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2022
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[2022] ZAFSHC 252
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DS Consortium v The MEC Free State Provincial Department of Sports, Arts, Culture and Recreation and Another (Reasons) (4568/2022) [2022] ZAFSHC 252 (3 October 2022)
FLYNOTES:
TENDER FOR FESTIVAL
Procurement
– Tender specifications – Bids on basis of multiple
venues – Bidders not notified of change
to single venue –
Undisclosed correspondence with winning bidder – Tender
process not fair, equitable and competitive
– Constitution,
s 217.
IN
THE HIGH COURT OF SOUTH AFRICA
,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
number:
4568/2022
Reportable:
YES/NO
Of
Interest to other Judges: YES/NO
Circulate
to Magistrates: YES/NO
In
the matter between:
DS
CONSORTIUM
Applicant
and
THE
MEC:
FREE
STATE
PROVINCIAL
DEPARTMENT
OF
SPORTS, ARTS, CULTURE AND RECREATION
First
Respondent
C-SQUARED
GROUP (PTY) LTD
Second
Respondent
Reasons
for the Orders handed down on 3 October 2022
[1]
On 3 October 2022 I handed down the Orders of Court in this
application, and I informed
that the reasons for the Orders made
would be made available today, 6 October 2022, to the Registrar of
this Court and the attorneys
representing the parties by e-mail. Due
to the large number of opposed applications this duty Court had to
deal with in the past
week, this was the only option left to ensure
that the parties in this application be informed of the Court's
decision as soon
as possible.
[2]
The application concerned the award of a tender by the First
Respondent to the Second
Respondent to provide event management
services for the Macufe Festival in Bloemfontein, which festival has
already commenced on
25 September 2022, and will be held until 9
October 2022. The Applicant contends that the awarding of the tender
was tainted by
administrative irregularities, in that it deviated
from the tender specifications published by the First Respondent. It
therefore
moves for the reviewing and setting aside of the decision
to award the tender to the Second Respondent.
[3]
The tender notice inviting bids from
prospective service providers contained the tender specifications in
respect of the dates and
venues of the Macufe events as follows:
3.1
A Gospel Music Show at Vista University
or the Molemela Stadium on 2 October 2022.
3.2
A Film Expo at PACOFS on 4 October 2022.
3.3
A Comedy Show at PACOFS on 5 October
2022.
3.4
Theatre Event at the Civic Theatre on 6
October 2022.
3.5
A Fashion Show at the Bloemfontein
Showgrounds on 6 October 2022.
3.6
A Divas Show at the Vista University or
the Molemela Stadium on 6 October 2022.
3.7
A Hip-Hop Show at the Rose Gardens on 7
October 2022.
3.8
A Boxing Event at the Bloemfontein City
Hall on 7 October 2022.
3.9
A main Jazz Music Festival at the Rose
Gardens on 8 October 2022, and
3.10
A Soccer or Rugby match at the Free
State stadium on 9 October 2022.
[4]
It appears to be common cause that the
Applicant was one of those who submitted an acceptable bid based on
these tender specifications.
On 26 August 2022, however, the
Applicant saw in the media that the tender had been awarded to the
Second Respondent. It was only
on 9 September 2022 that the Applicant
came across the promotion of certain of the Macufe events as they
were published on the
First Respondent's website. It transpired that
except for the Rugby or Soccer match at the Free State Stadium, the
Theatre event
at the Civic Theatre, the event at the Rose Gardens,
the Film Expo at PACOFS and the Boxing event at the City Hall, all of
the
Macufe events contemplated by the bid invitation would now be
held at a single venue, namely the marquee tent of the Second
Respondent
already erected at Old Greys sports club.
[5]
The bid of the Applicant amounted to R22
960 962.40, while the bid of the Second Respondent was markedly
lower, namely R16 849 863.80.
The Applicant is of the view that by
requiring bidders to price their bids on the basis that the services
were required at multiple
venues across Bloemfontein, while
eventually the First Respondent deviated from these requirements by
awarding the tender on the
basis that a number of the events were to
be held at a single venue, other bidders such as the Applicant were
deprived from a fair
opportunity to price their tenders
competitively. Competitors should be treated equally in the sense
that they should all be entitled
to tender for the same thing, the
Applicant says.
[6]
The Applicant contends that the change
in venues has a direct influence on bid prices, because if equipment
and services had to
be moved from one venue to another, there would
be significant additional costs involved, such as costs relating to
labour, transportation
and cleaning services. Had it known that a
number of the events could be hosted at a single event, its bid would
have been significantly
lower, according to the Applicant.
[7]
It was argued before me on behalf of the
Respondents that the application is not urgent, because the Applicant
had already known
on 26 August 2022 that the tender had been awarded
to the Second Respondent. Subsequently the Applicant had queried the
award in
correspondence with the First Respondent on certain grounds.
It is clear, however, that those grounds were bc;1seless, and that
the event which triggered the application presented itself on 9
September 2022, when it became known that a number of events would
be
held at a single venue. The application was filed on 19 September
2022, or put differently, 6 court days later. The question
is then
whether the Applicant could be afforded substantial redress if the
application was brought in the normal time periods.
It speaks for
itself that this could not have been possible. The application was
therefore found to be compliant with the requirements
of urgency.
[8]
As for the merits of the application, I
find it significant that the First Respondent does not dispute the
allegation that the management
services would be cheaper
if all or some of the events are held at
the same venue.
Nor
does it dispute that if the Applicant had known that multiple events
could be hosted at a single venue, the Applicant's bid
would have
been lower than the bid it had submitted. Furthermore, in its
opposing papers the First Respondent does not tell on
what basis the
tender was awarded to host events at a venue that was different to
what was specified in the bid invitation. All
that the First
Respondent put up as a defence is that it was entitled to negotiate a
change in venues with the Second Respondent
after the tender was
already awarded to the Second Responded.
[9]
Now this defence relied upon by the
First Respondent
does
not take cognisance of a letter written by the Second Respondent's
attorneys to the Department prior to the submission of its
tender.
This letter was disclosed to the Court by the Applicant by way of a
supplementary affidavit one court day before the hearing.
Incidentally, the Department did not disclose this letter to the
Court in its opposing papers, and when it did become disclosed,
the
Department failed to deal with it.
[10]
In the said letter it is pointed out that the Second Respondent
intends to bid for the services called for, but
it is also pointed
out that the Second Respondent is organising entertainment events
under its own umbrella that will take place
during the same time
frame in Bloemfontein than the envisaged Macufe Festival. It is said
in the letter that the Second Respondent
does not want to compete
with the Department in respect of the events, and it is suggested
that "the parties meet amicably
to consider how to enter into a
public private partnership agreement where our client could extend
assistance to the Department
to ensure that the entertainment value
of the event is a success". The letter further suggests that
"the parties come
together as soon as possible to find common
ground and to prevent a duplication of events which would not serve
the best interest
of the local Macufe patrons and might lead to
fruitless expenditure".
[11]
In my view, this letter provides a
perfect explanation for the award of the tender to the Second
Respondent on terms outside the
tender specifications. The failure of
the Department to deal with this letter in its papers only lends
support to this view. It
needs mentioning that also in the record of
decision filed by the Department,
there
is not a word of reference to this letter and the effect it had on
the award of a tender. I regard this omission as highly
suspicious,
to say the least.
[12]
In the answering affidavit filed by the
Second Respondent, it mainly raised technical objections, for
instance that the Applicant
lacked
locus
standi
since it is a joint venture
comprising of two different companies, and that a joint venture does
not have legal personality. This
objection has no merit, since the
only shareholder and director of the one company duly authorised the
only shareholder and director
of the other company to launch the
application in name of both companies, or then the joint venture. The
Second Respondent further
denied any urgency in the application. I
have already dealt with the issue of urgency. In addition, the Second
Respondent contends
that the Applicant failed to disclosed a cause of
action. I will briefly deal with this aspect hereunder.
[13]
Having regard to all the papers filed in
this application, I have no hesitation in finding that the award of
the tender to the Second
Respondent was the result of a tender
process that was not fair, equitable and competitive. It means that
the First Respondent
acted in contravention of Section 217 of the
Constitution. Section 217 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. By
deviating from the venues specified in the tender invitation without
informing
the Applicant and the other tenderers, the Department
defeated the objectives as set out in Section 217.
[14]
In the premises, I have granted prayers
1, 2, 3 and 5 of the Notice of Motion in so many words. In prayer 4,
the following orders
are sought:
4.
That the tender be awarded to the
Applicant, alternatively that the First Respondent be ordered to
re-evaluate the bids submitted
and that the tender be awarded in
accordance with the following process:
4.1
The Second Respondent's bid must be
excluded from re evaluation;
4.2
The tender must be awarded to the
qualifying bidder who achieved the highest score according to the
80/20 preference points system;
4.3
If the highest bidders have equal
scores, the tender must be awarded to the bidder who scored the
highest number of preference points;
4.4
If the bidders are still equal, the
tender must be awarded to the bidder who scored the highest points
for functionality; and
4.5
If the bidders are still equal, the
winner must be decided by the drawing of lots.
[15]
Now as far as these prayers are
concerned, I am mindful of the facts alleged by the Applicant that
the Macufe Festival is one of
the largest emerging festivals in
Africa, and that when it was last hosted in 2019, it attracted
approximately two hundred thousand
patrons. I am also mindful of what
is alleged by the Second Respondent, namely that the first event of
the festival had already
taken place on 25 September 2022, to wit the
Macufe soccer match in the Free State Stadium. That was the day
before this application
was heard.
[16]
The effect hereof is unescapable: the
Macufe festival is already underway and in full swing. Prayer 4 of
the Notice of Motion deals
with the suggested remedy should the award
decision be reviewed and set aside. I do not think that orders in
terms of prayer 4
would be in the public interest because it would,
in all probability, bring an abrupt end to the festival. It would
also have financial
repercussions for many institutions and patrons.
It is for this reason that I have refrained from granting the orders
contemplated
in prayer 4. It is best to leave the way forward in the
hands of the parties without interference by the Court, which could
have
a disastrous effect on a wide front.
[17]
Section 172 of the Constitution provides
for the powers of courts in constitutional
matters. Section 172(1)(a) provides that
a court must declare that any conduct that is inconsistent with the
Constitution, is invalid
to the extent of its inconsistency. This is
what this court has done in the present case. Section 172(1)(b)
provides that a court
may make any order that is just and equitable.
In the present case, I regard it as just and equitable not to make
any order in
terms of prayer 4 in the circumstances.
P.
J. LOUBSER, J