My Pride Smile Africa (Pty) Ltd and Another v Umzimvubu Local Municipality (2313/2022) [2023] ZAECMKHC 44 (6 April 2023)

80 Reportability
Administrative Law

Brief Summary

Administrative Law — Tender Process — Review of municipal tender procedures — Applicants sought to review the municipality's decision to sell tender documents at a non-refundable fee, alleging unconstitutionality and unlawfulness — Court held that the applicants' reliance on constitutional provisions was misplaced as the relevant national legislation, specifically the Preferential Procurement Policy Framework Act, governs procurement processes — The municipality's actions were found to be lawful and in compliance with applicable regulations, leading to the dismissal of the application.

Comprehensive Summary

Summary of Judgment


Introduction


The proceedings took the form of an urgent application in which the applicants sought to challenge the lawfulness and constitutionality of the respondent municipality’s procurement practice of selling tender documents (for a non-refundable fee) without also making those documents available on its website. Although the matter began as an urgent application, it ultimately came before the court for final determination on the papers, with counsel agreeing that the rule nisi should be either confirmed or discharged.


The applicants were My Pride Smile Africa (Pty) Ltd (a private construction company) and the Eastern Cape Black Contractors Forum (described as a non-profit organisation advancing the interests of Eastern Cape black contractors). The respondent was the Umzimvubu Local Municipality.


Procedurally, the application was instituted on 22 July 2022 and served on the municipality on 27 July 2022. The matter was postponed on 10 August 2022 and again on 16 August 2022, with no appearance for the municipality. On 23 August 2022, the court granted relief substantially in line with the notice of motion, but in the form of a rule nisi returnable on 6 September 2022. The order was served on 1 September 2022, the municipality delivered its notice of intention to oppose on 2 September 2022, and the matter was postponed sine die on 6 September 2022 by agreement, with the rule nisi extended pending confirmation or discharge. The municipality delivered its answering affidavit on 11 October 2022, the applicants delivered a replying affidavit on 16 January 2023, and the matter was argued on 19 January 2023.


The subject-matter concerned public procurement in the construction context, specifically whether the municipality’s practice regarding the accessibility and pricing of tender documents was reviewable administrative action and, if so, whether it was unlawful under the applicable procurement framework and section 6 of the Promotion of Administrative Justice Act 3 of 2000 (PAJA).


Material Facts


During July 2022, the municipality invited tenders for various capital projects, including a tender relating to Ntibani Access Road and Bridge Maintenance. The tender invitation stated that tender documents would be sold at a non-refundable fee of R451. The closing date for tenders was 27 July 2022, the same day the application papers were served.


The applicants’ case was directed at the municipality’s decision to sell tender documents and its alleged failure to make tender documents available electronically on the municipality’s website. The applicants framed this as a form of “gatekeeping” and contended that the practice discouraged participation and was inconsistent with procurement prescripts, rendering it unlawful and liable to be reviewed and set aside under PAJA.


A key factual dispute addressed by the court related to whether the R451 fee exceeded the permissible amount under the relevant tender standard. The municipal manager stated that the fee was a true estimate of the printing costs (including paper). The applicants disputed that the printing costs could amount to R451, but the court did not regard the municipality’s explanation as so far-fetched or untenable that it should be rejected on the papers. On that basis, the court accepted the municipality’s version that the amount reflected the printing cost.


Another factual aspect concerned whether the municipality had attempted to make the tender documents available on its website. The municipal manager did not state whether the municipality had a website or whether it attempted to make documents available electronically. The court proceeded on the basis that the municipality did have a website and failed to attempt to make the tender documents available on it.


Legal Issues


The central legal questions were whether the municipality’s decision (and related conduct) amounted to administrative action under PAJA, and whether that administrative action was unlawful (and thus reviewable) in terms of section 6(2)(i) of PAJA.


The dispute primarily concerned the application of legal rules to largely common-cause procurement facts, with one limited factual contest about whether the tender document fee reflected printing costs. The core enquiry was legal: determining which procurement instruments applied to a municipality, what obligations they imposed regarding tender document access and cost, and whether non-compliance (if any) rendered the tender document sale unlawful.


A further issue arose regarding the applicants’ reliance on various sources (including section 217 of the Constitution, the Public Finance Management Act 1 of 1999 (PFMA), treasury regulations, and the National Treasury guide), requiring the court to decide whether those sources were applicable to a municipality and whether they could found the review.


Court’s Reasoning


The court first dealt with the applicants’ attempt to rely directly on section 217 of the Constitution. Relying on authority that constitutional provisions should not be invoked to bypass legislation enacted to give effect to them, the court held that the applicants’ reliance on section 217 was impermissible. The court reasoned that section 217(3) requires a legislative framework for procurement policy, and that litigants must ordinarily rely on that enabling legislation, rather than “going behind” it to invoke the constitutional provision directly in circumstances where legislation governs the field.


The court then addressed the applicants’ reliance on the PFMA and associated Treasury Regulations. It analysed the PFMA’s scope and concluded that the PFMA applies to national and provincial departments, listed public entities, and constitutional institutions, but that a municipality is not such an entity for PFMA purposes. Since the PFMA did not apply to municipalities, the Treasury Regulations issued under section 76 of the PFMA likewise did not apply. The court also noted that the regulatory provisions invoked by the applicants did not list municipalities among the institutions to which they applied.


In relation to the Preferential Procurement Policy Framework Act 5 of 2000 (PPPFA) and regulations, the court explained the regulatory chronology. It held that on the date the application was instituted (22 July 2022), the 2017 Preferential Procurement Regulations were already invalid as a result of litigation culminating in the Constitutional Court’s dismissal of an appeal against the Supreme Court of Appeal’s invalidity finding. The 2023 Preferential Procurement Regulations only came into effect later and therefore did not apply. As a result, the applicants’ reliance on the 2011 or 2017 regulations was treated as misplaced for purposes of the review as pleaded.


The court then turned to the procurement prescripts that were central to the applicants’ case, namely the Construction Industry Development Board (CIDB) framework and the Standard for Uniformity in Engineering and Construction Works Contracts (the Standard) issued under that framework. The court outlined the statutory setting: the CIDB is established under the Construction Industry Development Board Act 38 of 2000, with objects including promoting or endorsing uniform standards and standardising procurement processes in the construction industry. Regulations made under the CIDB framework (including the Construction Industry Development Regulations, 2004) require that certain construction tender solicitations be in accordance with the Standard.


On the meaning of the Standard, the court emphasised that Annex A contemplates that an employer may require a non-refundable tender deposit for collection of tender documents, indicating that charging for tender documents is not in itself prohibited. It further analysed Annex C, specifically clause C.2.2.2, which provides that the cost of tender documents shall be limited to the actual printing cost and that employers must attempt to make tender documents available on their websites to avoid incurring printing costs.


Applying these provisions to the facts, the court accepted that the municipality charged an amount that was a genuine estimate of printing costs. Although the court accepted that the municipality failed to attempt to make the documents available on its website, it held that this failure did not render the sale of tender documents unlawful. The court reasoned that clause C.2.2.2 seeks to avoid printing costs by encouraging website availability; however, the consequence of failing to do so is that printing costs are incurred and passed on within the permitted limit, not that the practice becomes wrongful or invalid. The court stated that if an employer does not have a website or has attempted but failed to upload documents, selling documents would likewise not be unlawful; and even if an employer has a website and did not attempt to upload, the result is simply the incurring of costs that the clause aims to avoid, without converting the conduct into unlawfulness.


The court also addressed the applicants’ reliance on the Code of Conduct for All the Parties Engaged in Construction Procurement (published under CIDB auspices). It noted that the complaint was framed in general terms (non-compliance with unspecified “relevant legislation and regulations”), but the applicants had already been shown to have incorrectly relied on certain legislation (such as the PFMA and certain procurement regulations). The court found that the applicants failed to identify which other applicable legislation had been breached, and therefore held there was no merit in this aspect of the case.


Finally, the court dealt with reliance on the National Treasury’s Supply Chain Management: A Guide for accounting officers/authorities. The court disagreed with the proposition (advanced with reference to earlier case law) that the guide formed part of the procurement framework as articulated in the Constitutional Court’s procurement jurisprudence, observing that the Constitutional Court had not included the guide within the framework it discussed in that matter. The court further emphasised the guide’s own statement that it is not a substitute for legislation and should not be used for legal interpretation. In any event, the court held the guide was inapplicable because it concerns accounting officers and authorities in the PFMA-governed sphere, which does not include municipalities.


On this reasoning, the court concluded that the administrative action relied upon by the applicants was not shown to be unlawful, and thus did not meet the threshold for review and setting aside under section 6(2)(i) of PAJA.


Outcome and Relief


The court dismissed the application. It discharged the rule nisi issued on 23 August 2022, with the result that the interim relief fell away and the application was finally unsuccessful.


The court ordered the applicants to pay the respondent’s costs jointly and severally, with the one paying the other to be absolved. The court found no reason to depart from the ordinary costs principle.


Cases Cited


Minister of Health and another NO v New Clicks South Africa (Pty) Ltd and others (Treatment Action Campaign and another as amici curiae) 2006 (2) SA 311 (CC).


Afribusiness NPC v Minister of Finance 2021 (1) SA 325 (SCA).


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


Joubert Galpin Searle Inc and others v Road Accident Fund and others 2014 (4) SA 148 (ECP).


Allpay Consolidated Investment Holdings (Pty) Ltd and others v Chief Executive Officer, South African Social Security Agency, and others 2014 (1) SA 604 (CC).


Legislation Cited


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


Promotion of Administrative Justice Act 3 of 2000.


Public Finance Management Act 1 of 1999.


Preferential Procurement Policy Framework Act 5 of 2000.


Construction Industry Development Board Act 38 of 2000.


Rules of Court Cited


No rules of court were cited in the judgment.


Held


The court held that the municipality’s decision to sell tender documents constituted administrative action for purposes of PAJA, but that the applicants failed to establish that the decision and related conduct were unlawful under the applicable procurement prescripts relied upon.


The court held that charging a non-refundable fee for tender documents was contemplated by the applicable tender standard, that the municipality’s estimate of printing costs was accepted on the papers, and that the municipality’s failure to attempt to make documents available on its website did not render the sale unlawful. It further held that several legal instruments invoked by the applicants (including section 217 directly, the PFMA, treasury regulations made under it, certain PPPFA regulations, and the National Treasury guide) did not assist because of either impermissible reliance, inapplicability to municipalities, or lack of force at the relevant time.


LEGAL PRINCIPLES


The judgment applied the principle that where national legislation has been enacted to give effect to a constitutional imperative, a litigant may not avoid that legislation by relying directly on the constitutional provision in a manner that undermines the statutory framework.


It reaffirmed that the applicability of procurement and financial management instruments depends on their statutory scope, and that legislation and regulations made under the PFMA do not apply to entities (such as municipalities) that fall outside the PFMA’s defined domain.


In relation to PAJA, the judgment applied the principle that administrative action is reviewable under section 6(2)(i) only if it is shown to be unconstitutional or unlawful, and that not every failure to comply with an aspirational or cost-avoidance standard necessarily translates into unlawfulness. The court treated the relevant tender provisions as permitting the recovery of printing costs (within limits) and viewed the “attempt to make available on a website” requirement as aimed at reducing printing costs rather than creating an absolute prohibition on selling documents where such an attempt was not made.


The judgment also applied the approach to motion proceedings that where a respondent’s factual version is not so far-fetched or untenable that it must be rejected on the papers, that version may be accepted for purposes of determining the dispute.

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[2023] ZAECMKHC 44
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My Pride Smile Africa (Pty) Ltd and Another v Umzimvubu Local Municipality (2313/2022) [2023] ZAECMKHC 44 (6 April 2023)

IN THE HIGH COURT OF
SOUTH AFRICA
(EASTERN CAPE
DIVISION, MAKHANDA)
CASE NO: 2313/2022
In the matter between:
MY PRIDE SMILE AFRICA
(PTY) LTD

First Applicant
EASTERN CAPE BLACK
CONTRACTORS FORUM

Second Applicant
and
UMZIMVUBU LOCAL
MUNICIPALITY

Respondent
JUDGMENT
Bloem
J:
1.
This was originally an application for the
reconsideration of an order granted by this Court on 23 August 2022.
The application
was instituted on 22 July 2022.  On 27 July 2022
the deputy sheriff served the founding application papers on the
Umzimvubu
Local Municipality, the respondent herein (the
municipality). The first applicant is cited as a private construction
company and
the second applicant described itself as “
a
non-profit organisation which has been formed with the object of
advancing and protecting the interests of Eastern Cape black

contractors
”. In the notice of
motion the applicants notified the municipality that on Wednesday, 10
August 2022 they would seek an order
that the application be treated
as one of urgency;  that the municipality’s sale of the
tender documents without making
those documents available on its
website be declared unlawful and unconstitutional and be reviewed and
set aside; that the municipality

be
directed to make available the tender documents free of charge in the
manner set out in the National Treasury Guideline and/or
Standard
Conditions of Tender
”;
that, pending the finalisation of the application, the municipality
be interdicted from continuing with the evaluation
of the tenders
received, appointing contractors in terms of the tender, concluding
any contract with the appointed contractor(s)
in terms of the tender
and concluding any contract with the appointed contractor(s) or
implementing such contract. The municipality
was also notified in the
notice of motion that, should it intend opposing the relief sought,
it should notify the applicants’
attorney in writing of its
intention to do so by no later than 28 July 2022 and then deliver its
answering affidavit on or before
1 August 2022.  No such notice
of intention to oppose the application was delivered.
2.
On 10 August 2022 the application was
postponed to 16 August 2022 and on 16 August 2022 it was postponed to
23 August 2022, with
no appearance on behalf of the municipality on
either date.  On 23 August 2022 the court granted an order
substantially in
accordance with the relief sought in the notice of
motion, but in the form of a rule
nisi
returnable on 6 September 2022.  The order was served on the
municipality on 1 September 2022.  On 2 September 2022 the

municipality delivered written notice of its intention to oppose the
application.  On 6 September 2022 and by agreement, the

application was postponed
sine die
,
with the rule
nisi
extended until confirmed or discharged.  On 11 October 2022
the municipality delivered its answering affidavit, deposed
to by its
municipal manager.  The application was set down to be heard on
15 November 2022, on which day it was postponed
to 9 January
2023.  On 16 January 2023 the applicants delivered a
replying affidavit deposed to by the Chief Executive
Officer of the
second applicant.  At the hearing, counsel agreed that, since
all the affidavits had been delivered, the rule
nisi
should either be confirmed or discharged.
3.
The
factual background is that during July 2022 the municipality invited
tenderers to submit tenders on various capital projects,
the one in
question being in respect of the Ntibani Access Road and Bridge
Maintenance.  The closing date for the submission
of tenders was
27 July 2022, on which day the founding application papers were
served on the municipality.  In the invitation
to submit their
tenders, tenderers were informed by the municipality that tender
documents would be sold at a non-refundable fee
of R451.  The
applicants’ case is that the municipality’s decision to
sell tender documents at a non-refundable
fee was unlawful and
therefore unconstitutional and falls to be reviewed and set aside in
accordance with section 6 of the Promotion
of Administrative Justice
Act
[1]
(PAJA).
4.
In
support of its contention that the municipality acted unlawfully, the
applicants alleged in their founding affidavit that the
municipality
breached the provisions of section 217
[2]
of the Constitution, the Public Finance Management Act
[3]
(the PFMA) and its regulations, the Preferential Procurement Policy
Framework Act
[4]
and its
regulations, the Standard for Uniformity in Engineering and
Construction Works Contracts
[5]
(the Standard), the Code of Conduct for All the Parties Engaged in
Construction Procurement
[6]
(the
Code of Conduct) and the National Treasury’s
Supply
Chain Management: A Guide for accounting officers/authorities
(the National Treasury’s Guide).
5.
The applicants’ reliance on section
217 of the Constitution is impermissible.   Section 217(3)
of the Constitution
provides that national legislation must prescribe
the framework within which a procurement policy, referred to in
section 217(2),
must be implemented.  The Preferential
Procurement Policy Framework Act is the national legislation that was
passed to give
effect to section 217(3) by providing a framework for
the implementation of the procurement policy contemplated in section
217(2)
of the Constitution.
6.
In
Minister
of Health and another NO v New Clicks South Africa (Pty) Ltd and
others (Treatment Action Campaign and others as amici
curiae)
[7]
it was held that a litigant cannot avoid the provisions of
national legislation which was passed to give effect to a
constitutional
imperative by going behind such national legislation
and seeking to rely on the section in the Constitution providing for
such
constitutional imperative or common law.  That, it was
held, would defeat the purpose of the Constitution in requiring, in

this case, the provision of a framework within which a procurement
policy referred to in section 217(2) must be given effect to
by means
of national legislation.  If the applicants believed that they
had a case in that regard, they were required to rely
on the
provisions of the Preferential Procurement Policy Framework Act, and
not section 217 of the Constitution.
7.
According
to its preamble, the Public Finance Management Act
inter
alia
regulates
financial management in the national and provincial governments.
Section 3 provides that the Public Finance Management
Act, to the
extent indicated therein, applies to departments, public entities
listed in Schedule 2 or 3 and constitutional
institutions.
A municipality is not a public entity listed in either Schedule 2 or
3.  In terms of section 1 of the
Public Finance Management Act,
a “constitutional institution” means an institution
listed in Schedule 1 and “department”
means a
national or provincial department or a national or provincial
government component.  A municipality is not listed
as a
constitutional institution in Schedule 1.
[8]
8.
Counsel for the applicants did not persist
with the submission that a municipality is a provincial government
component, because
a municipality is not listed in Part B of Schedule
3 of the Public Service Act, 1994, as required by the definition of
“provincial
government component” in section 1 of the
Public Finance Management Act.  Since the latter Act does not
apply to a municipality,
the applicants’ reliance on it was
misplaced.
9.
The
applicants relied on regulation 16A(6)(3)(a)(ii) of the Treasury
Regulations,
[9]
which provides
that the accounting officer or accounting authority must ensure that
bid documentation and the general conditions
of a contract are in
accordance with the prescripts of the Construction Industry
Development Board (the Board) in a case of a bid
relating to the
construction industry.  The applicants contended that the
municipality’s bid documentation was not in
accordance with the
provisions of the Board, since the municipality sold the tender
documents at a non-refundable fee of R451.
The applicants’
reliance on that regulation was articulated as follows in the
founding affidavit:

33.
In terms of the said national treasury regulation 16A,
sub-regulations 16A(6)(3)(a)(ii) provides that
the accounting officer
must ensure that bid documentation and the general conditions of
contract are in accordance with the prescripts
of the Construction
Industry Development Board, in the case of a bid relating to the
construction industry.
34.
The sub-regulation contemplated in the aforegoing paragraph is
self-explanatory and unambiguous
in that in the bid in casu, public
entities such as the respondent are at all material times during the
procurement of the construction
services, bound by the national
treasure regulations, and more specifically regulation 16A.  in
terms of the said regulation,
the respondent in its procurement of
construction goods, is called on to comply with, and observe the CIDB
prescripts.

10.
Regulation
1.2.1 provides that the Treasury Regulations apply to departments,
constitutional institutions, public entities and the
South African
Revenue Service.  The applicants cannot rely on the Treasury
Regulations.  Firstly, the Treasury Regulations
were made in
terms of section 76 of the Public Finance Management Act.  If
that Act does not apply to a municipality, as pointed
out above, then
the regulations made in terms thereof also do not apply to a
municipality.  Secondly, regulation 16A.2 specifically
provides
for the entities to which the Treasury Regulations apply.
[10]
A municipality is not listed therein.  In the circumstances,
regulation 16A(6)(3)(a)(ii) also does not apply to a municipality.
11.
The Preferential Procurement Policy
Framework Act was published to give effect to section 217(3) of the
Constitution by providing
a framework for the implementation of the
procurement policy contemplated in section 217(2) of the
Constitution.
12.
The
2011 Preferential Procurement Regulations
[11]
were the precursor to the 2017 Preferential Procurement
Regulations.
[12]
On 2 November
2020 the Supreme Court of Appeal
[13]
held that the 2017 Preferential Procurement Regulations were
inconsistent with the Preferential Procurement Policy Framework Act

and were thus invalid.  In the majority judgment, the
Constitutional Court
[14]
dismissed the appeal against the judgment of the Supreme Court of
Appeal.  The result is that on 22 July 2022, when the present

application was instituted, the 2017 Preferential Procurement
Regulations were of no force and effect.  The 2023 Preferential

Procurement Regulations
[15]
came into effect only on 16 January 2023.  They accordingly do
not apply to this application.  The applicants’
reliance
on the 2011 or 2017 Preferential Procurement Regulations was
therefore also misplaced.
13.
I
now deal with the applicants’ reliance on the Standard.
The legislative framework is that the Board was established
as a
juristic person in terms of section 2 of the Construction Industry
Development Board Act
[16]
(the
CIDB Act).  One of the objects of the Board is to promote,
establish or endorse uniform standards that regulate the actions,

practices and procedures of parties engaged in construction
contracts.
[17]
Section
5(3)(c) provides that, to advance the uniform application of policy
with regard to construction industry development,
the Board must,
within the framework of procurement policy of Government, promote the
standardisation of the procurement process
with regard to the
construction industry.
14.
The
Minister of Public Works made the Construction Industry Development
Regulations, 2004.
[18]
Regulation 24(c) provides that every client or employer who is
soliciting competitive tenders in the construction industry
must
publish  that invitation to tender on the Board’s website
and that solicitation must be in accordance with the
Standard.
The Standard contains Annexes A to E.  The Annexes which are
relevant to this application are A and C.
15.
Annex A provides for a Standard Tender
Notice and Invitation to Tender.  It is stated therein that “
(A)
non-refundable tender deposit of R… payable in cash or by bank
guaranteed cheque made out in favour of the Employer is
required on
collection of the tender documents
.”
That provision may be omitted if it is not a requirement
and the wording may be amended if cheques or cash
are not
acceptable.  In terms of Annex A, an employer is accordingly
within its right to charge a non-refundable deposit for
the tender
documents.
16.
Annex C provides for Standard Conditions of
Tender.  C.2 deals with a tenderer’s obligations.
C.2.1 deals with
the eligibility of tenderers and an employer’s
duty to notify tenderers of any proposed material change in the
capabilities
or formation of the tendering entity or any other
criteria which formed part of the qualifying requirements used by the
employer
as the basis in a prior process to invite tenderers to
submit a tender offer and obtain the employer’s written
approval to
do so prior to the closing time for tenders.
17.
C.2.2 deals with the cost of tendering.
It provides as follows:

C.2.2.1
Accept that, (sic) unless otherwise stated in the tender data, the
employer will not compensate
the tenderer for any costs incurred in
the preparation and submission of a tender offer, including the costs
of any testing necessary
to demonstrate that aspects of the offer
complies with requirements.
C.2.2.2
The cost of the tender documents charged by the employer shall be
limited to the actual cost incurred by the
employer for printing the
documents. Employers must attempt to make available the tender
documents on its website so as not to
incur any costs pertaining to
the printing of the tender documents.”
18.
Under C.2.2.1 an employer is not liable to
compensate a tenderer for any cost incurred by the tenderer in the
preparation and submission
of a tender.  The first sentence of
C.2.2.2 reinforces the employer’s entitlement to charge a fee
for the cost of the
tender documents, but places a limitation on that
entitlement to the actual cost incurred by the employer for having
printed the
documents.  In his answering affidavit that
municipal manager stated that the fee charged for the sale of the
tender documents
is a true estimate of the cost of the printing of
the tender documents, which includes the paper on which the tender
documents
are printed.  Although the applicants deny that the
cost incurred by the municipality for the printing of the tender
documents
amounts to R451, the municipality’s version is not so
far-fetched or untenable that it should be rejected.  I
accordingly
accept the municipality’s version in that regard.
19.
The second sentence of C.2.2.2 required the
municipality to attempt to make the tender documents available on its
website so that
the municipality did not have to print the tender
documents and thereby incurring cost when it has to print them.
A tenderer
could download the tender documents from the
municipality’s website at his or her own expense.  In his
answering affidavit
the municipal manager did not state whether or
not the municipality has a website and, if so, whether or not it
attempted to make
the tender documents available on its website.
I shall therefore accept that the municipality has a website and that
it failed
to attempt to make the tender documents available on its
website.
20.
Against the above background, the effect of
the municipality’s failure to attempt to make the tender
documents available on
its website is that prospective tenderers must
purchase the tender documents from the municipality. The applicants
contended that
the municipality’s conduct in that regard
amounted to gatekeeping and “
is
blatantly unconstitutional and unlawful and goes against the
prescripts of the CIDB Standard and its Standard Conditions of Tender

which is binding upon the respondent in casu

and that “
the decision to sell
tender documents at such an exorbitant amount while refusing, or
taking no steps to avail the documents in
printable/electronic form
falls to be reviewed in accordance with section 6 of PAJA

and should therefore be set aside.
21.
The applicants seek an order, based on
section 6(2)(i) of PAJA, which provides that a court or tribunal has
the power to judicially
review an administrative action if the action
is otherwise unconstitutional or unlawful.  The municipality
contended that,
because the Board is empowered to promote the
standardisation of procurement processes with regard to the
construction industry,
it may issue only guidelines and give advice
relevant to the construction industry.  It contended that the
Board is not empowered
to issue mandatory provisions or prescripts
that bind a municipality.
22.
It must be determined whether the
municipality’s decision to sell the tender documents
constitutes administrative action.
In so far as it is relevant,
in terms of section 1 of PAJA “‘
administrative
action’
means any decision
taken, or any failure to take a decision, by –
(a)
an organ of state, when-
(i)
exercising a power in terms of
the Constitution or a provincial constitution; or
(ii)
exercising a public power or performing a public function in terms of
any legislation; or
(b)
a natural or juristic person, other
than an organ of state, when exercising a public power or performing
a public function in terms
of an empowering provision,which adversely
affects the rights of any person and which has a direct, external
legal effect…”.
23.
The municipality exercised a power in terms
of Annexes A and C of the Standard, which, in turn is the product of
the formulation
of policy by the Board in the exercise of the powers
it has in terms of the CIDB Act.  In my view, the municipality’s

decision to sell the tender documents constituted administrative
action.
24.
The next issue to be determined is whether
the administrative action should be reviewed on the basis of it being
unlawful and therefore
unconstitutional.  Put differently, the
enquiry is whether the sale of the tender documents by the
municipality was unlawful.
Administrative action which is not
in accordance with the law is unlawful.  The Board’s
powers, functions and duties
are contained in section 5 of the CIDB
Act.  They include the provision of strategic leadership, the
promotion of best practice,
the advancement of a uniform application
of policy with regard to the construction industry development, the
promotion of uniform
and ethical standards within the construction
industry, the promotion of sustainable growth of the construction
industry and the
participation of the emerging sector therein, the
promotion of appropriate research, the implementation of policy and
advising
the Minister of Public Works on
inter
alia
legislation impacting on the
construction industry or proposing amendments to the CIDB Act.
In terms of section 5(9) of the
CIDB Act, the Board may advise the
aforesaid Minister on the effectiveness of the implementation of
inter alia
legislation developed by the Minister or by the Board itself.
Although the Board may develop legislation, it does not have
the
power to make legislation.
25.
As pointed out above, C.2.2.2 does not
prohibit an employer from selling tender documents.  It obliges
an employer to attempt
to make tender documents available on its
website.  If an employer does not have a website or has
attempted but failed to
make the tender documents available on its
website, the sale of tender documents by the employer, under those
circumstances, will
not render the sale unlawful.  If an
employer has a website but has not attempted to make the tender
documents available on
its website, its failure will result in the
incurring of cost pertaining to the printing of the tender
documents.  The employer’s
failure will accordingly result
in a situation which C.2.2.2 seeks to avoid.  That result does
not make the employer’s
failure wrongful.  Such failure
simply results in cost being incurred.
26.
In the circumstances, the municipality’s
failure to make the tender documents available on its website and its
resultant sale
of the tender documents to prospective tenderers are
not unlawful. The administrative action complained of by the
applicants is
accordingly not unlawful.  The result is that the
applicants are not entitled to an order that the municipality’s
decision
to sell the tender documents be reviewed and set aside in
terms of section 6(2)(i) of PAJA.
27.
The
applicants also alleged that the municipality has breached the
provisions of paragraph 2.2.3 of the Code of Conduct.
[19]
Section 5(4) of the CIDB Act authorises the Board to establish and
promote uniform and ethical standards that regulate the
actions,
practices and procedures of parties engaged in construction contracts
and that the Board must publish a code of conduct
for construction
procurement for all participants involved in the procurements
process.  The Board accordingly obliged when
it published the
Code of Conduct. Paragraph 2.2.3 thereof provides that parties in any
public or private construction-related procurement
should, in their
dealings with each other, comply with all applicable legislation and
associated regulations.  The applicants’
complaint in this
regard was “
that
the conduct of the first and second respondent, by not observing the
relevant legislation and regulations which it ought to
have observed
when procuring the construction services, committed a breach of the
code
”.
The municipality is the only respondent herein.  Secondly, the
applicants’ reliance on the Public Finance
Management Act and
the Preferential Procurement Policy Framework Act has been shown to
be misplaced.  The applicants have
failed to identify the other

relevant
legislation and regulations

which the municipality allegedly did not observe and thereby
committing a breach of the Code.  There is accordingly
no merit
in that complaint.
28.
The
last string in the applicants’ bow was item 4.9 of the National
Treasury’s Guide.
[20]
Item 4.9 deals with the invitation to prospective tenderers to
submit tenders.  Regarding the sale of tender documents,
item
4.9 provides that accounting officers or accounting authorities may
decide to charge a refundable or non-refundable fee for
tender
documents if and when necessary, provided that:
28.1.
the fees should be reasonable and reflect
only the costs of their printing and their delivery to prospective
tenderers;
28.2.
the fees should not be so high as to
discourage prospective tenderers; and
28.3.
all monies received for the sale of tender
documents must be paid into the National Revenue Fund or provincial
revenue funds in
terms of the Public Finance Management Act.
29.
The
applicants complained “
that
it was not necessary for the respondent to sell tender documents,
instead of availing them free of charge as contemplated in
the
guideline, and therefore avoid the costs of printing
.”
In
Joubert
Galpin Searle Inc and others v Road Accident Fund and others
[21]
it was held by Plasket J (as he then was) that the National
Treasury’s Guide was part of what Froneman J included in
‘the
constitutional and legislative procurement framework’ in
Allpay
Consolidated Investment Holdings (Pty) Ltd and others v Chief
Executive Officer, South African Social Security Agency,
and
others
.
[22]
Plasket J said that the National Treasury’s Guide forms
part of those provisions that both empower and limit the powers
of
public bodies involved in the procurement of goods and services and
is not merely an internal prescript that may be disregarded
at whim.
With respect, Froneman J did not refer to, and accordingly did not
include, the National Treasury’s Guide
as part of the
constitutional legislative procurement framework with which he was
concerned in
Allpay
.
Froneman J dealt with section 217 of the Constitution, the Public
Finance Management Act, the Preferential Procurement Policy
Framework
Act and the regulations in terms of the latter Acts.  In
particular, Froneman J referred to the treasury regulations
issued
pursuant to section 76 of the Public Finance Management Act.
30.
The National Treasury’s Guide itself
states, in the preface thereof, that it is not a substitute for
legislation and should
not be used for legal interpretations.
It states that it does not in any way detract from the
responsibilities that Parliament
and the provincial legislatures
expect all accounting officers and authorities to fulfil in terms of
the Public Finance Management
Act and the Preferential Procurement
Policy Framework Act.
31.
In
any event, the National Treasury’s Guide is irrelevant in this
application as it applies to accounting officers and accounting

authorities, as defined in sections 36
[23]
and 49
[24]
respectively of the
Public Finance Management Act.  A municipality is neither a
department, a constitutional institution nor
a public entity.  The
National Treasury’s Guide applies only to constitutional
institutions, public entities as defined
in Schedule 3A and 3C of the
Public Finance Management Act, national and provincial departments,
trading entities and all school
governing bodies.  As pointed
out above, a municipality is not a public entity or a national or
provincial department.
It is obviously also not a school
governing body. According to section 1 of the Public Finance
Management Act, ‘trading entity’
means
an entity operating within the administration of a department for the
provision or sale of goods or services, and established,
in the case
of a national department, with the approval of the National Treasury;
or in the case of a provincial department, with
the approval of the
relevant provincial treasury acting within a prescribed framework.
A
trading entity does not operate within a municipality. Constitutional
institutions are listed in Schedule 1 of the Public Finance

Management Act.  A municipality is not listed as a
constitutional institution.  In all the circumstances, the
National
Treasury’s Guide did not assist the applicants’
case.
32.
For the reasons set out above, the
application must be dismissed.  There is no reason why the
applicants should not pay the
respondent’s costs.
33.
In the result, it is ordered that:
1.
The rule
nisi
issued on 23 August 2022 be and is hereby discharged, with the result
that the application is dismissed.
2.
The applicants shall pay the respondent’s
costs of the application jointly and severally the one paying the
other to be absolved.
G H BLOEM
Judge of the High Court
For
the applicants:
Mr
WH Olivier, instructed by Moletsane PN Attorneys, East London and
Yokwana Attorneys, Makhanda.
For
the respondent:
Mr
D Crampton, instructed by Mdledle Inc, Pietermaritzburg and Cloete
and Company, Makhanda.
Date
heard:
19
January 2023.
Date
of delivery of judgement:
6
April 2023.
[1]
Promotion
of Administrative Justice Act, 2000 (Act 3 of 2000).
[2]
Section
217 of the Constitution, which deals with procurement, reads as
follows:

(1)
When an organ of state in the national, provincial or local sphere
of government, or any other institution identified
in national
legislation, contracts for goods or services, it must do so in
accordance with a system which is fair, equitable,
transparent,
competitive and cost-effective.
(2)
Subsection (1) does not prevent the organs of state or institutions
referred to in that subsection from implementing
a procurement
policy providing for-
(a)
categories
of preference in the allocation of contracts; and
(b)
the
protection or advancement of persons, or categories of persons,
disadvantaged by unfair
discrimination.
(3)
National legislation must prescribe a framework within which the
policy referred to in subsection (2) must
be implemented.”
[3]
Public
Finance Management Act, 1999 (Act 1 of 1999).
[4]
Preferential
Procurement Policy Framework Act, 2000 (Act 5 of 2000).
[5]
Published
under GenN 423 in Government Gazette 42622 of 8 August 2019.
[6]
Published
under BN 127 in Government Gazette 25656 of 31 October 2003.
[7]
Minister
of Health and another NO v New Clicks South Africa (Pty) Ltd and
others (Treatment Action Campaign and another as amici
curiae)
2006
(2) SA 311
(CC) at para 96.
[8]
The
following
are
the constitutional institutions listed in Schedule 1
of
the
Public Finance Management Act
:
The
Commission for Gender Equality.
The
Commission for the Promotion and Protection of the Rights of
Cultural, Religious and Linguistic Communities.
The
Financial and Fiscal Commission.
The
Human Rights Commission.
The
Independent Communications Authority.
The
Independent Electoral Commission.
The
Municipal Demarcation Board.
The
Pan South African Language Board.
The
Public Protector.
[9]
The
Treasury Regulations were issued under GN R225 in Government Gazette
27388 of 15 March 2005.
[10]
The
framework applies to all departments, constitutional institutions
and public entities listed in Schedules 3A and 3C of the
Public
Finance Management Act.
[11
]
Published
under GN R502 in Government Gazette 34350 of 8 June 2011.
[12]
Published
under the GN R32 in Government Gazette 404553 of 20 January 2017.
[13]
Afribusiness
NPC v Minister of Finance
2021 (1) SA 325 (SCA).
[14]
Minister
of Finance v Afribusiness NPC
2022 (4) SA 362 (CC).
[15]
Published
under GN 2721 in Government Gazette 47452 of 2 November 2022.
[16]
Construction
Industry Development Board Act, 2000 (Act 38 of 2000).
[17]
Section
4(f)(i) of the CIDB Act.
[18]
Construction
Industry Development Regulations, 2004 published under GN 692 in
Government Gazette 26429 of 9 June 2004, as amended.
[19]
Footnote
6.
[20]
Paragraph
4.
[21]
Joubert
Galpin Searle Inc and others v Road Accident Fund and others
2014 (4) SA 148
(ECP) at para 73.
[22]
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 paras 31-40.
[23]
Section 36(1) provides that every department and every
constitutional institution must have an accounting officer.
[24]
Section 49(1) provides that every public entity must have an
authority which must be accountable for the purposes of the
Public
Finance Management Act.