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[2020] ZAECPEHC 42
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Bayethe Projects CC v Nelson Mandela Municipality and Another (3516/2018) [2020] ZAECPEHC 42 (5 November 2020)
IN THE HIGH COURT OF
SOUTH AFRICA
EASTERN
CAPE LOCAL DIVISION – PORT ELIZABETH
Case
No.: 3516/2018
In
the matter between:
BAYETHE
PROJECTS CC
Applicant
and
THE
NELSON MANDELA BAY MUNICIPALITY
First Respondent
BRONSCOR
CC
Second
Respondent
JUDGMENT
REVELAS
J
:
1.
The applicant sought orders aimed at
reviewing and setting aside a decision of the first respondent to
award a tender (Contract
No SCM/18-46S – Area 2) to the second
respondent and substituting the aforesaid by awarding the tender to
the applicant.
The application is brought in terms of Uniform
Court Rule 53 and section 6 of the Promotion of Administrative
Justice Act 3 of
2000 (‘PAJA’). In its amended Notice of
Motion the applicant sought relief which included the review and
setting aside
of the decisions to declare it non-responsive in
respect of its bid for Area 1 and the award of the tender in respect
of Area 1
to the second respondent and the substitution of that award
by an award to the applicant. The applicant did not further amend its
notice of motion, but attached a draft order to its heads of
argument reflecting the relief which it now seeks, in which
it has
abandoned its claim for the review and setting aside of the decision
to declare its Area 1 bid non-responsive. The
applicant
nevertheless persists with a claim that the award to the second
respondent of its area 1 bid be set aside, and in place
of a
substitution order, now seeks that the bid in respect of Area 1 be
remitted to the first respondent for reconsideration.
2.
In 2007, the Directorate: Infrastructure
and Engineering of the first respondent, addressed a memorandum to
the relevant Bid Evaluation
Committee, seeking the appointment for
tenderers for Contract No SCM/18-45/S: Mechanical
Infrastructure Services. The
reason given for the request was
that the first respondent’s Plant Maintenance Division
experienced mechanical workload challenges
with regards to repairs
and maintenance of mechanical equipment and new installations “as
and when required”.
The memo mentioned that previously
the Plant Maintenance Department of the first respondent had awarded
a three year contract for
mechanical services, to the applicant and
SDM Manufacturing respectively for the period 29 January 2014 to 31
January 2017, on
an “
as and when
basis
”.
3.
The first respondent invited bids under the
abovementioned contract number from interested parties to undertake
“mechanical
infrastructure services” consisting primarily
of maintenance and repairs to the first respondent’s waste
water treatment
works (Area 1); waste water pumpstation (Area 2); and
water treatment works (Area 3). Bidders were invited to submit a bid
in respect
of one or more of these areas within 120 days until 12
October 2017, the closing day for bids. The second respondent
submitted
a bid for area 1 and the applicant for areas 1, 2 and 3.
The applicant submitted its tender on 12 October 2017.
4.
On 29 November 2017 the Bid Evaluation
Committee resolved that the tender be referred back to the
Directorate to effect certain
amendment before resubmitted it to the
Directorate. The amendments involved doing the scoring tables
over again so as to
exclude those who did not meet the minimum
requirements; including a section for non-responsive bidders;
requesting a Supply Chain
Practitioner to accompany the Directorate
representative to site visits.
5.
In December 2017, the first respondent’s
Directorate: Infrastructure and Engineering, submitted two reports to
the Bid Evaluation
Committee. In the first report there was an
evaluation summary which adopted a cryptic description of “pass”
or “fail”
in respect of bidders. The applicant’s
evaluation outcome was “fail” in this first report. In
the second
report it was stated that the second respondent be
recommended for appointment in respect of area 1, and SDM
Manufacturing for
area 3. It recommended that no appointment be
made in respect of area 2, suggesting it be re-advertised since none
of the
service providers (bidders) met the minimum criteria required
and set out in the tender data.
6.
On 16 February 2018 the Bid Adjudication
Committee (‘BAC’) resolved that for area 2, all bidders
were deemed non-responsive.
It was further recommended that the
tender be awarded as follows:
Area 1:
to the second respondent
Area
3: to SDM Manufacturing
7.
On 20 April 2018 the BAC resolved that
there decision in respect of area 3 (to SDM Manufacturing) be put on
hold subject to the
Directorate referring the item to Internal Audit
for further investigation.
8.
On 2 May 2018 the first respondent
published a cancellation notice, stating that SCM/18-46/S Mechanical
Infrastructure Services
has been cancelled. It did not state which
area this applied to, but on the probabilities and the first
respondent’s answering
affidavit it the cancellation applied to
area 2. On 18 May 2018 the first respondent advised the
applicant that its bids
had been unsuccessful (those relating to
Areas 1 and 2 being relevant to this matter) as being non-responsive
to the minimum requirements
stipulated in the tender data. The
applicant thereafter unsuccessfully pursued certain internal remedies
before launching the present
application.
9.
Area 1 was awarded to the second respondent
subject to the signing of a service level agreement. On 3 August
2018, the second respondent
concluded a contract with the first
respondent in terms of which its offer to provide the tendered
services for Area 1 was accepted
by the first respondent.
10.
The first respondent advised the applicant
that its bid was unsuccessful in that it did not meet the minimum
requirements in respect
of the following:
“
Senior
Mechanical x 1 Artisan: National Diploma and trade test not
submitted; the four year experience requirement was not
met.
Trade test x 5
Artisans: submitted equivalent not trade test; the three year
experience requirement was not met.
Boilermaker
x 2: Only one boilermaker submitted; submitted equivalent and
not trade test; the three year experience not met
.”
11.
For purposes of this application, what was
required of bidders were the following minimum criteria. These were
set up in “lines”
and the relevant lines are referred to
below.
Line 1
Applicants were to
provide a work profile history of past work experience together with
business references and contact details
(i.e. address, telephone and
contact number. A template – annexure 1 – had to be
completed.
Line 3
Service providers were
required to show that they would be able to demonstrate a financial
ability to carry the contract to this
end three years audited
financial statements were to be submitted with all tenders.
Line 5
All applicants for the
tender were obliged to have at least five qualified Mechanical
Artisans (trade tested) per area and “
[A] least two to four
years’ post trade test experience is compulsory x5”
The applicants were accordingly obliged to attach proof of the trade
test and “
three years’ industrial experience post
trader test and complete attached Annexure 1”
Line 13
A qualified welder (also
trade tested) with three years’ industrial experience was
required. The Annexure 1 template
provided was to be completed
to prove the three years’ industrial experience and post trader
test.
Line 14
A qualified boilermaker
with three years’ industrial experience post trade test was
also required for each area and the obligatory
proof of the trade
test was also required.
“
Senior
Mechanical x 1: N Dip, Trade Test Cert, 4yrs industrial
experience post trade test.
Mechanical Artisan x 5:
Trade test and 3yrs industrial experience post trade test.
Boilermaker
x 2: Trade test and 3yrs industrial experience post trade
test.”
12.
The second respondent only tendered in
respect of Area 1 and was awarded Area 1. No award was made in
respect of Area 2.
The applicant, however states that the
second respondent’s tender in respect of Area 1 was
non-responsive as it did not fill
the minimum criteria. Several of
the employees of the applicant and their qualifications were a listed
by the applicant to demonstrate
that they had indeed met the minimum
requirements set out in the tender data. The applicant’s
challenge to the award of the
tender in area 1, is that the second
respondent’s tender was non-responsive as it did not fulfil the
aforesaid criteria.
The applicant set out in a very long list the
relevant lines in the data requirements to demonstrate that the
second respondent
did not meet the minimum requirements whereas, in
its own view it had met those requirements.
13.
The first respondent disputed this. In
respect of line 1 it asserted that the second respondent had indeed
complied with the minimum
requirements set out in lines 1, 3, 5, 13
and 14 of the minimum criteria and that, in fact, the applicant’s
papers in respect
of line 1 were incomplete.
14.
In respect of line 3, the first respondent
pointed to the record to show that the second respondent did indeed
attach financial
statements for three months.
15.
The first respondent stated that in respect
of line 5, Mr Anton Hugo, the mechanical artisan of the second
respondent, satisfies
the minimum criteria in that the trade test
certificate he provided was issued in terms of section 13 of the
Manpower Training
Act of 1981 which defines trade to include “any
branch of a trade, or any group of trades or branches of trades”.
An apprentice is defined in the Manpower Training Act as “any
person employed in terms of a contract of apprenticeship, registered
in terms of section 16(3)(d) or Section 18(1)(c) or (3) and for the
purposes of sections 42, 50, 51, 54 and 56, includes any minor
employed in terms of the provisions of section 5”. It
follows, says the first respondent, that the certificate submitted
is
in accordance with what was required and thus fulfilled the set
criteria.
16.
The applicant also decried the proposal of
Mr Sean Musquin the basis that he is a millwright and not an
artisan. According
to the South African Qualifications
Authority (SAQA) an electro mechanic is a millwright and
multi-skilled artisans responsible
for installation, maintenance and
repair of plant equipment and that is known as a millwright.
According to the first respondent,
that puts paid to the applicant’s
complaint in respect of line 5.
Line 13
The applicant complained
that Mr Lukhosi did not meet the three year industrial experience
post-grade test. The first respondent
conceded this and adapted
the view that its contract with the second respondent was to be
declared invalid, as the shortfall in
experience seemed to be
insubstantial.
Line 14
The second respondent’s
proposed boilermaker Mr Morné Rousseau’s post trade test
industrial experience fell short
of twelve days. The first respondent
contends that the shortfall is immaterial. I tend to agree.
Since the only issue
that with the tender submitted by the second
respondent was Mr Lukhosi’s insufficient post grade test
industrial experience.
The first respondent
contended that the applicant’s tenders in respect of both areas
were non-responsive by virtue of the
following:
Line 4
In respect of the
applicant’s proposed senior mechanical artisan, Mr Goshomi, a
South African national diploma and no trade
tests were submitted and
the four years of experience criteria was not met. The artisan
in question has Zimbabwean qualifications
only and there is no
confirmation from SAQA that his qualification are recognised here or
what their South African equivalent is.
Line 5
No trade tests for the
five mechanical artisans were submitted nor an equivalent. The three
years of experience requirement was
also not met.
Line 14
Two
boilermakers were required. The applicant proposed only one
without trade test papers nor three years’ experience.
17.
The applicant challenged the first
respondent’s criticisms and criteria on several grounds. The
latest supply chain management
policy of the first respondent defines
“
Non responsive” in terms of
a bid as that it ” does not comply in all material aspects
with
the requirements set out in or contained in an invitation to bid,
including the applicable specifications”
(emphasis added by the applicant). The applicant argued that the
first respondent’s call for new minimum qualification criteria
for the applicant’s engineering staff (“red seal
certificate”) constitutes a material and unfair change to the
tender and should have been addressed in the “tender data”.
The applicant also referred to the minutes of a compulsory
clarification meeting which was held on 19 September 2017, and stated
that the absence in the minutes to seal certificates was
a further
indication that bidders were not made aware thereof that it was a
minimum requirement. However, Mr Karish Nagura, the
deponent to the
second respondent’s answering affidavit stated that he was
present at the clarification meeting and “
[n]otwithstanding
the fact that the minute of that meeting does not record that
potential bidders were required to submit ‘Red
Seal Trade
certificates” in respect of their artisans, my recollection is
that that was pertinently raised during the meeting
by the first
respondent’s project manager, Mr Lunga Mahote.”
Mr
Nagura also stated that after the meeting Mr Mahote explained that
Red trade Seal Certificates were required because of
the first
respondent’s previous experience that contractors had employed
persons with foreign qualifications who were not
suitably qualified
which led to the delivery of substandard work.
18.
The applicant took further issue with the
red seal certificates. The deponent to the founding affidavit, Mr
Victor Zwane stated
that it was his understanding that the red seal
certificate is the National Artisan Trade certificate issued in terms
of section
26D of the Skills Development Act 37 of 2008. He submits
that there is no difference between this certificate and the previous
artisan’s certificates which were issued in terms of sections
13 and 28 of the Manpower Training Act, 56 of 1981. He states
that
they are equal in status and in this regard relied on a letter from
the Department of Higher Education and Training.
19.
The first respondent argued that issues
relating to the red seal trade test certificates were irrelevant in
light of the fact that
several of the applicant’s employees had
Zimbabwean qualifications that could not be verified as equal to the
South African
qualifications and in many instances provided no trade
test certificates of either country or SAQA.
20.
The first respondent concluded in
retrospect, that the second respondent had indeed failed to meet the
specified tender criteria
in one respect and accordingly should have
been declared to have been unresponsive. This is a question of
fact, it argues.
As there is a dispute between the applicant
and the first respondent as to the extent of the second respondent’s
failure
to comply, regard must be had to the facts put up by the
first respondent. The first respondent, in its answering affidavit
now
points out that the second respondent’s acceptance was
outside the validity period of the offer. In addition, the respondent
contends that the official of the first respondent who acted on its
behalf had no authority to accept the offer and conclude the
agreement.
21.
In view of the respondent’s latest
approach to the awarding of the contract in respect of area 1 to the
second respondent,
it actually supports the relief sought by the
applicant in one respect, namely the setting aside its own decision
taken to award
the tender in respect of Area 1 to the second
respondent, and remitting it back to make a decision afresh.
22.
The second respondent contends that its
failure to meet the specified requirements is so minor that it should
be overlooked.
The first respondent argues that the requirement
was clearly material given the purpose of the empowering provisions a
ground of
review of the award to the second respondent has
accordingly been established and “
there
is no room for shying
away
from it
”. In the circumstances,
the first respondent submitted, the first step identified by the
Constitutional Court must result
in a decision pursuant to section
172(1)(a) of the Constitution to the effect that its decision was
invalid.
23.
In my view, it is not open to the first
respondent in these proceedings to argue for the setting aside of its
own decision in respect
of the award of the tender in relation to
Area 1 to the second respondent in this application. Just as Mr
Motasi, the independent
and impartial person appointed in terms of
Regulation 50
of the
Municipal Supply Chain Management Regulations
stated
in a memo (written on the letterhead of the first respondent’s
“Chief Operating Officer”):
“
The
decision that of the BAC, that Area 2 be cancelled, is valid as this
municipality is bound by such decision regardless the incorrect
publication thereof. This is based on the principle applicable in
Oudekraal Estates (Pty) Ltd v City of
Cape Town & others
2004 (6) SA 222
(SCA)
where
court (sic) held that invalid act or decision remain valid until set
aside.”
24.
Having the tender awarded to the second
respondent set aside on the grounds argued for, would necessarily
involve a substantial
application which, if it had merit, ought to
have been brought much sooner.
25.
The alternative relief sought by the
applicant is that if the tender for Area 1 is set aside and remitted
to the first respondent,
there should be directives that the first
respondent shall request all tenderers who submitted responsive
tender offers, to extend
the validity period of their tender offers
for such period as the first respondent considers necessary. In view
of the approach
I adopt in this matter it is not necessary to
consider the submissions made in this regard.
26.
The procedures followed and decisions taken
in the course of acquisition by an organ of state of goods and
services fall within
the definition of administrative action in the
PAJA. That much is trite.
27.
Section
217 of the Constitution, the Preferential Procurement Policy
Framework Act
[1]
,
the Local Government: Municipal Finance Management Act
[2]
,
the
Municipal Supply Chain Management Regulations
[3
]
and
the Municipality’s Supply Chain Management Policy provide the
constitutional and legislative framework within which administrative
action may be taken in the procurement process. “
The
lens for judicial review of these actions, as with other
administrative action is found in PAJA. The central focus of
this enquiry is not whether the decision was correct, but whether the
process is reviewable on the grounds set out in PAJA
”
[4]
.
28.
The
Constitutional Court has decisively set out the proper legal approach
to the consideration of whether a procurement process
was
administratively flawed, by applying six principles (as summarised by
Mr Richards, counsel for the first respondent)
[5]
These
are:
28.1
an assessment of the fairness and lawfulness of the procurement
process must be independent of the outcome of the tender process;
28.2
the materiality of compliance with legal requirements depends upon
the extent to which the purpose of the requirement
is attained;
28.3
the constitutional and legislative procurement framework entails
supply chain management prescripts that are legally
binding;
28.4
the fairness and lawfulness of the procurement process must be
assessed in terms of the provisions of PAJA;
28.5
Black economic empowerment generally requires substantive
participation in the management and running of any enterprise;
28.6
it is only at the remedy stage that appropriate consideration must be
given to the public interest in the consequences
of setting the
procurement process aside.
29.
It
follows that once a ground of review under PAJA has been established
“
there
is no room for shying away from it”,
as
the applicant itself argued. The decision (or other administrative
action) must be declared unlawful. Only thereafter are
the
consequences of the declaration of unlawfulness given effect to in a
just and equitable order under section 172(1)(b) of the
Constitution. Section 8 of PAJA gives detailed legislative
content to the Constitution’s “
just
and equitable”
remedy
[6]
.
30.
Judicial cognisance can be taken of the
fact that the water management arrangement in the area which falls
under the first respondent
is beset by maintenance problems and is in
fact in crisis. One would expect proper contractors and suitably
qualified artisans
to be appointed to perform the sorely needed
functions to solve the water problems concerned. The first respondent
(through Mr
Mahote) was therefore is therefore entitled to insist on
proper qualifications for artisans, and in any event, it has been
demonstrated
on these papers that the applicant’s complaints
illustrated by the tables of criteria and individual employee
qualifications
are not sufficient to justify setting aside the award
made in favour of the second respondent. The first respondent had in
its
answering papers illustrated that the second respondent had
complied with the criteria and in so far as there were shortcomings,
they were of a minor nature.
31.
Moreover, there is no averment from any
party to these proceedings that the applicant delivered exemplary or
proper work, or solved
any of the numerous problems relating to water
management when it previously was awarded the three year contract
which ended in
January 2017. It appears that the applicant was piqued
about not obtaining the contract for a second time. Yet it set out no
facts
upon which a legitimate expectation for being appointed again
could be based and did not even present its case in those terms.
32.
On the other hand, the second respondent
has, at least on the face of it, contracted in good faith with the
first respondent and
has begun with the work the tender requires it
to perform. There is no allegation that it is unable to perform those
duties or
that its work is below standard. It is a matter of concern
that the first respondent has taken so many steps to ensure that none
of the three areas covered by its invitation to tender and accepted
by it, are completed. The tender for Area 3 is on hold, the
tender
for Area 2 has been cancelled and now the first respondent seeks the
setting aside of the tender for area Area 1 as well.
Lately courts
have observed a tendency amongst the municipalities of the Eastern
Cape to have their own administrative actions
(taken in the context
of vying bidders for tenders), set aside by the courts. These
applications, usually brought out of time,
come at the expense of the
taxpayers and the delivery of basic constitutionally protected
amenities to the poor. In the present
matter the second respondent
will be severely and unnecessarily prejudiced if the tender for Area
1 is set aside. Accordingly
the application cannot succeed.
33.
There is no reason why the unsuccessful
applicant should bear all the costs of the application in view of the
first respondent’s
ambivalent approach in this matter.
34.
In the circumstances the following order is
made :
1.
The application is dismissed.
2.
The applicant and the first respondent are
liable to pay the second respondent’s costs of the application,
jointly and severally,
the one paying the other to be absolved.
_____________________
E REVELAS
Judge
of the High Court
Appearances
:
For
the Applicant: Adv Zietsman instructed by Greyvensteins, St
George’s House, 104 Park Drive, Port Elizabeth
For
the first respondent: Adv Richards instructed by Rushmere Noach
Inc., 5 Ascot Office Park, Conyngham Road, Port Elizabeth
For
the second respondent: Adv Pienaar instructed by Gregory Clark
& Associates Inc., 9 Buffelsfontein Road, Mount Pleasant,
Port
Elizabeth
Date heard:
18 June 2020
Date
delivered: 05 November 2020
[1]
5
of 2000.
[2]
56
of 2003.
[3]
GN
868 dated 30 May 2005.
[4]
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 para [45]
[5]
Allpay
(supra)
paras
[22] to [56]
[6]
Allpay
at
para [25]