 7. The decision
referred to in paragraph
8 is still the same decision as referred to in paragraph 7 –
the relief sought is just couched in
different terms. The first
respondent understandably referred to this narrow basis of the relief
sought by the applicant and argued
that the applicant should not be
allowed to generally “
throw darts
” at the award
made by first respondent to the second respondent.
[39]
This Court shall nonetheless not limit itself to the issue whether
the applicant’s
tender was validly regarded as non-responsive
and accordingly disqualified, but will also consider whether the
applicant has established
on its papers that the award to the second
respondent should be reviewed and set aside. The first substantive
issue has already
received attention, and shall be reverted to
shortly. A preliminary issue raised by the first respondent regarding
an alleged lack
of urgency and a related issue of delay, requires
attention. First respondent avers that any alleged urgency was
self-created by
the applicant, ascribable to an undue delay on the
part of the applicant in instituting these proceedings.
[40]
The first respondent emphasises the factual context, especially the
funding dimension,
as well as the socio-economic and political
dimension, and criticises the applicant for having procrastinated
before launching
its application. According to the first respondent,
the applicant’s use of the Promotion of Access to Information
Act 2 of
2000 (“
PAIA
”) was unnecessary and nothing
but a fishing expedition, aimed at hopefully netting an irregularity.
[41]
There may
be some merit in some of the criticisms levelled at the applicant in
this regard, but in my view, the applicant should
not be non-suited
by reason of an alleged undue delay in the particular circumstances
of this matter. Although the applicant might
already have learned of
its disqualification on the basis of non- responsiveness during early
June 2019, its somewhat cautious
approach before launching
[35]
was not necessarily imprudent, as was its use of the statutory
information gathering mechanism of PAIA. The applicant furthermore
did institute this PAJA review within the 180-day time bar
period contained in section 7(1) of PAJA. The standard of assessing
delay in both PAJA and legality reviews, is whether the delay
was unreasonable.
Buffalo
City Metropolitan Municipality v Asla Construction (Pty) Ltd
2019 (4)
SA 331
(CC)
at
paragraph [49]. In my view, the applicant did not
unreasonably
delay
the institution of this review
application.
[42]
A degree of
urgency evidently attaches to the matter – this is clear from
all the letters exchanged between the attorneys
representing the
applicant and both respondents – and the delay cannot in the
circumstances be regarded as so inordinate
to effectively result in
the dismissal of the application on this ground,
[36]
notwithstanding
the admittedly relevant pressing factors previously
mentioned.
[43]
Which
brings one back to the applicant’s tender disqualification. Was
applicant’s tender lawfully (or
validly)
regarded as non-responsive? In my view,
it was. The
applicant’s tender did not adhere to the “
conditions
”
[37]
of tender, or to the tender terms. Compare:
Aurecon
South Africa (Pty) Ltd v Cape Town City
2016 (2) SA 199
(SCA)
.
[38]
[44]
The
applicant’s tender price was subject to escalation and its
proposal did amount to a rather open-ended transfer of risk
to the
first
respondent.
[39]
[45]
The opinion formed by the first respondent that the applicant’s
tender proposal
was non-responsive within the meaning of clause
5.8 of SANS10845-3, cannot, in the view of this Court, be faulted,
having been
rationally arrived at
intra vires
the provisions
of the tender documentation.
[46]
In any event, no reviewable irregularity as required by section 6 of
PAJA read with section
33 of the Constitution, was established by the
applicant. To the contrary, the first respondent’s panel acted
lawfully, reasonably
and procedurally fairly in its assessment of the
responsiveness of all the tenders received. The validity of the
evaluation methodology
which was utilised, was furthermore never in
issue.
[47]
Accordingly, absent a finding of an established reviewable
irregularity in terms of PAJA
in respect of the responsiveness
assessment, the decision of the first respondent to treat the
applicant’s tender as non-responsive
and to reject same in
terms of clause 5.8 of SANS10845-3, must stand. This finding disposes
of the main thrust of the applicant’s
case.
[48]
Is there
any merit in the applicant’s broader challenge, assuming
[40]
that its notice of motion and founding papers have properly
ventilated such
broader-based
challenge, namely that the first respondent’s award of the
tender to the second respondent should be set aside?
[49]
Some of the applicant’s contentions can be dealt with swiftly.
The applicant’s
purported reliance on a so-called “
warranty
”,
interchangeably referred to as a “
guarantee
”, that
the tender would have been awarded by a fixed date, is hardly
consistent with its simultaneous incorporation of the
Haylett formula
and escalation provision. In paragraph 26.6 of the applicant’s
founding papers, De Beer asserts:
“
As I understood
it
(referring
to a clarification meeting held on 2 August 2018 – pleadings
record pages 21 and 22)
there
was an undertaking in the form of a
guarantee
[41]
that the
award would be made by the 20th December 2018, to enable the
project to proceed on a fast-track basis, in order
to achieve the
completion date of 30th May 2020
”.
In
paragraph 30 of the founding papers,
[42]
it is asserted by De Beer that the applicant presented its bid
“
specifically
on the basis of a
warranty
that
the tender award would be made on the 20th December 2018
”.
[50]
This reliance on such an alleged “
guarantee
” or
“
warranty
” is irreconcilable with the applicant’s
incorporation of an escalation provision as formulated. Further, the
breach
of a warranty or guarantee in the correct legal sense (i.e. as
used in the law of contract) would have entitled the applicant to
exercise an election on 21 December 2018, to sue the first respondent
for contractual remedies, such as specific performance, or
to elect
to resile and sue for damages arising from the alleged breach of a
“
guarantee
” or “
warranty
”. This
did not occur. These allegations, contained in a founding affidavit,
which simultaneously constitutes a pleading and
contains the evidence
(
Transnet Ltd v Rubenstein
2006 (1) SA 591
(SCA)
at
600), were either without substance or in any event, legally
inappropriate. Irrelevant allegations or inappropriate “
labels
”
do not belong in founding affidavits.
[51]
Fortunately,
applicant’s counsel did not press the warrantee/guarantee
contention during argument. This was prudent, because
this
guarantee/warranty contention simply bolstered first respondent’s
argument on the delay/urgency issue. Had such a cause
of action
indeed arisen by 21 December 2018, and had applicant persisted with
the concept of a breach of contract giving rise to
an administrative
remedy, then the delay in only instituting the application on 31 July
2019 would have been much more significant.
[43]
Such a perceived cause of action could also have been promptly
disposed of by way of a circumscribed legal argument. But
this bullet
was a blank, was going nowhere and was correctly discarded by
applicant’s counsel.
[52]
The applicant further contends that a procedural irregularity
occurred which invalidated
the tender process, when the first
respondent requested all tenderers to extend the validity period of
their tender offers. In
paragraphs 34 and 51.1 of its founding papers
(pleadings record pages 27 and 39), the applicant accuses the first
respondent of
having acted unfairly by having requested the applicant
to extend its tender offer whilst it was found to have been
non-responsive.
In paragraph 65 (pleadings record page 45)
applicant’s deponent
inter alia
asserts:
“
In
breach of its duty to be transparent that tenderers had been
disqualified, it in fact invited the applicant to extend its tender
validity, in April 2019, having already disqualified the applicant in
November 2018
”.
[53]
In paragraph 23.2 of the applicant’s supplementary affidavit
(page 359), it is asserted
that this non-notification was
“
deliberate
”. These assertions are all denied by
the first respondent. The request for an extension of the validity
period of all tenders
is logically explained in the first
respondent’s answering papers, paragraphs 161 and 162
(pleadings record pages 515 and
516), and also in paragraph 255 of
the answering affidavit (page 543).
[54]
The Tender
Data (Part 71.2 – redacted record pages 92 to 95) in paragraph
4.16.1
[44]
, reflect that the
“
tender
offer validity period is twenty four (24) weeks
”.
The Tender Data also provide, as already mentioned, that the
applicable conditions of the tender are the Standard Conditions
of
Tender as contained in the latest edition of SANS10845-3. The
applicable version of SANS10845-3: 2015, provides in clause
5.16
firstly, that a successful tenderer had to be informed of success
before the expiry of the tender validity period
, but secondly,
also requires that unsuccessful tenderers should
only
be
informed that their tender offers were not accepted
after
the
successful tenderer had been notified (redacted record page 129).
[55]
Such a contractually permissible extension of the tender validity
period is also contemplated
in clause 4.16.1 of SANS10845-3 (redacted
record page 122). Contained under the heading “
4. Tenderer’s
Obligations
”, clause 4.16.1 relates to the period of
validity and reads:
“
Hold
the tender offer(s) valid for acceptance by the employer at any time
during the validity period stated in the tender date after
the
closing time stated in the tender data. If requested by the employer,
consider extending
[45]
the
validity period stated in the tender data for an agreed
additional period, with or without
any
conditions attached to such an extension.
Extend
the period of the tender security, if any, to cover any agreed
extension requested by the employer
”.
[56]
Contractually, the first respondent therefore had a right, clearly
spelled out, to extend
the tender period. Administratively, the
extension of the tender validity period was
intra vires
the
powers of the first respondent
ex facie
the conditions of
tender.
[57]
The validity period
in casu
would have expired by 11 April
2019 (review record bundle 2, page 458), but because the successful
tenderer had by then not been
identified,
all
the tenderers
were requested to extend their tender validity periods to 6 June 2019
at 12h00 (answering affidavit pages 515 to 516,
paragraphs 161 and
162; redacted record pages 257 to 261).
[58]
The importance of extending a tender validity period is evident from
Telkom SA Ltd v Merid Trading (Pty) Ltd 2011 JDR 0004 (GNP)
,
followed and applied in this division in
Joubert Galpin Searle
Inc and Others v Road Accident Fund and Others
2014 (4) SA 148
(ECP)
,
and referred to (but distinguished on the facts) in
Trencon
Construction (Pty) Ltd v Industrial Development Corporation of South
Africa Ltd and Another
2015 (5) SA 245
(CC)
at paragraphs
[79] to [81].
[59]
This Court finds that no reviewable irregularity was committed in the
extension of the
tender offer validity period by the first
respondent.
[60]
The applicant contended further that the first respondent
impermissibly extended the scope
of the contract (see applicant’s
supplementary affidavit, pages 350 to 352, paragraphs 10 to 15).
First respondent denies
this allegation and asserts that at no stage
was the substance of the bid altered by the first respondent. In
paragraph 235 of
first respondent’s answering affidavit (record
page 537), the point is made that although the initial phase
related
to 500 beds, an extension to 1800 beds was expressly
foreshadowed in the tender documentation. This is factually correct.
[61]
The Tender Notice and Invitation to Tender, Part T1.1 (redacted
record page
90) contain(s) the following introductory
paragraph:
“
Nelson Mandela
University (NMU) hereby invites tenders from experienced and capable
building construction entities for the design,
engineering,
procurement and construction of new student residences (500 beds)
within the NMU Campus, situated in Summerstrand,
Port Elizabeth.
As
more funding becomes available, the Contract and Works may be
extended to accommodate additional students as well as additional
student accommodation facilities, to a total of 1800 beds
”.
[46]
[62]
Part C2.3 –
Pricing Schedules / Bill of Quantities (redacted record page 99)
provides
inter
alia
,
with reference to “
later
”
or “
further
”
negotiations, that “
[A]s
more funding becomes available, it is the Employer’s intention
to negotiate the construction of additional
beds and
facilities
.
This
Schedule will provide a basis to negotiate this additional scope
”.
[47]
[63]
Part C3.1 – Description of the Works (redacted record page 102)
contains an italicised
passage providing unequivocally:
“
Th(r)ough
a negotiated process with the successful Contractor, the Contract and
the Works on this site may be extended to accommodate
an additional
300 students as well as additional student accommodation facilities
on other sites on the Campus (total of 1800 beds),
should more
funding become available
.
[48]
It
should be noted however that the bulk electrical, bulk earthworks,
storm water and fencing design and implementation will need
to be
undertaken for the entire erf 1904 (800 beds), regardless of an
extension being negotiated
”.
[64]
It was no surprise that applicant’s counsel had little appetite
for this point, which
was only developed by the applicant in its
supplementary affidavit on sweeping grounds, without sufficient
consideration
having been paid to these express provisions in the
tender documentation.
[65]
All the tenderers were fairly and transparently informed of the
possibility of the envisaged
extension of the works, subject to more
funding becoming available. There is also no substance in
this challenge to
the tender process.
[66]
This brings one to the applicant’s main, remaining argument at
the hearing, albeit
in the context of linking the argument to the
requirements of section 217 of the Constitution.
[67]
In applicant’s papers, it is contended that the tender process
was vitiated by reason
of “
pre-award negotiations
”.
In the founding papers, the deponent De Beer states, in paragraph
35.1, that he had heard “
rumours
” during February
2019 that the first respondent was in a negotiation with the second
respondent (pleadings record page 27).
He admits that these “
rumours
”
were “
speculative
” and “
led me to believe
that the second respondent was engaging with the first respondent and
amending its bid by way of a negotiated
process
”. De Beer
then asserts that the first respondent “
has conducted itself
contrary to the empowering provisions, having communicated and
negotiated with the second respondent, prior
to making the award in
order to reduce
the
fixed
price
tender
for
500
beds,
which
is
prohibited
in
terms
of
clause
5.7.2
of its SCMP
”.
It is asserted that the said clause only allows clarification of
aspects of bids, and that the negotiations had the effect
that second
respondent was afforded an “
unfair
”
advantage to the detriment of the applicant and other tenderers. In
paragraph 45 of the founding papers,
[49]
the applicant asserts that “
[L]ittle
more needs to be said about the First and Second Respondents’
negotiations, which are prohibited in terms of the
empowering
provisions, as read with section 217 of the Constitution referred to
above and thus renders the entire process unlawful
and invalid
”.
[68]
In applicant’s supplementary affidavit (pleadings record pages
347 to 365 excluding
the annexures), it asserts that “
a
perusal of the Record re-affirms that: 8.1 the First Respondent was
intent on proceeding with the construction of student accommodation
at its Summerstrand, Port Elizabeth (1800 beds) and George (200 beds)
campuses; 8.2 in respect of Summerstrand the construction
would be
undertaken in 3 phases
” and then avers, in paragraph 10.3
(page 351)
inter alia
that: “
[S]ubstantial contracts
awarded by way of negotiation rather than through a transparent
procurement process would be highly irregular
in the circumstances
”.
But, as will be shown below, the tender invitation did inform all
tenderers about the envisaged extension of the
Works and about
envisaged negotiations with the successful tenderer or “
contractor
”
after the tender adjudication process.
[69]
The first
respondent’s procurement policy (referring to paragraph 5.7.6
of the Supply Chain Management Policy of the first
respondent), reads
as
follows:
[50]
“
5
.
7.6
Negotiation
All
tenderers shall be informed in the request documents that they must
submit their best prices as Nelson Mandela University will
not enter
into negotiation with service providers. However, the Nelson Mandela
University may negotiate post award with the successful
service
provider
”.
[70]
The
applicant contends that this means that negotiations could only take
place
after
the
tender had already been formally
awarded, without any final negotiations on
critical
aspects such as the price being allowed whatsoever prior to such a
formal award. The first respondent avers that such
an interpretation
would result in a commercial absurdity (answering affidavit page 490,
paragraph 100.7). The first respondent
refers further to case law in
support of its argument that negotiations with preferred bidders are
not unlawful if provision therefor
was made in the tender
invitation.
[51]
[71]
The first respondent also denies as a matter of fact that there is
any substance
to this ground, by way of a multi-pronged
defence. The first respondent denies that the first and second
respondents were engaged
in pre-award negotiations from
November 2018. In the answering affidavit, it is stated that although
the second respondent
was identified as the preferred bidder during
November 2018 (page 513, paragraph 154.8), negotiations only
commenced in February
2019, after the management committee of the
first respondent gave approval for negotiations with the preferred
bidder on 15 January
2019 (page 514, paragraph 15). In terms of the
applicable approach to factual disputes of this nature, as laid down
in
Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd
1984
(3)
SA 623 (A)
, this must be so accepted in favour of the first
respondent.
[72]
The first respondent further emphasises that the relevant policy is
but one document of
various relevant documents and legal instruments
which must be considered. The logical point of departure is the
tender invitation
document, and the tender documentation collectively
comprising the tender process. Reference has already been made to the
Tender
Data, which provides that the conditions of tender are the
Standard Conditions of Tender in SANS10845-3 (T1.2, page 92). Under
“
General
notes
to
tenderers
” (redacted record page 85), reference is
made to the means by which a preferred tenderer will be identified in
a competitive
selection process and provides that preferred bidders
will be identified for each successive round of negotiations in the
competitive
negotiation procedure.
[73]
The first
respondent argues that the applicant fails to interpret its Supply
Chain Management Policy (“
the
Policy
”)
correctly, or does so selectively. The reference to “
post
award
”
and to “
the
successful service provider
”
can be sensibly interpreted to refer to negotiations after a fair
tender process was held, with the identified preferred
bidder. This
accords with the underlying purpose of this provision of the Policy,
read and understood in its proper
context.
[52]
[74]
It further
appears that the express incorporation of the PPPFA into the Policy
itself, might have received inadequate attention.
In the Preamble of
the Policy itself (redacted record page 35), under the heading “
Open
and Effective Communication
”,
reference is made to the requirement of “
Observance
of the provisions of the
Preferential Procurement Policy Framework
Act
&rdquo
;.
It makes reference
[53]
to the
applicability of section 217 of the Constitution “
and
(states)
that the
Preferential Procurement Policy Framework Act may
be applied on a
voluntary basis
”.
Paragraph
1.3.1
of the Policy (redacted record page 38) makes it clear that the
principles of i
nter
alia
the
PPPFA, apply “
and
its regulations
”.
[54]
[75]
Regulation 7(9)(a)
indicates that if a tender scoring the highest
points is not “
market-related
”, then a
market-related price may
inter alia
be negotiated with the
tenderer scoring the highest points, or the tender may be cancelled.
[76]
There is merit in Mr Beyleveld’s assertion that this particular
regulation presupposes
that the bid of the successful tenderer should
not have been market- related, to which contention Mr Du Plessis
rhetorically posed
the question: but what does “
market-related”
really mean in circumstances where the first respondent is
dependent upon uncertain government funding? There is no open market
in such a setting, in the sense of a commercial market. The
availability of government funding is a clear constraint, as is the
limited funding capacity of the first respondent itself.
[77]
The
applicant’ further persisted in its assertion that the
“
negotiated
process with the successful Contractor
”,
referred to in C3.1.2
[55]
had
to be interpreted literally and restrictively, as being a reference
to a
contractor
to whom an award has been made
and
could not be interpreted as referring to a preferred bidder (see
replying papers, pages 687 and 688, paragraphs 29.5 and 29.6).
I
disagree. These words must be interpreted in its actual context. The
wording forms part of the tender invitation and tender documentation,
which provide that negotiations with the preferred bidder were
envisaged after the tender adjudication process had been completed,
but
prior
to final contracting
.
To interpret the words restrictively in the manner as suggested by
the applicant, would lead to impractical and unbusiness-like
consequences.
[78]
To equate the word “
contractor
” with the word
“
tenderer
”, in this particular context, does not
seem to me to strain the import of the relevant passage at all. A
“
successful contractor
” is not open for only such
a narrow interpretation, namely to mean a tenderer to whom a contract
has already been awarded,
or with whom a contract has been concluded.
The word “
contractor
” in this sense rather has a
generic meaning in the particular
context, and includes
a tenderer,
supplier or potential service provider, in my view. And to have been
identified as “
successful
”, does not necessarily
imply that a contract should have been awarded or concluded.
[79]
The applicant also sought to place reliance on the Implementation
Guide to the PPPFA published
in March 2017 in paragraph 34 of its
replying papers (pleadings record page 690). The applicant admits in
paragraph 33.2 of its
replying affidavit (pleadings record 689) that
“
the PPPFA is incorporated by reference in the SCMP
”.
The applicant then avers that although the PPPFA is incorporated by
reference, it does not impose or grant the first respondent
“
automatic rights or obligations
”. This assertion
is somewhat difficult to understand, but fortunately the applicant
then proceeds to state as follows in
paragraph 34.3 of its replying
affidavit:
“
In
the Implementation Guide to the PPPFA published in March 2017,
section 19
thereof prescribes that institutions may include in their
supply chain policies a process for negotiating a fair market related
price after a competitive bidding
process
”.
This
is an important admission.
[80]
However, the applicant asserts that “
[T]his process is
limited only to a fair market related price and may not allow a
preferred tenderer a “second or unfair opportunity
”,
or to be to the “
detriment of any other
tenderer”
”.
[81]
The applicant itself then attaches an extract of the Implementation
Guide: Preferential
Procurement Regulations 2017. Paragraph 19 does
contain a heading with the wording “
Negotiating a fair
market related price
”. The applicant has latched onto this
heading and contends that the first respondent has not alleged that
the tender bid
of the second respondent was not market related. Such
an argument attaches a commercial meaning to the concept of “
market
related
” in a setting in which the first respondent was
dependent upon government funding to implement a project in the
interests
of the student community and the
public. First respondent itself has limited funds. The “
benchmark
”
(cost) or targeted cost had to be approved by the responsible
minister and the Department. The “
benchmark
” or
targeted cost was not determined by way of free-market demand and
supply concepts. If anything, the first respondent,
and obviously the
government, would rather want the second respondent, as the preferred
bidder, to provide the beds at the first
respondent’s campus,
more cost-effectively. Final price negotiations with the preferred
bidder, prior to finally contracting,
would achieve this.
Obviously the process still had to be lawful, reasonable and
procedurally fair and compliant with section 217,
but this is surely
a more practical and business-like interpretation. The adjective
“
fair
” links the description of “
market
related
” to both section 217 and section 33 of the
Constitution. What the concept “
market related
”
really means in such a setting, given the absence of a clear market
affected by ordinary market factors, is certainly open
to different
views, as has been mentioned previously.
[82]
For the applicant to criticise the first respondent for not having
addressed this point
in more detail in its papers, ignores the fact
that the main thrust of the applicant’s belated reliance on
these provisions
of the Implementation Guide, only forms part of the
applicant’s
replying
papers.
[83]
In any event, the actual content of clauses 19.1 and 19.2 rather lend
support to the first
respondent’s contentions, because they
read as follows:
“
19.1
Institutions may include in their SCM policies a process for
negotiating with preferred bidders after a competitive bidding
process or price negotiations. The policy may include amongst others
the following principles:
(a)
Delegations and threshold values for negotiating by the
accounting officer
(b)
Negotiating may not allow any preferred tenderer a second or
unfair opportunity
(c)
Is not to the detriment of any other tenderer
(d)
Does not lead to higher price than the bid as submitted.
19.2
Institutions must include in the tender documents a condition stating
clearly that the award of the tender may be subjected
to price
negotiation with the preferred tenderers
”.
[84]
Price negotiation with preferred bidders is explicitly allowed.
Paragraphs 19.1 and 19.2
quoted above, furthermore implicitly do make
allowance for price negotiations with preferred bidders in
circumstances such as those
in casu
, where the tender
documentation
did
provide for such negotiations. Accordingly,
the applicant’s purported reliance on the implementation guide
to the PPPFMA Regulations
does not offer assistance to the applicant.
If anything, these provisions support the approach of the first
respondent. As will
be shown below, no “
second or unfair
opportunity
” as envisaged in paragraph 19.1 above was
established on the papers. The first respondent convincingly shows in
its papers,
that a more cost- effective price per bed was achieved
during such negotiations with the second respondent as preferred
bidder,
not a higher price than the bid as submitted.
[85]
Competitiveness
was
still kept in mind, as well as price
effectiveness. On the undisputed facts (and keeping
Plascon-Evans
in mind), the papers show that by the time that the pre-award
negotiations began, there were two preferred bidders: the second
respondent
and Transtruct, but with the second respondent’s
tender offer being R55 million
cheaper
than the tender offer
of Transtruct (answering affidavit, page 513, paragraph 154.7).
[86]
The award
to the second respondent was only communicated to the second
respondent on 30 May 2019.
[56]
The first respondent explains in its answering affidavits that
such pre-award negotiation with
the
preferred bidders yielded a reduced price in relation to
the expanded project.
[57]
According to the first respondent the negotiated bid was
[58]
more favourable to the first respondent to accommodate its limited
funds, and price wise more advantageous to the State as the
public
funder as well.
[87]
Not only
does
Plascon-Evans
apply
from a procedural perspective, but the applicant has not shown,
despite analysing the voluminous documentation making
up the
review record, that the result achieved by the first respondent
through its negotiations with the second respondent after
a fair
adjudication process had been conducted substantively, resulted in a
result which fell foul of the principles enunciated
in section 217 of
the Constitution.
[59]
[88]
The
contract between the first and second respondents itself was
negotiated
after
the
awarding phase, and was only signed on 16 July 2019 (answering
papers, page 500, paragraph 128). The benchmark cost,
[60]
which was the targeted cost, had previously required (and indeed
received) the approval of the Department. The process followed
met
all the requirements of section 217, and was conducted fairly,
transparently, competitively and also cost-effectively in that
the
best price was achieved.
[61]
[89]
The first respondent has gone to great lengths in its papers to
demonstrate the objective
benefits or savings achieved per bed
as a result of such negotiations with the preferred bidder (answering
papers, pages 504 to
507).
[90]
In paragraph 141.1 of the answering papers (record page 506), first
respondent states as
follows:
“
141.1
Ultimately the project was brought within the
benchmark by removing
from the total project value, the amount of some R23.9 million
relating to infrastructure and services relating
to the entire
campus… resulting in a total development cost to be funded
from the IEG grant of R599 for 2000 beds (including
George campus of
200 beds)… This was in line with the cost framework approved
by the DHET on 6 March 2019
”. (This is a reference to a
letter signed by Mrs Pandor
qua
responsible Minister at the
time – AA13, pleadings record page 603).
[91]
In
Aurecon South Africa (Pty) Ltd v Cape Town City
2016 (2) SA
199
(SCA)
, clause F.4.2 of the Standard terms of Contract
made provision for negotiations with preferred tenderers after a
“
competitive tendering process
”, provided that
such negotiations:
(a) does not allow
any preferred tenderer a second or unfair opportunity;
(b) is not to the
detriment of any other tenderer; and
(c)
does not
lead to a higher price than the tender as submitted.
[62]
In
paragraph [27] of the
Aurecon
judgment,
the following is
stated:
“
The similarly
worded clause 231 of the SCMP grants the City Manager the same right.
These provisions make clear that the mere proposal
of qualifications
cannot in itself render a bid non-responsive. It was common cause
that when Aurecon was asked to withdraw its
qualifications it had
become the City’s preferred tenderer. In that case the City was
entitled to negotiate the final
terms of the contract with it.
Needless to say, the other tenderers had already
been
eliminated
from
the
process
in
the
initial
evaluation
for
failing
to
meet
the
relevant eligibility criteria. There would, therefore, have been no
room to negotiate anything with them. In any event, it is
not known
what amendments they should have been allowed to make, so it is not
possible to determine if the BEC could have exercised
its direction
in their favour
”.
[63]
[92]
In the matter of
South African Container Stevedores (Pty) Ltd v
Transnet Port Elizabeth Terminals and Others 2011 JDR 0357 (KZD)
at
paragraph [72], Ndlovu J held that “
[T]he concept of
post-tender negotiations is not uncommon in public tender dealings
and has been found to be a legally acceptable
practice as long as, it
seems to me, it is included in the tender document as a requirement
in the tender process
”.
[93]
On the facts of this matter, the tender documentation
did
refer
all the tenderers to the envisaged expansion of the works; to
the government funding constraints; to the first respondent’s
own funding constraints and importantly, to the envisaged pre-award
price negotiations.
[94]
First respondent’s counsel has argued, with respect to the
effect of the negotiations
with the preferred bidders, that on the
papers the first respondent has shown that savings were achieved to
the advantage of the
first respondent, its student body, and
ultimately also the government who “
stood in the wings to
disburse public funds towards student housing
”. Having
regard to the first respondent’s papers, he is correct.
[95]
The applicant has not established that the first respondent was
allowed a second or unfair
opportunity; that such negotiations were
to the detriment of the applicant or other tenderers or led to a
higher price than the
tender as submitted.
[96]
The applicant has not shown that the negotiations with the second
respondent as preferred
bidder, and the outcome of such negotiations,
constituted a reviewable irregularity in terms of section 6(2) of
PAJA, if this Court
evaluates the process which was followed (as
described in the papers and applying
Plascon-Evans
),
against the constitutional yardstick of section 217.
[97]
The
applicant suggested finally, that because the second respondent’s
B- BBEE submitted certificate had expired, the second
respondent’s
tender offer was defective (this is a point proferred in paragraphs
18.1 and 18.2 of the applicant’s supplementary
affidavit,
pleadings record pages 354 to 355). However, the PPPFA regulations
6(3) and 6(4)
[64]
provide that
a tenderer who fails to submit such proof may
not
be
disqualified, but may only “
score
points out of 80 for price
”,
but “
scores
0 points out of 20 for “B-BBEE
”.
And this is precisely what happened: the second respondent
did
score
zero for B-BBEE. There is accordingly no substance in this point,
which was correctly not advanced at all during oral argument
presented on behalf of the applicant.
[98]
The applicant’s primary problem was to overcome the hurdle of
its own disqualification
for non-responsiveness. The Court has found
that the applicant has not, for the reasons as explained above,
succeeded in surmounting
this hurdle.
[99]
This first
hurdle became a stumbling block, because the applicant’s tender
offer did
not
comply
in all respects with the first respondent’s tender
requirements. This determination was objectively and even-handedly
arrived at by a panel of experts during a fair adjudication process.
The expert panel – whose views must be accorded a degree
of
judicial deference
[65]
–
fairly and impartially assisted the first respondent, which formed an
opinion that the applicant’s tender offer did
not meet the
definition of responsiveness in terms of the conditions of
tender.
[100]
Whether or
not the Haylett formula is a standard escalation formula and whether
or not the applicant’s tender price would
have escalated or not
if the tender was awarded earlier, misses the point. The escalation
provisions and the risk responsibility
proviso which was incorporated
in the applicant’s tender offer, were simply not in line with
the tender invitation and with
the tender provisions which included
the FIDIC Silver Book. Non-responsive tenders, such as the
applicant’s, had to
be rejected. There was also no
equitable
audi
-principle
or rule in play, somehow obliging the first respondent to assist the
applicant in making its non- responsive tender,
responsive – to
the contrary, the first respondent had no such power or
discretion.
[66]
It had a duty
to reject non-responsive tender offers such as the tender offer of
the applicant.
[67]
These
findings dispense with the main relief sought by the applicant, which
cannot be granted.
[101]
Insofar as the applicant has also challenged the award of the tender
to the second respondent on broad grounds,
this Court finds that the
process which was followed by the first respondent did comply with
the requirements of the tender documentation
and with the legal
requirements of the applicable legal framework, including those
contained in section 217 of the Constitution.
[102]
Consequently, the relief sought by the applicant (in paragraphs 7
(as amended from the bar) and 8)
cannot succeed. The ancillary
interdictory relief initially sought, has already fallen by the
wayside.
[103]
In the circumstances, the application is dismissed with costs,
including the costs of two counsel.
Swanepoel
AJ
Dated:
30 September 2019
APPEARANCES:
FOR
THE APPLICANT:
AdvA Beyleveld SC and Adv O.H.
Ronaasen
SC, instructed by Friedman Scheckter Attorneys
FOR
THE 1
st
RESPONDENT: Adv
M Du Plessis
SC and Ms J.Y.
Thobela-Mkhulisi,
instructed by Joubert Galpin Searle Incorporated
FOR
THE 2
nd
RESPONDENT: Baker
McKenzie
Attorneys
No
appearance (a notice to abide was delivered)
[1]
Each ringbinder containing hundreds of pages, but not consecutively
indexed and paginated with one consolidated index.
[2]
Pleadings record (hereinafter referred to as “the pleadings
record”) page 58 – the separate “
redacted
record
”
will be identified as such, for the sake of clarity. The full review
record, contained in seven ringbinders, will be referred
to as “
the
review record
”.
[3]
Such as the first respondent.
[4]
Ms Pandor’s approval of 6 March 2019 appears as ”AA12”
to the answering affidavit, page 603.
[5]
Pleadings record page 468, paragraph 45.
[6]
Pleadings record page 468, paragraph 46, with reference to “AA9”.
[7]
Pleadings record page 469, paragraph 50.1
[8]
Page 470.
[9]
Pleadings record page 471, paragraph 56.
[10]
Also referred to as DHET in the papers
[11]
Pleadings record page 473, paragraph 62
[12]
The Court was informed from the bar, that moulds were
inter
alia
being
manufactured in Turkey for the turnkey-project.
[13]
Pleadings record page 473, paragraph 63.
[14]
Pleadings record pages 473 to 475
[15]
Pleadings record pages 479 to 482.
[16]
Redacted record page 99.
[17]
Pleadings record page 129.
[18]
Review record, bundle 2, page 226
[19]
Pleadings record volume 2, page 228.
[20]
Pleadings record volume 2, page 232.
[21]
Pleadings record volume 2, page 232.
[22]
Redacted record page 124.
[23]
Redacted record page 225. See further paragraph 155, pleadings
record page
513
[24]
With an impressive CV appearing as “AA15” to the
answering papers, pages 607 to
612.
[25]
Pleadings record page 514.
[26]
See annexure “DB4” to the
applicant’s founding papers, a
letter
from the applicant’s managing director
Eastern Cape, addressed to the first respondent dated
25 October
2018 – pleadings record page 214). This must be read with the
Contract Data, which provides that “
[T]he
contract shall not be adjusted in terms of this Sub-clause
”.
[27]
See section 1 of the PPPFA
[28]
Or rather terms
[29]
See the concluding paragraph of clause 5.8 of SANS10845-3, quoted
above.
[30]
Redacted record page 124
[31]
The applicant even sought to introduce an expert’s affidavit
on the general applicability of the Haylett formulate, and
on its
effect, had it been applied. This approach also misses the point,
and the difference between a merits and process assessment.
[32]
Pleadings record, page 557.
[33]
The
failure
to
have
sought
the
setting
aside
of
the
contract
admittedly
concluded,
may
be
legally
relevant, but did not receive much attention during argument. It was
unnecessary for the Court – having regard to
the conclusion
reached – to assess whether this was a further substantive
stumbling block to the applicant in respect of
its challenge to the
validity of the tender award to the second respondent.
[34]
Ibid
.
[35]
The applicant allegedly “
luxuriated
”
before instituting the application,
according to
the
first
respondent’s counsel
[36]
See
Wolgroeiers
Afslaers (Edms) Bpk v Munisipaliteit van Kaapstad
1978 (1) SA 13
(A)
;
Cape
Town City v Aurecon SA (Pty) Ltd
2017 (4) SA 223
(CC)
at
paragraph [51], and footnote
42.
[37]
For a distinction between true conditions, terms and time clauses,
see
Jurgens
Eiendomsagente
v
Share
[1990] ZASCA 81
;
1990 (4) SA 664
(AD)
at
674 G to I.
[38]
Leave
to
appeal
against
the
Supreme
Court
of
Appeal
decision
was
refused
by
the
Constitutional
Court, see footnote 36 above.
[39]
Begging the question: who and how
will it be determined whose
“
fault
”
it was, if contractual completion was
indeed delayed beyond the end of May 2020. The
first respondent’s
tender invitation was inter alia aimed at averting such risk in the
light of the funding
uncertainty.
[40]
In applicant’s favour.
[41]
Emphasis added.
[42]
Pleadings record page 24.
[43]
And this mixed contractual/administrative cause of action as
suggested, might have activated
the 180-
day time bar and the presumption of unreasonable delay, referred to
in
Opposition
to Urban Tolling Alliance v SANRAL
[2013] 4 All SA 639
(SCA)
at
paragraph [26], referred to in
Buffalo
City v Asla
,
supra
,
on page 345
[44]
Record page 95.
[45]
Which means that the applicant could also have declined such a
request after consideration.
[46]
Emphasis added.
[47]
Emphasis added.
[48]
Emphasis added.
[49]
Page 37.
[50]
Review record bundle 1, page 98.
[51]
The first respondent refers
inter
alia
to
the Supreme Court of Appeal decision in
Aurecon
,
supra
,
at paragraph [27] and to
South
African Container Stevedores (Pty) Ltd v Transnet Port Terminals and
Others 2011 JDR 0357 (KZD)
at
paragraph [72].
[52]
In the view of the Court, this is also a commercially sensible and
reasonable
interpretation:
compare the Kwazulu-Natal High Court, Pietermaritzburg decision in
Raubex
KZN (Pty) Ltd v The Umhlosinga Development Agency and Two Others
,
case number
11393/17.
[53]
Redacted record page 35
[54]
Emphasis added.
[55]
Pleadings record page 208.
[56]
Answering papers, page 500, paragraph 127.
[57]
See the review record, bundle 7, pages 10 and 30, and the redacted
record pages 358 to 369, and the answering affidavit
pages 507
to 508.
[58]
Objectively assessed.
[59]
Compare paragraph 143 on pages 507 to 508 of the answering
affidavit.
[60]
In the circumstances, perhaps a more appropriate concept than
market-related
price.
[61]
Such aspersions that were cast in the applicant’s papers, on
the basis of “
rumours
”
and speculation, about “
deliberate
”
underhandedness, were inappropriate and without
substance.
[62]
Which accords with three of the four subparagraphs in paragraph 19.1
of the Implementation Guide,
supra
,
paragraph [83].
[63]
Aurecon
,
paragraph [27].
[64]
Regulations 6(3) and 6(4) read:
“
6(3)
A tenderer must submit proof of its B-BBEE status level of
contributor.
6(4)
A tenderer failing to submit proof of B-BBEE status level of
contributor or is
a non-compliant contributor to B-BBEE
may not be disqualified, but-
(a)
may only score points out of 80 for price;
and
(b)
scores 0 points out of 20 for B-BBEE
”.
[65]
Bato
Star Fishing (Pty) Ltd v Minister of Environmental Affairs
[2004] ZACC 15
;
2004 (4)
SA 490
(CC)
,
paragraphs
[46] to [48].
[66]
Dr
JS Moroka Municipality & Others
,
supra
,
at paragraphs [12], [15] and
[16].
[67]
An acceptable tender under the PPPFA in any event “
means
any tender which, in all respects, complies with the specifications
and conditions of tender as set out in the tender document”
(section
1 of the PPPFA – referred to in
Allpay
Consolidated Investment Holdings (Pty) Ltd and Others v Chief
Executive Officer, South African Social Security Agency and
Others
2014 (1) SA 604
(CC)
at
paragraph [34]. See also
Dr
JS Moroka Municipality & Others
,
supra
,
at paragraph
[16].