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[2022] ZAFSHC 318
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Roadmac Surfacing (Pty) Ltd v MEC For The Department of Police, Roads and Transport, Free State Province and Another (171/2022) [2022] ZAFSHC 318 (14 November 2022)
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
No:
171/2022
Reportable:
NO
Of
Interest to other Judges: NO
Circulate
to Magistrates: NO
In
the matter between:
ROADMAC
SURFACING (PTY)
LTD
Applicant
(Registration
number: 1992/001299/07)
and
MEC
FOR THE DEPARTMENT OF POLICE, ROADS &
TRANSPORT,
FREE STATE PROVINCE
1
st
Respondent
TAU
PELE CONSTRUCTION (PTY)
LTD
2
nd
Respondent
(Registration
number: 2003/020819/07
CORAM
:
MOLITSOANE,
J et POHL, AJ
HEARD
ON
:
07
NOVEMBER 2022
JUDGMENT
BY
:
POHL, AJ
DELIVERED
ON
:
14
NOVEMBER 2022
I
INTRODUCTION
[1]
In this application, the applicant seeks an order that the decision
by the first respondent
to disqualify the applicant in a tender
and/or the award of the tender to the second respondent be reviewed
and set aside.
[2]
During March 2022, the applicant applied for interim relief, in the
form of an interdict,
pending the outcome of the present application
for review. On Monday, 28 March 2022 Daffue J, issued the following
orders:
“
1.
The first respondent is interdicted from giving instructions to the
second respondent and/or any other
tenderer to perform any further
work under
Tender No: PR&T18/2021/22
.
2.
The second respondent is interdicted
from commencing with any further work under
Tender
No: PR&T18/2021/22
.
3.
The orders in paragraphs 1 and 2 shall
serve as interim interdicts with immediate effect pending
finalisation of the review application
to be instituted on/or before
22 April 2022 by the applicant against the decision of the first
respondent to award
Tender No:
PR&T18/2021/22
to the second
respondent.
4.
The costs of 28 January 2022, 10
February 2022 and 24 March 2022 shall stand over for later
adjudication.
5.
The reasons for the orders will follow
in due course.”
[3]
Daffue J, duly delivered his reasons on 2 June 2022.
II
THE PARTIES
[4]
The applicant is Roadmac Surfacing (Pty) Ltd, represented by Adv N
Snellenburg SC
assisted by Adv JJ Buys, they being instructed by York
Attorneys, Bloemfontein.
[5]
The 1
st
respondent is the MEC for the Department of
Police, Roads and Transport, Free State Province, represented by Adv
L Bomela, instructed
by the State Attorney, Bloemfontein.
[6]
The 2
nd
respondent is Tau Pele Construction (Pty) Ltd,
represented by Adv S Grobler SC, instructed by Peyper Attorneys,
Bloemfontein.
III
THE RELIEF CLAIMED
[7]
The applicant claims the following relief from this Court in the
notice of motion:
“…
an
order in the following terms:
1.
That the decision of the first
respondent to disqualify the applicant in
Tender
no: PR&T 18/2021/22
and/or to
award
Tender No: PR&T 18/2021/22
to the second respondent be reviewed
and set aside.
2.
That the contract concluded with second
respondent pursuant to and as a result of the award of the tender
under
Tender No: PR&T 18/2021/22
be set aside.
3.
That the tender under
Tender
No: PR&T 18/2021/22
be awarded
to the applicant in terms of section 8(1)(c)(ii)(aa) of the Promotion
of Administrative Justice Act 3 of 2000 (“PAJA”),
alternatively
remitting
the aforesaid tender for bid evaluation by the first respondent
subject to such directions as the Court deems meet and
with due
consideration of the Court’s findings herein in terms of
section 8(1)(c)(i) of PAJA.
4.
That the first respondent be ordered to
pay the costs of this application on an attorney and client scale.
5.
That the second respondent be ordered to
pay the costs of this application if the application is opposed by
the second respondent.
6.
Further and alternative relief”
IV
BACKGROUND AND TENDER DOCUMENTATION
[8]
Upon invitation by the
Department of Police, Roads and Transport, Free State Province,
several construction companies submitted tenders for “the
special maintenance on Route P44/1&2 between Deneysville and
Jim
Fouche from section one (01) to section four (04).”
[1]
The
duration of the project was advertised to be six months only. Once
the tender had been awarded, the applicant, being one of
the
unsuccessful tenderers, decided to embark on litigation.
[9]
On 11 January 2022 the applicant became aware that the tender had
been awarded to
the second respondent. It immediately reacted
and requested reasons to be provided by 14 January 2022. No
reasons were
provided. On 18 January 2022 its application for
urgent relief, set down for 28 January 2022, was issued.
[10]
On 28 January 2022 an order was granted by agreement. The first
respondent was directed
to on or before 7 February 2022 file “full
and written reasons” for the decision not to award the tender
to the applicant.
The reasons
[2]
then followed as indicated above, and thereafter the
application for the interim relief referred to in paragraph
[2], supra. The reasons thus furnished by the first respondent
reads as follows: “It is a known fact that pre-qualification
being stage one(1) is compulsory for the contractor must complete 30%
subcontracting amount.The criteria found its way in terms
of Section
14 subparagraphs 14.1 to 14.6 of the Preferential Procurement
Regulations, 2017 pertaining to the
Preferential Procurement Policy
Framework Act of 2000
. We further refer Roadmac to SDB 6.1 of its
tender whereby it says “Not Applicable” while it MUST to
give subcontracting
amount as part of terms and conditions of the
tender. We further refer Roadmac to Tender Bulletin advertisement no.
75 dated 3
rd
December 2021 as to pre-qualification criteria (PPR2017). Based on
non compliance of 30% subcontracting, it was deemed not to be
responsive to pre-qualification at stage 1.”
[11]
The present review application was then issued on 22 April 2022 which
was opposed by the first
and second respondents. Opposing affidavits
were filed by the respondents and a replying affidavit was filed by
the applicant.
[12]
It is necessary to refer to the following portions of the tender
documentation to give context
to the cases put forward by the
respective parties.
[13]
The tender notice and invitation to tender has the following
paragraph on the first page thereof:
[3]
“The successful tenderer must subcontract a minimum of 30% of
the value of the contract to Targeted Enterprises through Contract
Participation Goals (CPG)”
[14]
At the portion of the documentation, just above the applicant’s
representative’s
signature, where the applicant was required to
stipulate its price for the bid, it stated that it offered the amount
of R38 803 821.40
VAT included. Just below that amount,
printed in bold as part of the tender documentation, the
following words appear:
“
WHICH
WILL INCLUDE A MINIMUM SUBCONTRACTING VALUE OF:”
[4]
That
portion was however not completed by the applicant but for the
acronym “TBC”. According to counsel it means “To
be
concluded” or “To be calculated”. Despite the
fact that this part of the tender document requesting
the
subcontracting amount in rand to be written in, the applicant did not
do so.4
[15]
Clause F.1.4 of the Tender data requires that all communication
between the Employer and the
Tenderer must be in writing between the
Tenderer and the Employer’s engineers or agent.
[5]
[16]
Clause F.2.3 of the Tender data, which deals with the
Tenderer’s obligations, requires
the Tenderer to check the
tender documentation for completeness and to communicate any
discrepancy or omission with the Employer.
[6]
[17]
Clause F.2.8 requires the tenderer to seek clarification from
the Employer at least 2 days
before closing time where clarification
is needed.
[7]
[18]
Clause F.2.14 requires “Information and data to be completed in
all respects” and
further “Accept that tender offers,
which do not provide all data or information requested completely
and, in form, required
may be regarded by the Employer as
non-responsive.”
[8]
[19]
Clause F.3.8.1, that deals with the test for responsiveness under the
heading dealing with the
employers obligations and reads as follows:
“Determine, on
opening and before detailed evaluation
,
whether each tender offer properly received: a) meets the
requirements of these Conditions of Tender, b) has been properly and
fully completed
and signed, and c)
is responsive
to the
other requirements of the tender documents. (emphasis added)
[20]
Clause F.3.8.3 then requires the Employer to reject a a non
responsive tender offer.
[9]
[21]
In the portion of the tender documentation that deals with the
returnable schedules, a note appears
that the tenderer must realise
that failure to complete the said documentation to the satisfaction
of the Employer, “may
lead to rejection on the grounds
that the tender is non-responsive.”
[10]
[22]
Paragraph 7 of the said documentation then deals specifically with
sub-contracting. The first
question is: “Will any portion of
the contract be sub-contracted?
[11]
There is then a tick box with the options of “yes” or
“no”. No box was ticked and the applicant’s
representative dealt with this section by drawing a line through it
and writing in pen “not applicable”.
[12]
[23]
The applicant’s tender in the amount of R38 803 821.40
was the lowest of the
14 tenders. The second respondent’s bid
was in the amount of R51 615 000.00.
[13]
V
THE PREFERENTIAL PROCUREMENT REGULATIONS
[24]
In the decision of
Afribusiness
v The Minister of Finance
[14]
,
the
Preferential Procurement Regulations were declared invalid by the
Supreme Court of Appeal and the order of invalidity lapsed
on 2
November 2021. An application for leave to appeal was directed
to the Constitutional Court requesting that the order
of the Supreme
Court of Appeal be set aside. The matter was heard on 25 May 2021 and
the Court handed down judgment on 16 February
2022 in which the
invalidity was confirmed.
[25]
In terms of section 18 (1) of the Superior Courts Act, the Supreme
Court of Appeal’s judgment
was suspended when the application
for leave to appeal was launched. The tender in casu was duly
advertised, published and
closed during the time after the
Constitutional Court had heard the appeal and before it handed down
judgment. In the premises
the Preferential Procurement
Regulations, 2017, found application and was in full force and effect
in respect of this matter that
serves before this Court.
[26]
The relevant portion of Regulation 4 reads as follows:
“
Pre-qualification
criteria for preferential procurement
4.
(1) If an organ of state
decides to apply pre-qualification criteria to advance certain
designated groups, that organ of state
must advertise the tender with
specific tendering condition that only one or more of the following
tenders may respond-
(a)
a tenderer having a stipulated minimum B-BBEE status level of
contributor;
…
..
(2)
A tender that fails to meet the pre-qualifying criteria stipulated in
the tender documents is an unacceptable tender.”
[27]
The relevant portion of Regulation 9 reads as follows:
“
Subcontracting
as a condition of tender
9.
(1)
If feasible to subcontract for a contract over R30 million, an organ
of state must apply subcontracting to advance designated
groups.”
[28]
In the applicant’s papers there is an affidavit by the
applicant’s business development
manager, Mr Maluleke. In this
affidavit he alleges that he contacted Mr Ndaba, who was the Project
Manager of the project and he
was employed by the Free State
Department of Police, Roads and Transport. The reason why he
contacted him was to get clarity
about the sub-contracting.
[15]
According to him, Mr Ndaba told him that applicant need not
deal with the sub-contracting, as that will be done
with the
successful tenderer, once the tender has been awarded. In
opposing the application, the first respondent
filed an affidavit by
Mr Ndaba. In this affidavit, Mr Ndaba then denied that he
ever said that sub-contracting was
not an issue or that
sub-contracting will be discussed at a later stage with the
successful tenderer.
[16]
There is thus a substantial factual dispute between the applicant and
the first respondent on this aspect.
VI
THE APPLICANT’S CASE
[29]
The applicant’s case in essence was that it should have been
awarded the tender. It submitted
that its tender was responsive and
it should have scored the highest points based on price (the lowest)
and B-BBEE.
[30]
First respondent, in discarding the applicant’s tender and
awarding same to second respondent,
utilised a process that was not
fair, equitable, transparent, comparative or cost-effective.
[31]
The reasons advanced by the first respondent amounts to reviewable
irregularities.
[32]
The 30% sub-contracting requirement was not a pre-qualification
requirement in terms of the eligibility
criteria, being the first
stage of the evaluation process.
VII
THE DEFENCES
[33]
The respondents relied on several defences which can be summarised as
follows:
33.1
It was submitted that at the heart of this application lay at the
applicant’s contention that its bid was invalidly
and
irregularly disqualified. The true reason for the
disqualification is however because it submitted an incomplete bid.
The bid was incomplete because it did not indicate with whom and in
what value it will subcontract.
33.2
The applicant’s case should thus be seen as one of a
disappointed tenderer seeking to avoid the consequences of
a failure
to submit a complete and compliant bid.
VIII
EVALUATION OF THE EVIDENCE AND THE APPLICABLE LEGAL FRAMEWORK
[34]
Section 217(1) of the Constitution
[17]
provides that an organ of state contracting for goods of services
must do so in accordance with a system which is fair, equitable,
transparent, competitive and cost-effective. Section 2(1)(f) of
PPPFA provides that:
“
The
contract must be awarded to the tenderer who scores the highest
points, unless objective criteria… justify the award
to
another tenderer.”
[35]
In
Chairperson,
Standing Tender Committee and Others v JFE Sapela Electronics and
Others
[18]
the Supreme Court of Appeal had this to say about an
“acceptable tender”:
An
'acceptable tender' in turn is defined in s 1 as meaning 'any tender
which, in all respects, complies with the specifications
and
conditions of tender as set out in the tender document'. It is
well established that the legislature and executive in
all spheres
are constrained by the principle that they may exercise no power and
perform no function beyond those conferred upon
them by law. This is
the doctrine of legality. ….. The acceptance by an organ of
State of a tender which is not 'acceptable'
within the meaning of the
Preferential Act is therefore an invalid act and falls to be set
aside. In other words, the requirement
of acceptability is a
threshold requirement.”
[36]
In
Millennium Waste Management (Pty) Ltd v Chairperson, Tender Board:
Limpopo Province and Others,
[19]
Jafta JA (as he then was), writing for a unanimous bench of the
Supreme Court of Appeal, considered the definition of “acceptable
tender” and held as follows, quoting Scott JA’s dictum in
JFE
Sapela Electronics
with approval:
“
[18]
….Therefore the definition in the statute must be construed
within the context of the entire s 217 while striving for
an
interpretation which promotes 'the spirit, purport and objects of the
Bill of Rights' as required by s 39(2) of the Constitution.
In
Chairperson: Standing Tender Committee and Others v JFE
Sapela Electronics (Pty) Ltd and Others
Scott JA said (para 14):
‘
The
definition of 'acceptable tender' in the Preferential Act must be
construed against the background of the system envisaged by
section
217(1) of the Constitution, namely one which is 'fair, equitable,
transparent, competitive and cost-effective'. In other
words, whether
'the tender in all respects complies with the specifications
and conditions set out in the contract documents
must be judged
against these values'.
[19]
In this context the definition of tender cannot be given its
wide literal meaning. It certainly cannot mean that a tender
must
comply with conditions which are immaterial, unreasonable or
unconstitutional. The defect relied on by the tender committee
in this case is the appellant's failure to sign a duly completed
form, in circumstances where it is clear that the failure was
occasioned by an oversight. In determining whether this
non-compliance rendered the appellant's tender unacceptable, regard
must
also be had to the purpose of the declaration of interest in
relation to the tender process in question.”
[37]
In evaluating the evidence and drawing the conclusions in this review
application, this Court
takes due cognisance of the well formulated
judgment by Daffue J. It must however be remembered that his
judgment was delivered
when the applicant applied for the interim
relief as referred to in paragraph [2], supra. In doing so, it
is a fact that
at that stage of the proceedings, the test that the
Court then had to apply is vastly different to the test and the
further evidence
that this Court now has to consider and apply in
deciding this review application. Where Daffue J pronounced on
the merits
of the review, this Court will seriously consider same,
although his references to the merits may well be regarded by it
as orbiter.
[38]
The factual dispute referred to in paragraph [26], supra, should in
my judgment be dealt with
by applying the so-called “Plascon-Evans
Rule”. It is trite that this rule that emanates from the
well known
case of
Plasacon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd.
[20]
In
essence, this entails that the relief the applicant claims
should only be granted if the facts stated by the respondent,
together with the admitted facts in the applicant’s affidavits,
justify the order. In applying this rule, it follows
that the
case should be adjudicated on this aspect, on the basis that Mr Ndaba
did not tell Mr Maluleke of the applicant that subcontracting
was not
an issue and that it will only be dealt with the successful tenderer,
after the tender had finally been awarded.
Over and above this,
it must be remembered, as is indicated in paragraph [15], supra, that
the tender documentation clearly stipulates
that communication
between the tenderer and the employer must be in writing and with the
employer’s engineer or agent.
That did not happen.
[39]
In the premises, it follows in my judgment, that the evaluation
of the applicant’s
bid must be done on the tender documentation
itself and how it was completed or not completed by the applicant
itself and applying
that to the applicable legal framework.
[40]
In an affidavit of Mr Monyane
[21]
,
filed by the first respondent, he explained that he was the person
who drafted the “reasons” referred to in paragraph
[10],
supra. He explained that he had the so-called “Implementation
Guide: Preferential Procurement Regulations”
before him.
In that guide, Regulation 9, on which he actually
relied, is discussed under paragraph 14 of
the guide.
[22]
The incorrect reference to “Regulation 14” by Mr Monyane
matters little in my judgment. It is clear from
a proper
reading of his reasons that the first respondent rejected the
applicant’s bid because of the applicant’s failure
to
complete the forms with regards to the 30% subcontracting and that is
the subject matter of Regulation 9.
[41]
It is patently clear for the following reasons that the applicant
failed to submit a complete
and compliant bid:
41.1
As is indicated in paragraph [13], supra, the invitation to tender
clearly required the successful tenderer to subcontract
a minimum of
30% of the value of the contract. When any bidder sees that
invitation and responds thereto, it surely wants
to be the successful
tenderer. The fact that the invitation refers to “successful
tenderer”, does not mean the
30% subcontracting only comes into
play once the eventual successful tenderer is identified.
41.2
As is indicated in paragraph [14], supra, the applicant’s
representative failed to stipulate the monetary value
of the
subcontracting, despite the tender documentation clearly and in bold
print, requesting it to do so. Instead, he wrote “TBC”.
41.3
As is indicated in paragraph [22], supra, and at the portion of the
tender documentation which specifically deals with
subcontracting,
the applicant’s representative simply drew a line through it
and wrote not applicable.
41.4
As is indicated in paragraph [16], supra, there was throughout
the tender process an obligation on the applicant
to ensure that its
documentation was complete.
41.5
As is indicated in paragraph [18], supra, requires the
first respondent to check that all information and
data is completed
in all respects and entitles it to reject tender offers as
non-responsive, when the tenders do not comply
with same.
41.6
As is indicated in paragraph [19], supra, the tender
documentation places an obligation on the first respondent
to
“determine on opening and before detailed evaluation,
whether each tender offer properly received :…has been
properly and fully completed and signed, and..is responsive to the
other requirements of the tender documents”. If not
responsive,
it should be rejected (paragraph [20] supra), which
is exactly what happened here.
[42]
In terms of the abovementioned Regulation 4 (2) a tender that fails
to meet the pre-qualifying
criteria stipulated in the tender
documents, is an unacceptable tender. Having regard to the tender
documentation above,
the applicant has failed to meet the said
pre-qualifying criteria and its bid was thus correctly rejected on
this score as well.
VIII
CONCLUSION
[43]
In the final analysis, I find that the tender documentation was
clear, both in relation to the
duty to fill in the required documents
completely and fully, as well as the subcontracting requirements.
The applicant did
not do so and its bid was therefore correctly
rejected.
[44]
The following order is thus made:
1.
The application is dismissed with costs.
L.
LE R. POHL, AJ
I
concur:
P.
E. MOLITSOANE, J
On
behalf of Applicant:
Advv
N Snellenburg SC & JJ Buys
Instructed
by :
L&V
York Attorneys
BLOEMFONTEIN
On
behalf of 1
st
Respondent:
Adv L
Bomela
Instructed
by :
State
Attorney
BLOEMFONTEIN
On
behalf of 2
nd
Respondent: Adv
S Grobler
SC
Instructed
by: Peyper
Attorneys
[1]
Index review application, p 77
[2]
Index review application p396
[3]
Index review application p81
[4]
Index
review application, p264
[5]
Index
review application, p89
[6]
Index
review application, p 90
[7]
Index
review application, p91
[8]
Index
review application, p92
[9]
Index
review application, p95
[10]
Index
review application, p104
[11]
Index
review application, p152
[12]
Index
review application, p152
[13]
Index
review application, p269
[14]
2021
(1) 325 (SCA)
[15]
Index
review application, p315
[16]
Index
review application, p498
[17]
See also
Metro
Project CC and Another v Klerksdorp Local Municipality and Others
2004 (1) SA 16
(SCA) at paras 11 – 13 and numerous judgments
thereafter, and
inter
alia
Millennium
Waste Management (Pty) v Chairperson Tender Board: Limpopo
Province and Others
2008 (2) SA 481
(SCA) at paras 17 - 21
[18]
2008 (2) SA 638
(SCA) at para 11
[19]
2008 (2) SA (SCA) at paras 18 & 19
[20]
1984
(3) SA 623 (A)
[21]
Index
review application, p543-567
[22]
Index
review application, p560