Brief Summary

Tender — Judicial review — Urgent interdict pending review application — Applicants sought to stay implementation of a tender award by the Department of Social Development, alleging procedural unfairness and lack of transparency in the tender process — Court granted interim interdict pending finalisation of review application, condoning non-compliance with procedural rules due to urgency — Holding that the applicants demonstrated a reasonable apprehension of harm and a prima facie case for review, warranting the interdict to prevent implementation of the tender until the review could be heard.

Comprehensive Summary

Summary of Judgment

1. Introduction

This judgment concerns urgent motion proceedings in which four security-service providers sought interim interdictory relief to prevent the implementation of a provincial departmental tender award, pending the institution and determination of anticipated judicial review proceedings. The matter was framed as an urgent interdict application designed to preserve the status quo until a review could be launched and the procurement record and reasons could be properly interrogated.

The applicants were LSM Security (Pty) Ltd, Mkwaze Security (Pty) Ltd, NUBC Security (Pty) Ltd, and Ngonyama Security (Pty) Ltd, all security companies operating in Gqeberha that had tendered for the relevant contract. The first respondent was the MEC, Department of Social Development, Eastern Cape (“the Department”). The second respondent was Golden Security Services CC, described as the successful bidder in respect of Bid Number SCMU4-21/220019, and it joined as a respondent on the return day.

Procedurally, the court initially granted a rule nisi in an urgent application during the week of duty in Gqeberha, together with interim relief staying implementation of the tender award. On 22 August 2022, the court confirmed paragraph 3 of the rule nisi (the substantive interim interdict) and amended paragraph 4 of the interim order to require the applicants to institute the anticipated review within a shorter timeframe, having regard to the respondents’ interest in certainty. The present judgment consists of reasons furnished after both respondents requested them.

The dispute arose from a contested public procurement process for security services over a 36-month period at specified Departmental facilities in the Gqeberha area, and the applicants’ concern that the award was likely constitutionally non-compliant, including because of the alleged inadequacy of the reasons provided for their non-success and the circumstances under which a higher-priced bid was selected.

2. Material Facts

The Department issued Bid Number SCMU4-21/220019 on 15 November 2021 for the provision of security services at Kwa-Nobuhle One Stop Centre, Protea, CYCC, Erica CCYC, and the Department’s Ibhayi district office, for a long-term period of thirty-six months. The tender closed on 14 December 2021 but its validity was later extended; the judgment records that the tender “was extended until 17 July 2022”, and the applicants ultimately abandoned an initially pleaded contention that there had been an irregular extension after expiry, describing that contention as a mistake made under urgent conditions.

The applicants had previously provided services to the Department on short-term contracts, but the urgent application was not directed at extending those short-term arrangements as such. Rather, it was directed at preventing implementation of the new long-term tender award, which the applicants understood was imminent.

After the tender was believed to have been awarded, the applicants (initially through the Gqeberha Security Forum, and later through their attorneys) sought reasons and documentation to explain why their bids had not succeeded and to allow an assessment of whether a review was warranted. On 21 July 2022, the Forum requested information, including evaluation and adjudication reports and any functionality scorecards. On 10 August 2022, attorneys acting for bidders including the applicants pressed for reasons for the rejection of each applicant’s bid and sought an undertaking that implementation would be suspended pending resolution of what was described as a “dispute” concerning their entitlement to reasons and concerns about the lawfulness of the process.

The Department acknowledged, in principle, the applicants’ entitlement to information, but refused to suspend implementation. When the Department eventually responded late on Friday 12 August 2022, it provided what it characterised as reasons. The court recorded that these reasons were generic and non-specific, stating broadly that 40 of 45 bids were “not acceptable” for various reasons, without clearly attributing disqualifying shortcomings to each applicant’s bid or explaining at what stage and on what precise basis each applicant fell out of contention. The Department also volunteered that the successful bidder was not based in Gqeberha (or at least addressed the local presence question raised by the Forum) and that the successful bid was not the lowest priced.

The judgment further records that, on the papers, it emerged that the value of the winning bid was more than four million rand higher than the second applicant’s bid and substantially exceeded the other applicants’ bids. This fact was treated as contributing to the applicants’ concern and the public-interest character of the dispute, in circumstances where the Department had not provided a clear explanation for selecting a higher-priced bid.

The Department did not meaningfully amplify its reasons in its answering affidavit. It disclosed the identity of the successful bidder only at that stage, asserting that this was known to the applicants, although the court regarded the suggestion that the applicants had been coy about the identity as unjustified on the papers. The answering papers also reflected further uncertainty about whether a “local presence” feature was a requirement or merely a preference, and the Department was described as being unclear and non-committal on key aspects of compliance and justification.

The applicants launched the urgent interdict application on Monday 15 August 2022, based on the expectation that the tender would be implemented on the next working day and the view that the Department’s late response had not furnished meaningful reasons. The rule nisi was initially granted in circumstances where the first respondent was served minutes before the hearing and by email only to a private address. The second respondent joined as a respondent on the return day.

3. Legal Issues

The central legal questions concerned the grant of an interim interdict pending a tender review application, and whether the requirements for such interim relief were satisfied on the facts presented. The dispute was therefore primarily one of the application of legal standards to the facts, including evaluative judgment in relation to urgency, balance of convenience, and whether the applicants had shown a sufficiently strong prima facie entitlement to interim protection.

More specifically, the court was required to determine whether, pending an anticipated review, the applicants had established a prima facie right, a reasonable apprehension of irreparable harm, that the balance of convenience favoured interim restraint, and the absence of any satisfactory alternative remedy. These questions were intertwined with the adequacy (or otherwise) of the Department’s reasons and disclosures about the tender process and outcome, and the implications of those deficiencies for the prospects of a review.

The respondents also raised procedural and threshold objections, including alleged non-compliance with the State Liability Act 20 of 1957, challenges to urgency (including allegations that urgency was self-created), accusations of non-disclosure or dishonesty regarding the identity of the successful bidder, and broader allegations that the application was an abuse of process. The court was therefore also required to assess whether these objections undermined the applicants’ entitlement to interim relief.

4. Court’s Reasoning

The court approached the matter on the basis that tenderers have a legally protected interest in participating in a procurement process subject to the governing legal framework, and that exclusion from such participation must be lawfully grounded and procedurally fair. In this regard, the court relied on the articulation in Down Touch Investments (Pty) Ltd and Another v South African National Road Agency SOC Limited and Another (2064/2020) [2020] ZAECGHC 120 (29 October 2020), which recognises that where an exclusion appears not to be fairly or lawfully grounded, a tenderer may establish a prima facie right and a corresponding apprehension of irreparable harm, and that the public interest suffers where constitutionally regulated procurement values are undermined.

On the facts, the court treated the applicants as having participated as co-bidders with legitimate expectations of a fair process and entitlement to reasons after the process concluded. While the Department accepted in principle that they were entitled to information, the court evaluated the substance of the reasons ultimately provided and found them inadequate, because they did not state clearly why each applicant’s bid had been disqualified (if disqualification was the basis), nor did they explain why the successful bidder was preferred in circumstances where price was significant and the winning bid was apparently materially higher.

The court considered that the Department’s “purported reasons” were of no utility to the applicants, and that the Department’s stance that it had provided all it needed to provide, coupled with its refusal to suspend implementation, created a reasonable basis for concern that the award might not withstand review. The court regarded transparency as vital in tender processes and considered that attention to detail in explaining disqualifications would naturally have removed doubt; the Department’s failure to do so contributed to the inference that procedural fairness may have been compromised.

A notable feature of the reasoning was the court’s criticism that the Department did not squarely assert that its processes and decision met the requirements of section 217 of the Constitution, nor did it unequivocally assert that the successful bid was compliant in all respects. The court regarded it as problematic that the respondents appeared to expect the applicants to prove compliance “in a vacuum” while withholding the information necessary to understand how and why the applicants’ bids were treated as unsuccessful.

In assessing harm and the need for interim protection, the court accepted that the imminent implementation of a potentially unlawful tender award threatened the constitutional value of legality, and that it may be extremely difficult to undo the practical consequences once performance commenced. In applying the approach endorsed in Down Touch Investments, the court accepted that it might be “well-nigh impossible to unscramble” the consequences of unlawful administrative action once implementation has reached a certain point. This supported the conclusion that interim restraint was justified to preserve the practical effectiveness of a forthcoming review.

As to alternative remedies, the court considered that it might have been possible to direct the applicants to pursue information via the Promotion of Access to Information Act 2 of 2000 or to seek improved reasons under section 5 of PAJA, but regarded that course as ineffective on the facts because the Department had made it plain that it considered its reasons already comprehensive and did not intend to provide more meaningful disclosure voluntarily. The court therefore treated interim interdictory relief as the only satisfactory means to prevent implementation while review proceedings were prepared.

On the balance of convenience, the court was persuaded that it favoured interim relief. The Department did not disclose key contextual facts, including when the award was made, and was unclear about the status of the contract. The judgment also records ongoing discussions about a “requirement” that at least 50% of the successful bidder’s staff be local, suggesting continuing uncertainty around implementation details. The second respondent, for its part, did not provide information indicating real prejudice, and the court noted that by 12 August 2022 it was already plain there was a dispute about the award.

Finally, while affirming that courts grant such restraining orders only in the clearest of cases, the court characterised this as an instance where it was “constitutionally appropriate” to intervene. The court also declined to make a final costs determination at the interim stage, indicating that costs should follow the result of the review, and noting that certain shortcomings and abandoned allegations in the applicants’ papers might later bear on the appropriate costs order.

5. Outcome and Relief

The court confirmed the interim restraint embodied in paragraph 3 of the rule nisi, thereby interdicting and restraining the Department from implementing the decision to award Bid Number SCMU4-21/220019, and similarly interdicting the successful bidder from commencing work under that bid, pending the finalisation of review proceedings.

The court also amended the timetable for the institution of the anticipated review by requiring the applicants to launch the review within a shorter timeframe than originally stipulated, with due regard to the respondents’ interest in certainty.

The issue of costs was not finally determined at this stage. The operative approach was that costs stood over for determination in the review application, rather than being finally adjudicated in the interim interdict proceedings.

Cases Cited

Down Touch Investments (Pty) Ltd and Another v South African National Road Agency SOC Limited and Another (2064/2020) [2020] ZAECGHC 120 (29 October 2020).

Minister of Finance v Afribusiness NPC 2022 (4) SA 362 (CC).

Majojobela v MEC for Rural Development and Agrarian Reform, Eastern Cape [505/2020] (2020) ZAECBHC 22 (3 November 2020).

Legislation Cited

Constitution of the Republic of South Africa, 1996, section 217.

Promotion of Administrative Justice Act 3 of 2000, sections 5, 5(3), and 6(2)(c).

Promotion of Access to Information Act 2 of 2000.

Preferential Procurement Policy Framework Act 5 of 2000, section 2(1)(f).

General Law Amendment Act 62 of 1955, section 35.

State Liability Act 20 of 1957.

Rules of Court Cited

Uniform Rules of Court, Rule 6(12)(a).

Held

The court held that the applicants established the requirements for an interim interdict pending the institution and finalisation of review proceedings in relation to a tender award for security services. The applicants’ prima facie entitlement arose from their right to participate in a tender process subject to the legal framework and to receive meaningful reasons, and from the court’s provisional assessment that the Department’s reasons were materially inadequate and did not properly explain either the applicants’ non-success or the selection of a higher-priced successful bid.

The court held further that implementation of the tender award was imminent, that harm would likely be irreparable in the sense that it would be practically difficult to undo the consequences once implementation commenced, that no satisfactory alternative remedy presented itself in the circumstances, and that the balance of convenience favoured preserving the status quo. The court therefore confirmed interim relief restraining implementation and commencement of work, and directed that costs stand over for determination in the review.

LEGAL PRINCIPLES

The judgment applied the principle that tenderers are entitled to participate in public procurement processes subject to the legal framework, and that exclusion from participation must be lawful, rational, and procedurally fair, consistent with constitutional procurement requirements and administrative-law standards.

It applied the principle that, in tender-related disputes, inadequate or non-specific reasons and a lack of transparent disclosure may support a conclusion that a tender award is reasonably susceptible to being set aside on review, thereby assisting an applicant in establishing a prima facie right for purposes of interim relief.

The judgment applied the principle that interim interdictory relief may be warranted where the imminent implementation of possibly unlawful administrative action threatens the constitutional value of legality, particularly because the consequences of implementation may become practically irreversible or extremely difficult to undo, making later review relief potentially hollow.

It further applied the established principle that interim interdicts are granted only where the recognised requirements are met, and that the court’s intervention in procurement matters, while cautious, may be justified where it is constitutionally appropriate to prevent potentially unlawful implementation pending review, especially when the decision-maker does not provide clear justification for the decision under challenge.

LSM Security (Pty) Ltd and Others v MEC, Department of Social Development, EC and Another (2300/2022) [2023] ZAECQBHC 12 (24 January 2023)