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[2023] ZAKZPHC 42
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Impande Consulting Engineers (Pty) Ltd v MEC For The Department Of Transport- Kwazulu-Natal Province and Another (8544/22P) [2023] ZAKZPHC 42 (11 April 2023)
SAFLII
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Certain
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REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION,
PIETERMARITZBURG
CASE
NO: 8544/22P
(1)
REPORTABLE:
YES
/ NO
(2)
OF INTEREST TO OTHER JUDGES:
YES
/ NO
(3)
REVISED:
YES
/ NO
DATE:
11 April 2023
In
the matter between:
IMPANDE
CONSULTING ENGINEERS (PTY) LTD
Applicant
and
MEC
FOR THE DEPARTMENT
OF
TRANSPORT- KWAZULU-NATAL PROVINCE
First
Respondent
DEPARTMENT
OF TRANSPORT
KWAZULU-NATAL
PROVINCE
Second
Respondent
ORDER
1.
The
decision of
the
second
respondent to cancel Bid No. ZNB [....] 20/T is reviewed and set
aside.
2.
The second
respondent is directed to discontinue the tendering process initiated
pursuant to its invitation to Bid No. ZNBO [....]
22/T .
3.
The second
respondent is directed to implement the recommendations of its Bid
Evaluation Committee of 13 December 2021, alternatively
2 March 2022,
by:
3.1.
Forthwith
awarding to the applicant the contract for the Escourt Cost Centre;
3.2.
Issuing a
letter of appointment to the applicant within ten (10) days of this
order for the appointment for the provision of professional
engineering services for the Escourt Cost Centre for a period of
three years;
3.3.
Concluding the
required Service Level Agreement with the applicant for the provision
of the professional engineering services for
a period of three years
to the Escourt Cost Centre within twenty-one (21) days of issuing and
signing of the letter of appointment.
4.
The second
respondent is ordered to pay the costs of Part A of this application
on the attorney and client scale, and the costs
of Part B of this
application, on the party and party scale
.
JUDGEMENT
NCUBE
J
Introduction
[1]
This is
opposed application in which the applicant ("lmpande") in
its amended Notice of Motion, seeks the following relief:
(a)
"Reviewing
and setting
aside
the decision
of the second
respondent
to cancel
Bid
No
ZNB 0[....]
20/T.
(b)
Directing
the second respondent to discontinue the tendering process initiated
pursuant to
its
invitation to
Bid No ZNB 0[....] 22/T .
(c)
Directing
the
second
respondent
to
implement
the
recommendations
of
the
Bid Evaluation
Committee of 13 December 2021, alternatively 2 March 2022
,
by
:
i.
Forthwith
awarding to the applicant the contract for the Escourt Cost Centre
ii.
Issuing
a letter of appointment to the applicant within 10 (Ten) days of this
order for the appointment for the provision of professional
engineering services for the Escourt Cost Centre for a period of
three years.
iii.
Concluding
the required Service Level Agreement with the applicant for the
provision of the professional engineering services for
a period of
three years to the Escourt Cost Centre, within 21 (twenty-one) days
of issuing and signing of the letter of appointment.
iv.
Directing
that any of the respondents who oppose the relief in part B of this
application to pay the costs of this application jointly
and
severally."
lmpande
is a consulting engineering company providing civil and structural
engineering infrastructure, assets management and project
management
consultancy services.
Factual
Background
[2]
On 04 December
2020, the second respondent ("the Department") issued an
invitation for bids. It invited suitably qualified
entities to bid
for the appointments of engineering service providers for each Cost
Centre for a period of three years. The parties
referred to that
tender as ("the original tender"). There were twelve Cost
Centres in total. Those were Port Shepstone,
Pietermaritzburg,
Dundee, Hluhluwe, Eshowe, New Castle, Ulundi, Vryheid, Escourt,
lxopo, Ethekwini and KwaDukuza. The purpose of
the bid was to obtain
proposals from professional service providers for the provision of
civil engineering consultant services
for the Cost Centres. The
initial closing date was 19 January 2021 at 11.00 am, which was later
extended to 29 January 2021. No
bids were to be received after 29
January 2021.
[3]
The tender
validity period was 28 May 2021, but was extended to 29 September
2021, further extended to 28 January 2022 and finally
extended to 30
May 2022. The tender was subject to the provisions of the
Preferential Procurement Policy Framework Act, 5 of 2000
(PPPFA).
lmpande submitted a bid for all twelve (12) Cost Centres before the
closing date. lmpande charged an amount of R62 790
000-00 for the
Escourt Cost Centre. By the closing date, 90 bids had been received
and lmpande is reflected as number 54 on the
register of bids
received. According to the tender advert, there
were
six
(6)
stages
in
the
evaluation
process.
Those
stages
were
(a)
Administrative
Compliance
(b)
Pre-qualification
(c)
Mandatory
Requirements
(d)
Functionality Evaluation (e) Price and Preference and (f) Objective
Criteria.
[4]
lmpande's bid
was responsive and it complied with all the requirements. On 02 March
2022 the Bid Evaluation Committees (BEC) of
the Department,
recommended that the lmpande be awarded the contract for the Escourt
Cost Centre for the period of
three
(3)
years,
with
the
amount
of
R62 790 000-00
to
be
negotiated
to R40 334
132.20. Subsequent to the recommendation of the BEC, the Department
published a Notice in the llanga Newspaper dated
3 -
4, May 2022,
cancelling the tender. The reason for the cancellation was stated as
"Administrative
Non
compliance."
Issues
[5]
The question
is whether the decision taken by the Department to cancel the whole
tender, based on Administrative Non-Compliance
was valid, rational
and in accordance with prescripts and the law. The Department avers
that the tender was cancelled because of
material irregularity in the
process.
The
Law
[6]
One
of the founding principles of our law is the Supremacy
of
the Constitution.
[1]
The
Constitution
is
the supreme
law
of
the Republic,
law
or conduct which is inconsistant with the Constitution is invalid and
the obligations imposed by the Constitution
must
be
fulfilled.
The
Constitution
guarantees
everyone
the
right
to
administrative
action that is valid, reasonable and procedurally fair.
[2]
The parliament is enjoined to enact legislation to give effect to the
constitutional right to just administrative action and such
legislation must make provision for the review of administrative
action by the courts.
[3]
[7]
Section
217
of
the
Constitution
provides
that
when
an
organ
of
state
in
the
national, provincial or local sphere of government contracts for
goods, or services, it must do so in accordance with a system
which
is fair, equitable, transparent, competitive and cost effective.
Pursuant to constitutional imperatives,
[4]
parliament enacted the Promotion of Administrative Justice Act
[5]
,
("PAJA").
PAJA provides that administrative action materially and adversely
affecting the rights or legitimate expectations
of any person must be
procedurally fair
.
[6]
The
court may review an administrative action if the administrator who
took that action amongst other things, took irrelevant considerations
into account or when she did not consider relevant consideration.
[7]
[8]
The tender in
question was subject to the provision of the Procumbent Framework
Regulations of 2017("Procumbent Regulations").
Regulation
13 thereof provides:
"13
(1) An organ of state may, before the award of a tender, cancel a
tender invitation if-
(a)
due
to changed circumstances, there is no longer a need for the goods or
services specified in the invitation
.
(b)
funds
are no longer available to cover the total envisaged expenditure
;
(c)
no
acceptable tender is received; or
(d)
there
is material irregularity in the process
.
(2)
The
decision to cancel a tender invitation in terms of sub regulation (1)
must be published in the same manner in which the original
tender
invitation was advertised
.
(3)
An
organ of state may only with the prior approval of the relevant
treasury cancel a tender invitation for the second time."
Discussion
[9]
Having
considered the legislative frame work, I turn now to look at the
substance of the decision to cancel the tender before award.
I must
consider the reason given for the decision to cancel the tender and
then assess if the decision was a rational or irrational
one. In my
view, irrational decision is the one which is shockingly bad and
defies logic, to the extent that no sensible person,
in his right
frame of mind and who had applied his mind correctly to the question
to be decided could have arrived at it. According
to the cancellation
advert in the llanga Newspaper, the tender was cancelled for
"administrative non-compliance". This
is despite the fact
that the process had progressed to the stage where the BEC had
recommended that the tender be awarded to various
bidders, including
lmpande, whose tender had passed the scrutiny and was found to be
compliant with all the requirements
.
[10]
It was
only the Bid
Adjudication
Committee
("BAC")
which referred
the matter back to BEC
.
The argument
raised by the Department in these proceedings, is that the BAC
referred the matter back to the BEC since the BAC discovered
that the
BEC evaluated ninety-two (92) bids instead of ninety (90) bids
recorded in the register when the tender closed on 29 January
2021.
The Department is now changing the reason for the decision to cancel
the tender from "administrative non-compliance"
to "material
irregularity". This is clearly done in order to bring the reason
for the decision to cancel the tender within
the ambit of Regulation
13 (1)(d). Unfortunately, the reason which was published in the
notice of cancellation and brought to the
attention of the public,
including lmpande, was "administrative non-compliance", not
"material irregularity."
"Administrative
non-compliance" is not one of the grounds mentioned in
Regulation 13. If that was the reason why the
tender was cancelled,
the action of cancelling the tender was not rationally connected to
the decision.
[11]
In
PG
Group Pty (Ltd) v National Energy Regulation of South Africa
[8]
Leach
JA Said:
"It
is a fundamental requirement of administrative law that an
administrative decision must be rational. This is entrenched
in
Section 6 (2) (f) (ii) of PAJA which provides for an administrative
action being reviewable if it
is
not rationally
connected,
inter alia,
to the
purpose for which it was taken, the purpose of the empowering
provision, or the reason given for it by the functionary who
took it.
Administrative action
is
also
reviewable under PAJA if
'it
is one that a
decision
maker
could not reach'
-
see
Bato
Star
Fishing
v
Minister
of
Environmental
Affairs
[2004] ZACC 15
;
2004 (4)
SA
490.
"
[12]
The
original reason given by the Department, for the decision to cancel
the tender was
administrative
non-
compliance,
they
cannot
now
come
with
another
reason. In
Umgeni
Water v Sembcorp Siza Water (Pty) Ltc
[9]
Wallis
JA expressed himself in the following terms:
"The
appellants are however bound by the original reason given for their
decision. They cannot now
rely
upon
the
management
scheme
as
a
further
reason
and
engage
in
ex
post
facto
rationalization of a bad
decision."
Therefore,
the Department's original reason, for the decision to cancel the
tender, stands and it cannot be supplemented or substituted
with any
other reason.
[13]
One must also
not lose sight of the fact that the material irregularity which the
Department now raises as the basis for their decision
to cancel the
tender process is not the ground relied upon by the BEC in its
recommendation to have the tender process cancelled.
The reasons
relied upon by the BEC for the cancelation, was the
non-responsiveness of other bidders, not lmpande. The discrepancy
in
the bid proposals submitted and those which were evaluated by the
BEC, was never raised by the BEC.
[14]
In any
event,
those
bid proposals
that found
their
way
through
to the
BEC evaluation
report are clearly identifiable in the evaluation report itself. They
are numbered 91 and 92 respectively
;
whereas the
register containing the number of bids submitted before the closing
date, reflects 90 bid proposals received. The extra
two bids were
from LTE Consulting and Sombude JV. Those two entities were rejected.
Both those entities did not meet the pre-qualification
requirements
and they were rejected
.
Therefore, the
inclusion of those two entities in the evaluation report, had no
impact on the outcome of the tender process.
[15]
The question,
therefore, is whether the irregularity relied upon by the Department
was a material irregularity which vitiated the
whole tender process.
Was
it an
irregularity of great import or consequences? In my view, a material
irregularity, is one which, if ignored, could lead to
substantial
injustice and render the tender process unfair. In the present case,
the impugned bidders were evaluated and rejected,
they did not make
their way through to the next stage and as such, they were not
amongst the bidders recommended for an award of
contract. The
continuation of the tender process was not going to lead to any
substantial injustice. I conclude therefore, that
the decision to
cancel the original tender, was irrational and unjustified.
Remedy
[16]
What remains
is the appropriate and effective relief to be granted. What would be
the appropriate relief under the circumstances?
The starting point of
exercise is section 8(1) of PAJA which provides:
"(1)
The court or tribunal, in proceedings for judicial review in terms of
section 6(1) may grant any order that is just and
equitable,
including orders-
(a)
directing the
administrator-
(i)
...
(ii)
...
(b)
prohibiting
the administrator from acting in a particular manner;
(c)
setting aside
the administrative action and-
(i)
remitting the
matter for reconsideration by the administrator, with or without
directions or
(ii)
in exceptional
cases-
(aa)
substituting or varying the administrative action or correcting a
defect resulting from the administrative action or
(bb)
directing the administrator
or any other
party to the proceedings to pay compensation
.
(d)
..
.
(e)
..
.
(f)
as
to costs."
Therefore,
in terms of section 8(1)(c)(ii)(aa) the court can substitute its own
decision for the decision of the administrator,
only in exceptional
cases.
[17]
lmpande is
asking this court to exercise its discretionary powers in terms of
section 8(1)(c)(ii)(aa) and substitute its own decision
for that of
the Department. lmpande argues that if the BEC, the BAC and HOD did
not commit an error, in making the impugned decision,
lmpande would
have been awarded the Escourt contract. The Department argues in its
answering affidavit and Heads of Argument, that
substitution will
offend the principle of separation of powers. It is important to note
that the Department's wrong decision to
cancel the tender process
infringed lmpande's constitutional right to an administrative action
that is lawful, reasonable and procedurally
fair, which is
entrenched in section 33(1) of the Bill of Rights.
[18]
In
Mwelase
and Others v Director-General for the Department of Rural Development
and Land Reform and Another
[10]
Cameron
J, said:
"The
courts and
government are not at odds about fulfilling the aspirations of the
Constitution. Nor does the separation of powers imply
a rigid or
static concept of strictly demarcated functional roles. The different
branches of constitutional power share a commitment
to the
Constitution's vision of justice, dignity and equality. That is our
common goal. The three branches of government are engaged
in a shared
enterprise of fulfilling practical constitutional promises to the
country's most vulnerable. These joint efforts will
not always be
frictionless. On the contrary, it has been astutely noted that an
understanding of the separation of powers as a
relationship
of
mutual
accountability,
responsiveness
and
openness
between
the
three
branches' may give rise to unavoidable- even productive- tension."
[19]
In
Trencon
Construction (Pty) Ltd v Industrial Development Corporation of South
Africa Ltd and Another
[11]
it
was said that there are two factors which inform the decision whether
or not the court should substitute its decision for that
of the
administrator. The first factor is whether the court is in as good a
position as the administrator to make that decision.
The second
factor is whether the decision of the administrator is a foregone
conclusion. The other factors to be considered will
include delay,
bias or the incompetence of the administrator. The ultimate question
is whether the substitution order is just and
equitable
.
Whether
exceptional circumstances exist will inevitably depend on the facts
of each case.
[20]
Applying the
above principles
to the present
case,
I am of the
view that a substitution order is justified. It will serve no purpose
to remit the case to the Department.
Considering
the fact that the BEC had done the evaluation and made a
recommendation to award the Escourt Cost Centre to lmpande,
the
decision of the Department was a foregone conclusion. If there were
no irregular bids included in the evaluation report, lmpande
would
have been awarded the contract for the Escourt Cost Centre. There was
no other reason for the matter to be referred back
to the BEC, except
for the two bids which were perceived to be irregular. The other
relevant factor in this case is the delay.
The tender has been
cancelled twice in three years affecting urgently required service
delivery to the public. The remittal of
this matter back to the
Department,
will cause further delays in the provision of services to the public
and that exercise will be prejudicial to lmpande.
Costs
[21]
It has become
a norm for the public officials to neglect correspondence, even legal
documents from attorneys representing and acting
in the interest of
their clients. In this case, after the original tender was wrongly
cancelled, the Department sought to undertake
a new tender process in
order to appoint service providers for the same work for which
lmpande was recommended under the original
tender. lmpande sought an
undertaking from the Department that the Department was not going to
proceed with the new tender process
whilst lmpande was preparing to
take the cancelation of the original tender on review. There was no
response from the Department.
The lackadaisical conduct of the
Department forced lmpande to bring part A of the application
interdicting the Department from
continuing with the new tender
process. On three occasions, lmpande requested reasons and other
documents which the Department
relied on for the decision to cancel
the original tender. The Department did not respond.
[22]
What
is worse is that the Department's answering affidavit was filed out
of time in defiance of a directive from court setting the
date on
which the same was to be filed. The answering affidavit was to be
filed by no later than 26 August 2022. That was not done.
On 26
August the Department asked for the extension of time to file their
affidavit on
29
August
2022.
The
answering
affidavit
was
sent
by
email
to
the
lmpande
Attorneys
at
19h30
on
29 August
and
filed in court
on
30
August 2022.
In
F
Kany Investments
CC
and
Another v Umdoni Municipality
[12]
it
was said:-
"Something
needs to be
said about the conduct of the respondent. It has been tardy and
impolite in the extreme, choosing not to reply to correspondence
legitimately sent to it by the applicant's attorneys. It has, through
its conduct, unnecessarily dragged this matter out for years.
It has
said that it will act and then did not act. It has ignored what it
acknowledged was a potentially dangerous situation and
has put the
life and limb of its constituents at risk. This is not the service
our country requires from a municipality. Such conduct
is unworthy of
an institution intended to serve the people. It warrants a punitive
costs order."
I
find that the conduct of the Department in this case deserves a
punitive costs order as well.
Order
[23]
In the result,
I make the following order:
1.
The
decision of
the second
respondent to cancel Bid No. ZNB [....] 20/Tis reviewed and set
aside.
2.
The second
respondent is directed to discontinue the tendering process initiated
pursuant to its invitation to Bid No. ZNB 0[....]
22/T .
3.
The second
respondent is directed to implement the recommendations of its Bid
Evaluation Committee of 13 December 2021, alternatively
2 March 2022,
by:
3.1.
Forthwith
awarding to the applicant the contract for the Escourt Cost Centre;
3.2.
Issuing a
letter of appointment to the applicant within ten (10) days of this
order for the appointment for the provision of professional
engineering services for the Escourt Cost Centre for a period of
three years;
3.3.
Concluding the
required Service Level Agreement with the applicant for the provision
of the professional engineering services for
a period of three years
to the Escourt Cost Centre within twenty-one (21) days of issuing and
signing of the letter of appointment.
4.
The second
respondent is ordered to pay the costs of Part A of this application
on the attorney and client scale, and the costs
of Part B of this
application, on the party and party scale
.
M
T NCUBE
Judge
of the High Court of
South
Africa, Pietermaritzburg
Judgment
reserved: 11 October 2022
Judgment
delivered:
11
April 2023
Appearances
For
Applicant:
Adv
Manentsa, B L
Instructed
by:
Shandu
Attorneys Inc
Sandton
c/o
Venns Attorneys
Pietermaritzburg
For
First and Second Respondent:
Adv
Sibeko, VG
Instructed
by:
State
Attorney (KwaZulu-Natal)
[1]
Sec
1 of the
Constitution
of
the
Republic
of South Africa Act 108 of 1996.
[2]
Sec
33 (1) of the Constitution
[3]
Sec
33 (3) (a) of the Constitution.
[4]
Sec
33 (3) of the Constitution
[5]
Act
No 3 of 2000
[6]
Section
3.
[7]
Section
(6) (2) (e) (i) and (iii).
[8]
2018
(5) SA 150
(SCA)
at
para
40
[9]
2020
(2) SA 450
(SCA) at
para
52
[10]
2019
(6) SA 597
(CC) paras 46 and 47.
[11]
2015
(5) SA 245
(CC)
[12]
(1891/2021P)
[2022] ZAKZPHC 35 (10 August 2022)