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[2022] ZAECMKHC 57
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Tekoa Consulting Engineers (Pty) Ltd v Alfred Nzo District Municipality and Others (1284/2021) [2022] ZAECMKHC 57; [2022] 3 All SA 892 (ECG) (14 June 2022)
IN
THE HIGH COURT OF SOUTH AFRICA
EASTERN
CAPE DIVISION, MAKHANDA
CASE
NO. 1284/2021
In
the matter between:
TEKOA
CONSULTING ENGINEERS (PTY LTD
Applicant
and
ALFRED
NZO DISTRICT MUNICIPALITY
First Respondent
THE
MUNICIPAL MANAGER:
ALFRED
NZO DISTRICT MUNICIPALITY
Second Respondent
ZINZAME
CONSULTING ENGINEERS / CYCLE
PROJECTS
/ UBUNTU BAM JV
Third Respondent
EMLANJENI
JV
Fourth Respondent
OLON
CONSULTING ENGINEERS JV
IPM
PLANT
HIRE
Fifth Respondent
BM
INFRASTRUCTURE JV MAGNACORP
Sixth Respondent
JUDGMENT
LAING
J
[1]
This is a review application that concerns the award of a tender for
the
appointment of a panel of service providers for the planning,
design and construction of Water Services Infrastructure Grant
(‘WSIG’)
funded projects for the Alfred Nzo District
Municipality, situated in the north-eastern corner of the Eastern
Cape Province. The
applicant seeks an order that,
inter alia
,
reviews and sets aside the decision to refuse to appoint it to the
panel. It seeks alternative relief to the effect that the decision
to
appoint the third to sixth respondents be reviewed and set aside and
that the decision be referred back to the Bid Evaluation
Committee
(‘BEC’) and the Bid Adjudication Committee (‘BAC’)
for reconsideration.
[2]
The applicant has brought the application in terms of section 6 of
the
Promotion of Administrative Justice Act 5 of 2000 (‘PAJA’),
read with rule 53 of the Uniform Rules of Court.
Background
[3]
The
Municipality previously advertised a request for proposals (‘RFP’)
for appointment to ‘the panel of consortium
service providers
(professional and consulting entity and contractor) for the planning,
design and construction of WSIG funded
projects in the Alfred Nzo
District Municipality for a period of three (3) years [sic].’
[1]
The closing date for submissions was 23 June 2020. The purpose of the
tender was to give effect to the implementation of an intervention
programme by water services authorities (‘WSAs’) ‘to
address water services backlogs as well as to provide interim
relief
for hot spot areas within the WSA’s area of jurisdiction.’
The services required by the successful bidders included:
the
preparation of technical reports, business plans, and designs; the
construction and supervision of projects; and the preparation
of
close-out and compliance reports.
[4]
The tender
documents indicated that the 90/10 preference point system would
apply, with a maximum of 90 points being allocated for
price and a
maximum of 10 points being allocated for a bidder’s B-BBEE
status level. However, a bidder was required to score
at least 70
points for functionality before it could be considered for further
evaluation in terms of the above system.
[2]
[5]
The
applicant submitted a bid by the closing date. The Municipality’s
BEC disqualified the bid on the basis that the applicant
had failed
to provide proof of registration with the Construction Industry
Development Board (‘CIDB’) and the necessary
grading, as
stipulated.
[3]
Subsequently, the
BEC recommended the appointment of the third, fourth, fifth and sixth
respondents, which were in turn recommended
by the BAC and finally
approved by the second respondent on or about 1 September 2020.
[6]
It is the above decisions that form the subject of the application.
Applicant’s
submissions
[7]
The applicant admits that it was not registered with the CIDB but
points
out that such registration was neither possible nor necessary.
When it discovered that it had been disqualified, it lodged an
objection
with the Municipality in terms of section 62 of the Local
Government: Municipal Systems Act 32 of 2000 (‘MSA’) and
requested reasons for the decisions in question. This occurred on 16
October 2020. In the absence of any cooperation on the part
of the
Municipality, the applicant instituted the present proceedings on 5
May 2021.
[8]
With regard
to CIDB registration, the applicant confirms that it is a firm of
consulting engineers, not a contractor. In any event,
the tender
documents did not expressly indicate that proof of CIDB registration
was a compulsory requirement and clearly called
for proposals from
consulting engineers such as the applicant. Moreover, the CIDB
requires contractors, not consulting engineers,
to register with it
and to be in possession of an appropriate contractor grading for
specific types of construction work. The Construction
Industry
Development Board Act 38 of 2000 (‘the CIDB Act’)
expressly prohibits an unregistered contractor from executing
work
for a public sector contract.
[4]
[9]
The applicant accepts that registered contractors may combine their
resources
and form joint ventures (‘JVs’) to improve
their grading designation, but membership of a JV is restricted to
contractors.
This is because each member of the JV must be registered
with the CIDB. Here, the third, fourth, fifth and sixth respondents
were
JVs that consisted of a combination of contractors and
consulting engineers. This was impermissible. The Municipality,
argues the
applicant, was required to have rejected their bids.
[10]
The nature of the tender placed it within the ambit of the relevant
CIDB guidelines and
standards, developed to ensure uniformity in
engineering and construction projects. The Municipality failed to
ensure compliance
therewith in the formulation of the conditions of
tender.
[11]
The applicant goes on to point out that the BEC disqualified a total
of 13 bidders, all
consulting engineers or similar, for want of proof
of registration with the CIDB. This suggested that they had not
interpreted
the tender documents in the manner adopted by the BEC.
Instead, the tender documents were understood as having required such
consulting
engineers, after their appointment to the panel, to have
appointed contractors in due course, who would have been required to
execute
the work under supervision.
[12]
There was non-compliance, too, argues the applicant, with the
provisions of section 112(1)
of the Local Government: Municipal
Finance Management Act 56 of 2003 (‘MFMA’). The
disqualification of the applicant
and other bidders had been unfair
and had not resulted in procurement that was competitive and
cost-effective. Furthermore, the
Municipality had failed to comply
with the regulations made in terms of the Public Finance Management
Act 1 of 1999 (‘PFMA’)
inasmuch as it had not applied the
relevant CIDB guidelines and standards in relation to the procurement
of goods and services
for an engineering and construction project.
[13]
Pertinently, the applicant observes that the Municipality did not
apply the preference
point system correctly; it combined the points
scored for functionality with those scored for a bidder’s
B-BBEE status level.
No points were awarded for price. This was not
lawful and the awards to the third, fourth, fifth and sixth
respondents fall to
be set aside.
Municipality’s
submissions
[14]
The Municipality avers that it was clear that the tender requested
proposals with regard
to the provision of services for both
consulting engineering and construction work. The terms of reference
in the tender documents
stated explicitly that construction work was
required, meaning that the involvement of a properly registered
contractor was necessary.
How potential bidders complied with such a
requirement was for them to decide.
[15]
The tender
documents also stipulated that the failure to submit any of the
identified documentation would result in disqualification.
During the
evaluation of the applicant’s bid, the BEC ascertained that it
was not accompanied by a certificate of registration
from the CIDB;
there was no indication that the applicant was properly registered
and that it was in possession of the required
grading designation.
[5]
Consequently, the BEC deemed the applicant’s bid to be
non-responsive and disqualified the applicant from further
evaluation.
[16]
As a result
of such disqualification, argues the Municipality, the applicant had
no legal interest in the outcome of the tender
process. It was unable
to participate further therein. Moreover, contractual rights accrued
to the third, fourth, fifth and sixth
respondents upon their
appointment to the panel, thereby preventing the applicant from
relying on the appeal mechanism created
in terms of section 62 of the
MSA, as it had attempted to do.
[6]
[17]
The Municipality raises a number of distinct arguments.
[18]
The first argument is that the applicant became aware of the
decisions that form the subject
of this application on or about 16
October 2020; however, it only instituted proceedings on 5 May 2021,
after the 180-day period
stipulated under PAJA. Accordingly, the
court cannot entertain the application in view of the applicant’s
unreasonable delay.
[19]
The second
argument is that there is no reviewable decision before the court.
This is based on the following reasoning: (a) the
applicant’s
bid was not an ‘acceptable tender’, as contemplated under
the Preferential Procurement Policy Framework
Act 5 of 2000
(‘PPPFA’),
[7]
because it failed to meet the minimum qualifying score for
functionality; (b) the applicant never entered into a JV, which may
have enabled it to comply with the need to demonstrate registration
with the CIDB and an acceptable grading designation; and (c)
consequently, the applicant could not allege that the Municipality’s
decisions amounted to administrative action, inasmuch
as the failure
to submit an acceptable tender did not give rise to any rights that
could have been affected by such decisions.
Simply put, the applicant
lacked
locus
standi
.
[20]
The third argument is that it was not necessary for a bidder to have
indicated a price
for the services to be provided; in fact, it was
not feasible to have done so because the professional fees payable to
a consulting
engineer are based upon the final cost of the
construction works. An estimate of the cost could only be made after
the award of
the tender, when the appointed panel members would
undertake investigations and thereupon prepare technical reports,
business plans
and designs for the works required. In any event,
argues the Municipality, the three-year appointment meant that it was
not possible
to determine cost for the full duration of the period
involved.
[21]
The fourth argument is allied to the above insofar as the nature of
the services to have
been procured did not permit the determination
of price when viewed within the context of the implementation of the
WSIG programme.
This entailed an investigation into the status of
water services for each local municipality so that the nature and
extent of any
infrastructure refurbishment or upgrade could be
ascertained, whereupon a successful bidder would be expected to
develop the necessary
business plan for the works required. Until
then, it would be impossible to calculate the value of the projects
in question or
the price of the services to be provided. This
approach had to be contrasted with one in which the Municipality
itself undertook
the investigation and developed the requisite
business plan, which would be a much lengthier process, ill-suited to
the short-term
funding nature of the WSIG programme.
[22]
The fifth argument is that there is no basis for the applicant’s
dissatisfaction
with the manner in which the Municipality carried out
the evaluation and adjudication of the bids received. The BEC
disqualified
the applicant’s bid for want of proper
registration with the CIDB and a minimum grading designation. These
were conditions
of the tender. The successful bidders all submitted
bids as JVs, which included contractors that met the stipulated
requirements.
[23]
The sixth argument pertains to the appropriate remedy that should be
made in the event
that the court finds that the decisions in question
are reviewable and should be set aside. To that effect, the
Municipality asserts
that the successful bidders have already
embarked upon the projects to be carried out in terms of the WSIG
programme. If a new
tender process is commenced, then this will have
an impact on the benefits intended by the implementation of the above
programme
for the affected communities and may result in the
Municipality’s forfeiture of the available funds. Accordingly,
argues
the Municipality, the court ought not to set aside the
decisions.
[24]
In relation to the specific allegations made by the applicant, the
Municipality avers that
the third, fourth, fifth and sixth
respondents all met the necessary CIDB registration and designated
grading requirements. The
Municipality also points out that the
applicant’s reliance on the CIDB guidelines and standards is
misplaced because the
tender requested proposals for a turnkey
solution, entailing the provision of services by both consulting
engineers and contractors.
The tender was not limited to construction
work, which would otherwise have fallen within the ambit of the CIDB
regulatory regime.
Third,
fourth, fifth and sixth respondents’ submissions
[25]
The respondents, at the outset, take the same point made by the
Municipality with regard
to the applicant’s unreasonable delay
in the institution of proceedings. The applicant was aware of the
Municipality’s
decisions by at least 16 October 2020; it only
brought the present application on 5 May 2021, after the expiry of
the 180-day period
indicated in PAJA. Consequently, the court has no
authority to entertain the application.
[26]
Similarly, the respondents assert that by reason of the applicant’s
not being registered
with the CIDB or having a grading designation in
terms of the CIDB Act and its regulations, it was precluded from
providing services
to the Municipality. This could have been avoided
had it entered into a suitable JV. Consequently, the applicant’s
bid did
not amount to an acceptable tender and the Municipality’s
decision to reject it did not give rise to a reviewable
administrative
action.
[27]
Like the Municipality, the respondents also take issue with the
applicant’s criticism
of the evaluation and adjudication of the
bids, pointing out that the tender documents indicated that price
would not be taken
into consideration for the allocation of
preference points. This was because of the nature of the services to
be procured by the
Municipality, which were incapable of price
determination.
[28]
The respondents align themselves with the remaining arguments raised
by the Municipality.
These will not be repeated.
[29]
Turning to the applicant’s allegations
per se
, the
respondents describe themselves as unincorporated joint ventures,
comprising a combination of consulting engineers and contractors
in
each instance. They reiterate that the applicant was disqualified
because it could not lawfully carry out any construction works
(on
its own) and simply lacked the capacity to provide the turnkey
solution required by the Municipality. A bidder had to demonstrate
how it would meet the tender conditions pertaining to the need for
the services of a contractor; the applicant failed to do so.
Furthermore, argue the respondents, the applicant has misunderstood
the CIDB regulatory regime inasmuch as it did not prohibit
the
formation of JVs between consulting engineers and contractors for
purposes of supplying a turnkey solution to a client such
as the
Municipality, as opposed to the execution of construction work only,
which was not the case here. If the applicant was correct,
then it
would not be possible for a lawful turnkey solution to exist;
consulting engineers could never be registered with the CIDB.
Issues
to be decided
[30]
As a
starting point, it is necessary to decide whether the court can
entertain the matter, notwithstanding the alleged unreasonable
delay
on the part of the applicant with regard to the institution of
proceedings. The provisions of section 7 of PAJA apply.
[8]
[31]
If the court is satisfied that it can indeed entertain the matter,
then it must decide
whether the applicant has a justiciable right
that deserves protection against unlawful administrative action. This
will entail
an analysis of the Municipality’s disqualification
of the applicant’s bid and the legal consequences thereof.
[32]
Assuming that a justiciable right can be identified, the court must
then decide whether
the tender process followed by the Municipality
was lawful; in the event that it was not, it will be necessary to
decide what remedy
would be most appropriate in the circumstances.
Unreasonable
delay
[33]
The alleged unreasonable delay on the part of the applicant stems
from the provisions of
section 7(1) of PAJA. These are set out below:
‘
(1) Any
proceedings for judicial review in terms of section 6(1) must be
instituted without unreasonable delay and not later than
180 days
after the date—
(a)
subject to subsection (2)(c), on which any proceedings instituted in
terms of internal remedies
as contemplated in subsection (2)(a) have
been concluded; or
(b)
where no such remedies exist, on which the person concerned was
informed of the administrative
action, became aware of the action and
the reasons for it or might reasonably have been expected to have
become aware of the action
and the reasons.’
[34]
For the sake of completeness, the above provisions must be read with
sub-section (2), which
provides as follows:
‘
(2)(a) Subject to
paragraph (c), no court or tribunal shall review an administrative
action in terms of this Act unless any internal
remedy provided for
in any other law has first been exhausted.
(b) Subject to paragraph
(c), a court or tribunal must, if it is not satisfied that any
internal remedy referred to in paragraph
(a) has been exhausted,
direct that the person concerned must first exhaust such remedy
before instituting proceedings in a court
or tribunal for judicial
review in terms of this Act.
(c) A court or tribunal
may, in exceptional circumstances and on application by the person
concerned, exempt such person from the
obligation to exhaust any
internal remedy if the court or tribunal deems it in the interest of
justice.’
[35]
The appeal
mechanism created under section 62 of the MSA permits a person whose
rights have been affected by a decision taken in
terms of a delegated
power or duty to appeal against such a decision by giving written
notice and reasons therefor to the municipal
manager within 21 days
of the notification of the decision.
[9]
This constitutes an internal remedy within the context of section 7
of PAJA. See
Municipality
of the City of Cape Town v Reader and others
[2009] JOL 22725
(SCA),
Groenewald
NO and others v M5 Developments (Cape) (Pty) Ltd
[2011] 1 All SA 17
(SCA), and
JDJ
Properties and another v Umngeni Local Municipality and another
[2013] 1 All SA 306 (SCA).
[10]
[36]
The court
requested the parties, subsequent to the hearing, to make submissions
in relation to whether the applicant had instituted
proceedings in
terms of an internal remedy, whether same had been concluded or
exhausted, and the extent to which the decision
in
Evaluations
Enhanced Property Appraisals (Pty) Ltd v Buffalo City Metropolitan
Municipality and others
[2014] 3 All SA 560
(ECG) was decisive in the present matter. In that
regard, a full bench for this division held that review proceedings
could only
be instituted once one of two requirements had been met:
all internal remedies had been exhausted or exemption had been
obtained.
The applicant in that matter failed to apply for such
exemption and was accordingly prohibited from having instituted
review proceedings
before lodging an appeal under section 62 of the
MSA.
[11]
[37]
The
applicant argues that it indeed instituted proceedings under section
62 when it sent a letter to the ‘SCM Manager’
for the
Municipality on 16 October 2020, pursuant to its having been informed
about the award of the tender after a telephonic
enquiry to that
effect on the same date. The letter states as follows:
[12]
‘
Dear Sir
This letter serves to
register our formal objection to your decision to reject the bid
submitted by Tekoa Consulting Engineers (Pty)
Ltd to the above
referenced tender.
Please furnish us with
the reasons for the rejection of our bid.
In terms of Section 62 of
the Municipal Systems Act, unsuccessful bidders are afforded the
opportunity to appeal the rejection of
their bid and as such please
receive our letter in the spirit of enhancing the Supply Chain
Management System as opposed to the
contrary.
Should you have any
queries please don’t hesitate to contact the undersigned.
Yours sincerely
Mr T Melato
Executive Director
For and on Behalf of the
Board and Management of Tekoa Engineering Consulting (Pty) Ltd’
[38]
The
applicant asserts that the Municipality failed or refused to
implement the appeal mechanism, despite a further request made
on 8
March 2021. Consequently, the applicant’s attempts to exhaust
the available internal remedy were frustrated by the Municipality,
leaving the applicant with no alternative but to institute review
proceedings. In any event, argues the applicant, it has already
sought an exemption from its obligation to exhaust such remedy.
[13]
[39]
The Municipality merely contends that the applicant knew about the
decision to award the
tender as early as 16 October 2020 but delayed
the institution of review proceedings until 5 May 2021. This was well
after the
180-day period prescribed in terms of section 7(1) of PAJA.
In the absence of an application for the extension of the above
period,
as envisaged under section 9(1), the application cannot be
entertained and ought to be dismissed without further ado.
[40]
The third,
fourth, fifth and sixth respondents point out that the applicant’s
reliance on section 62 of the MSA was misconceived.
This was because
the internal remedy is only applicable where the decision was taken
in terms of a delegated power or duty. Furthermore,
no variation or
revocation of such decision by the appeal authority may detract from
any rights that may have accrued as a result
of the decision; the
Municipality’s appointment of the above respondents to the
panel on or about 1 September 2020 gave rise
to such rights.
[14]
[41]
It is not disputed that the second respondent made the award of the
tender upon the recommendation
of the BAC. He did so in terms of the
provisions stipulated under
regulation 29(1)(b)
of the
Municipal
Supply Chain Management Regulations, whereby
the BAC is enjoined to
make a final award or make a recommendation to the accounting officer
(i.e. the second respondent) to make
such award, depending on the
extent of the BAC’s delegated authority. This must be read with
section 115(1)(a)
of the MFMA, which places an overall duty on the
accounting officer to implement a supply chain management policy for
the municipality
in question.
[42]
In
Maximum
Profit Recovery (Pty) Ltd v Inxuba Yethemba Local Municipality and
others
(1712/2020) [2021] ZAECGHC 11 (16 February 2021), Bloem J held that
an accounting officer’s power to award a tender is an
original
power, regulated by the MFMA and the regulations made in terms
thereof.
[15]
This court
respectfully agrees therewith; the second respondent’s decision
to appoint the third, fourth, fifth and sixth
respondents was not
taken under a delegated power. Accordingly, the provisions of
section
62
do not apply in the present circumstances and the third, fourth,
fifth and sixth respondents are correct to assert that the
applicant’s
reliance thereon, as evident from the
correspondence sent on 16 October 2020 and 8 March 2021, was
misplaced. No internal remedy
was available to the applicant.
[16]
The decision in
Evaluations
Enhanced Property Appraisals
has no bearing on the matter.
[43]
The question that subsequently arises is when the 180-day period
actually commenced. The
provisions of
section 7(1)(b)
of PAJA
stipulate that this must be calculated from the date on which the
applicant was informed of the administrative action,
became aware of
the action and the reasons for it or might reasonably have been
expected to have become aware of the action and
the reasons. The
Municipality and remaining respondents contend that the date in
question was 16 October 2020, when the applicant
first came to know
about the decision to award the tender.
[44]
However,
this overlooks the fact that the applicant was not aware of the
reasons for the decision at that stage. Whereas
section 7(1)(b)
seems
to suggest that the 180-day period may be calculated simply from the
date when a party was first informed of the decision,
this must be
interpreted to mean that the party must have been provided with a
proper set of facts or information, including the
reasons for such
decision. This is consistent with the alternatives indicated under
section 7(1)(b)
, which both require the party to be in possession of
the reasons before the 180-day period commences. Were it not so, a
party could
find itself in a situation where it would be constrained
to institute review proceedings purely to avoid the time-bar but
without
entirely knowing why otherwise, notwithstanding possible
attempts made to obtain reasons from the procuring entity.
[17]
[45]
In
Cape Town City v Aurecon SA (Pty) Ltd
2017 (4) SA 223
(CC),
the Constitutional Court supported the findings of the Supreme Court
of Appeal to the effect that
section 7(1)(b)
did not mean that a
review application had to be launched within 180 days after a party
became aware that an administrative action
was tainted by an
irregularity. The apex court held as follows:
‘
[41] On a
textual level the City’s contention confuses two discrete
concepts:
reasons
and
irregularities
.
Section 7(1)
of
PAJA does not provide that an application must be brought within 180
days after the City became aware that the administrative
action was
tainted by irregularity. On the contrary, it provides that the clock
starts to run with reference to the date on which
the reasons for the
administrative action became known (or ought reasonably to have
become known) to an applicant.
[42] On a
purposive level the City’s interpretation would give rise to
undesirable outcomes. As the SCA pointed
out, the City’s
interpretation would–
“
automatically
entitle every aggrieved applicant to an unqualified right to
institute judicial review only upon gaining knowledge
that a decision
(and its underlying reasons), of which he or she had been aware all
along, was tainted by irregularity, whenever
that might be. This
result is untenable as it disregards the potential prejudice to
[Aurecon] and the public interest in the finality
of administrative
decisions and the exercise of administrative functions.”’
[46]
The 180-day period begins from the date upon which a party was
informed or became aware
of the decision taken and reasons therefor
or might reasonably have been expected to have acquired such
knowledge. Within the context
of the present matter, it cannot be
said that, by 16 October 2020, the applicant had been informed or was
aware of the reasons
for the Municipality’s decision to award
the tender to the third, fourth, fifth and sixth respondents and not
to the applicant.
This is patently clear from the letter that it sent
on such date, in terms of which reasons were requested. The request
was repeated
on 8 March 2021 but to no avail. In terms of
section 5(1)
of PAJA, a party such as the applicant has 90 days
within which to request reasons, calculated from the date upon which
the party
became aware of or might reasonably have been expected to
have become aware of the decision. The applicant was within time.
Consequently,
section 5(2)
provides that an administrator such as the
second respondent has 90 days within which to give adequate reasons
in writing, calculated
from the date upon which he or she received
the party’s request. If the administrator fails to do so, then,
in terms of
section 5(3)
, it must be presumed for purposes of review
proceedings, in the absence of proof to the contrary, that the
decision was taken without
good reason. The earliest date upon which
the 180-day period could have commenced would have been upon the
expiry of the 90-day
period from when the applicant first requested
reasons. This would have been 14 January 2021. Accordingly, the
applicant’s
institution of review proceedings on 5 May 2021 was
well within the 180-day period.
[47]
In the circumstances, there was no unreasonable delay on the part of
the applicant. The
court is satisfied that it can entertain the
matter and proceeds to the next issue, viz. whether the applicant has
a justiciable
right capable of protection, notwithstanding its
disqualification on the basis of non-responsiveness.
Failure
to submit an acceptable tender
[48]
The
Municipality argues that the applicant’s failure to have
submitted proof of registration with the CIDB or to have had
the
requisite grading designation meant that its bid had to be treated as
non-responsive. This was in accordance with the strict
approach
adopted by the Supreme Court of Appeal in
Dr
JS Moroka Municipality and others v Betram (Pty) Ltd and another
[2014] 1 All SA 545
(SCA) and subsequently followed in
WDR
Earthmoving Enterprises and another v Joe Gqabi District Municipality
and others
(392/2017)
[2018] ZASCA 72
(30 May 2018).
[18]
The result of the ensuing disqualification was that the applicant
acquired no legal interest in the outcome of the tender process.
It
could not claim that the Municipality’s decision to award the
tender to the third, fourth, fifth and sixth respondents,
to the
exclusion of the applicant, had adversely affected its rights. The
decision did not meet the definition of administrative
action.
[49]
The third, fourth, fifth and sixth respondents adopt a similar
approach and contend that
the applicant’s failure to have
complied with the conditions of the tender and the requirements of
the CIDB Act meant that
no rights had accrued to the applicant. The
subsequent decision of the Municipality could not, vis-à-vis
the applicant,
be viewed as administrative action. In any event,
assert the respondents, the applicant would never have met the
functionality
requirements for it to have been further evaluated and
adjudicated.
[50]
It is important to emphasise that the Municipality’s decision
to treat the applicant’s
bid as non-responsive is the issue in
question. This is the decision that lies at the heart of the
respondents’ argument.
Whether the applicant would actually
have obtained sufficient points for functionality is not relevant for
present purposes.
[51]
From the minutes of the BEC meeting held on 5 August 2020, it is
evident that the reason
for why the BEC disqualified the applicant
was because ‘no CIDB grading required attached [sic]’.
The Municipality
elaborated upon this in the opposing affidavit of
the second respondent within the context of Part A of the
application, stating
that the applicant’s bid had not been
accompanied by a certificate of registration from the CIDB and that
there was therefore
no indication that the applicant was properly
registered or that it was in possession of the required grading
designation of 5CEPE
or 6CE or higher. The conditions of tender had
made it clear that such a certificate had constituted supplementary
information
that had been required from all bidders; the failure to
supply same would result in disqualification.
[52]
The difficulty with the above assertions is that the alleged
requirement is not at all
apparent from the conditions of tender.
Admittedly the tender envisaged the involvement of a contractor or
contractors for the
successful execution thereof. The preamble to the
RFP and the description of the scope of services to be provided
unequivocally
indicated that a successful bidder was required to
render construction work in relation to the implementation of the
various water
services projects intended for the numerous rural
communities that fell within the Municipality’s jurisdiction.
The assessment
of a bidder’s functionality, too, provided for
the evaluation of a combination of criteria that were distributed
between
a ‘consulting entity’ and a ‘contractor
entity’. However, the tender does not expressly stipulate the
condition
that a bidder was required to submit a certificate of
registration from the CIDB, failing which disqualification would
follow.
This is not apparent from the tender notice and invitation to
tender. It is not apparent from the checklist. It is not apparent
from the eligibility criteria.
[53]
The closest
to which such condition comes is the requirement that a bidder must
submit a company profile, which must include ‘proof
of
registration with professional bodies (e.g. CIDB, LGSETA)- if
applicable’.
[19]
The
applicant has carefully explained why it was impossible for it to
have obtained a certificate of registration from the CIDB;
it is not
a contractor. In other words, the certificate in question was not
applicable.
[54]
The respondents rely further on the stipulation that
‘
[the] failure to
supply all required and supplementary information will result in the
tender being deemed non-responsive; and therefore
the tender will not
be considered for award.’
[20]
[55]
The stipulation must, however, be interpreted in context. It comes at
the conclusion of
a list of ‘compulsory submissions’,
comprising items such as a valid SARS pin number, a municipal
clearance certificate,
a certified copy of a B-BBEE certificate, and
so forth. Proof of registration with the CIDB is not listed. If the
stipulation was
to be interpreted so to apply to information
indicated elsewhere in the tender, then what exactly would fall into
the set of ‘required
and supplementary information’- and,
conversely, what would fall outside? The stipulation is too vague to
permit the respondents
to make the argument that this applied to the
supply of proof of registration with the CIDB.
[56]
In
AllPay Consolidated Investment Holdings (Pty) Ltd and others v
Chief Executive Officer of the South African Social Security Agency
and others (Corruption Watch and another as amici curiae)
2014
(1) BCLR 1
(CC), the Constitutional Court dealt with the subject of
vagueness insofar as it pertained to a tender. The court observed as
follows:
‘
[88] There
is another, related concern with the clarity of administrative
action: vagueness can render a procurement process,
or an
administrative action, procedurally unfair under section 6(2)(c) of
PAJA. After all, an element of procedural fairness- which
applies to
the decision-making process- is that persons are entitled to know the
case they must meet.
[89] Section
3(2)(b)(i) and (ii) of PAJA reads in part:
“
In order to give
effect to the right to procedurally fair administrative action, an
administrator… must give–
(i)
adequate notice of the nature and purpose of the proposed
administrative action;
[and]
(ii)
a reasonable opportunity to make representations.”
[90] In the
context of a tender process, the tender documents give notice of the
proposed administrative action, while
the responding bids in effect
constitute representations before the decision is made. Adequate
notice would require sufficient
information to enable prospective
tenderers to make bids to cover all the requirements expected for the
successful award of the
tender.’
[57]
The conditions of tender must spell out, clearly and unambiguously,
what is required of
a bidder. There must be no vagueness or lack of
clarity about what constitute the ‘rules of the game’, so
to speak.
[58]
Under section 1 of the PPPFA, the definition of an ‘acceptable
tender’ is one
that, in all respects, complies with the
specifications and conditions of tender as set out in the tender
document. In the present
matter, it was not apparent that the
submission of proof of registration with the CIDB was a mandatory
requirement. Any suggestion
to that effect was vague at best. Insofar
as the applicant can be criticised for not having formed a JV with a
contractor or for
not having adopted a bid strategy that addressed
the indication from the tender that the involvement of a contractor
or contractors
would be necessary for the execution of the
construction work required, that is a matter that has a bearing on
functionality, not
bid responsiveness. It cannot be argued that the
applicant’s failure to submit proof of registration with the
CIDB had the
implication that its bid did not meet the definition of
an acceptable tender.
[59]
Consequently, the Municipality’s decision to disqualify the
applicant’s bid
on the above basis was an irregularity. It had
an adverse impact on the rights of the applicant. Moreover, it had a
direct, external
legal effect inasmuch as it eliminated a potential
service provider from the tender process for the supply of goods and
services
necessary for the planning, design and construction of
WSIG-funded projects in the north-eastern corner of the Eastern Cape
Province,
which is home to many rural communities for whom the
adequate supply of water services is an essential aspect of everyday
life.
The court is satisfied that the decision was an example of
administrative action and that it is reviewable within the context of
the factual matrix that informs the present application.
[60]
The above finding must be taken into consideration when assessing the
overall lawfulness
of the tender process itself and the awards made.
Lawfulness
of the tender process
[61]
The applicant has gone to considerable lengths to demonstrate that
the tender process failed
to include or implement the CIDB guidelines
and standards. The respondents contend that by reason of this being a
turnkey tender,
entailing not only construction work but also the
provision of engineering services, the conditions of tender could not
have been
made subject to the restrictions imposed by the CIDB Act.
[62]
At a more fundamental level, however, the applicant points out that
the Municipality did
not apply the preference point system correctly
for purposes of the evaluation and adjudication of the bids received.
It is common
cause that the tender combined the points scored for
functionality with those scored for a bidder’s B-BBEE status
level.
Price was not taken into consideration.
[63]
The PPPFA prescribes the framework for the implementation of a
preferential procurement
policy. To that effect, section 2(1)
provides as follows:
‘
(1)
An organ of state must determine its preferential procurement policy
and implement it within the following
framework:
(a)
a preference point system must be followed;
(b)
(i) for contracts with a Rand value above a prescribed amount a
maximum of 10 points may
be allocated for specific goals as
contemplated in paragraph (d) provided that the lowest acceptable
tender scores 90 points for
price;
(ii) for contracts with a
Rand value equal to or below a prescribed amount a maximum of 20
points may be allocated for specific
goals as contemplated in
paragraph (d) provided that the lowest acceptable tender scores 80
points for price;
(c)
any other acceptable tenders which are higher in price must score
fewer points, on a pro
rata basis, calculated on their tender prices
in relation to the lowest acceptable tender, in accordance with a
prescribed formula;
(d)
…
(e)
…
(f)
the contract must be awarded to the tenderer who scores the highest
points,
unless objective criteria in addition to those contemplated
in paragraphs (d) and (e) justify the award to another tenderer; and
(g)
…’
[64]
The preamble to the PPPFA makes it clear that the legislation was
enacted to give effect
to the constitutional principle that contracts
may be allocated in accordance with categories of preference and the
principle that
a procurement policy may be implemented by an organ of
state in such a way as to protect or advance persons disadvantaged by
unfair
discrimination. Simply on the basis of the weight attached to
it in accordance with the prescribed preference point system,
however,
the overriding importance of price in the evaluation and
adjudication of bids is obvious. This stands to reason inasmuch as
cost-effectiveness
is one of the five cardinal principles for public
procurement practices in South Africa, as stipulated under section
217(1) of
the Constitution.
[65]
An organ of
state has no discretion with regard to the inclusion or otherwise of
price when it follows its preference point system.
The framework
prescribed by the PPPFA, read with the principles indicated under
section 217(1) of the Constitution, is the basis
upon which a
preferential procurement policy must be determined and implemented.
See
Moseme
Road Construction CC and others v King Civil Engineering Contractors
(Pty) Ltd and another
[2010] 3 All SA 549
(SCA), at [2].
[21]
[66]
In the present matter, the respondents contend that it was neither
necessary nor feasible
for price to have been included in the
preference point system. It was only possible to estimate the final
cost of the various
water services projects entailed after the
successful bidders had undertaken the requisite investigations. The
final cost of the
construction works would, in turn, determine the
professional fees payable to the consulting engineers. Moreover, the
three-year
appointment of the successful bidders had the implication
that it was not possible to determine a price for the full duration
of
the tender. The respondents go on to argue that price
determination was not feasible in terms of the WSIG programme. An
assessment
of the condition of water services for each local
municipality was necessary so that a successful bidder could develop
a business
plan for the infrastructure refurbishment or upgrade that
was actually required. If the Municipality attempted to do this
itself,
then the exercise would take much longer, which would not
accommodate the short-term funding nature of the WSIG programme.
[67]
This may be
so. However, there is no reason on the papers why a different
procurement model could not have been adopted to suit
the
circumstances, one which addressed the concerns raised above and
which also complied with the prescribed legal framework. For
example,
a two-stage bidding process may have allowed bidders to submit
unpriced proposals, based on a general set of specifications
for the
water services required; subsequent to engagement with the
Municipality in relation to various technical or commercial
parameters, an amended and priced proposal could then be submitted by
a short-listed bidder, for final evaluation and adjudication.
[22]
[68]
The
Municipality has argued that the applicant accepts the lawfulness of
the tender insofar as it seeks to be appointed to the panel,
yet
challenges its lawfulness insofar as it seeks to have the award
thereof to the third, fourth, fifth and sixth respondents set
aside.
This cannot be done, asserts the Municipality; a litigant cannot
approbate and reprobate. To that effect, the Municipality
refers to
Chamber
of Mines of South Africa v National Union of Mineworkers and another
1987 (1) 668 (AD), where Hoexter JA held, at 690D-G, that, in a
situation where a party is faced with two alternative and entirely
inconsistent courses of action or remedies, the law ‘will not
allow that party to blow and cold’, he or she must make
an
election.
[23]
[69]
The above contentions are more apposite to a contractual dispute,
where, for example, a
party must decide whether to cancel a contract
in the event of a material breach by the other party or insist on due
performance;
it cannot do both. In the present matter, the applicant
has enforced a constitutional right to just administrative action,
rather
than a contractual right. The court understands the relief
sought by the applicant to be,
inter alia
, an order for the
decision not to award the tender to the applicant to be reviewed and
set aside and that the applicant be appointed
to the panel;
alternatively
, that the decision to award the tender to the
third, fourth, fifth and sixth respondents be reviewed and set aside,
and that the
tender be remitted back to the BEC and BAC for
reconsideration. The relief sought by the applicant hinges on the
extent to which
the court finds such decisions to be unlawful
administrative action. This is not so much a situation where the
applicant has created
mutually destructive or contradictory courses
of action as one in which it has astutely sought to mitigate against
the risk of
adverse findings by the court in relation to the nature
of the decisions taken by the Municipality.
[70]
Furthermore, the Municipality makes the point that the applicant
ought to have challenged
the lawfulness of the tender when it was
first issued. Instead, the applicant participated in the tender and
only cried foul afterwards.
It must be bound by its election.
[71]
This is a similar argument to the one already discussed above,
attracting the common law
principles of waiver and estoppel. It
ignores, however, one of the basic tenets of the principle of
legality, as enunciated in
Fedsure Life Assurance Ltd v Greater
Johannesburg Transitional Municipal Council
[1998] ZACC 17
;
1999 (1) SA 374
(CC),
where the Constitutional Court held, at [58], that
‘
the Legislature
and Executive in every sphere are constrained by the principle that
they may exercise no power and perform no function
beyond that
conferred upon them by law.’
[72]
Irrespective of the approach taken by the applicant, if the court
finds that the Municipality
exercised and performed powers and
functions beyond those prescribed in terms of section 217(1) of the
Constitution or section
2(1) of the PPPFA, then a declaration of
unlawfulness must follow. This will subsequently determine the relief
to be granted.
[73]
The
applicant’s election to participate in the tender cannot be
taken to mean that it waived its right to challenge the lawfulness
thereof later, upon proper reflection and after having obtained
appropriate professional advice. To hold otherwise would severely
infringe its right to just administrative action. If indeed a party
can waive a constitutional right in these circumstances, then
there
would, at the least, have to be evidence of an express and
unequivocal assertion to that effect.
[24]
No such evidence appears from the papers.
[74]
All of the
respondents, including the Municipality, contend, too, that if the
applicant had found fault with the tender, then it
ought to have
instituted review proceedings immediately after the issue thereof.
This was not done and the applicant is precluded
from doing so now by
reason of the time-bar provisions contained in section 7(1) of PAJA.
The respondents cite
Airports
Company of South Africa SOC Ltd v Imperial Group Ltd and others
[2020] JOL 46607
(SCA), where the Supreme Court of Appeal considered
a request for bids (‘RFB’) that had been advertised by
the appellant
in relation to the hiring of car rental kiosks and
parking bays at airports operated by it in various cities. The
respondent sought
an order reviewing and challenging the RFB on the
basis of its unlawfulness. In a minority judgment, Molemela JA held
that the
decision to advertise the RFB constituted administrative
action that was ripe for judicial challenge and that the respondent
was
entitled to have launched review proceedings without having to
await formal notification of the outcome of the RFB.
[25]
[75]
This court respectfully agrees with (and considers itself bound by)
the above findings.
The applicant in the present matter has, however,
not challenged the Municipality’s decision to advertise the
tender. It
has challenged the decision to disqualify the applicant’s
bid, alternatively the decision to award the tender to the third,
fourth, fifth and sixth respondents, with the implication that the
court is required to determine the lawfulness thereof in light
of the
grounds of review stipulated under section 6(2) of PAJA. This
exercise necessarily entails an assessment of the basis upon
which
the decisions were made and by implication the lawfulness of the
tender itself. The principles mentioned in
Airports Company
are not relevant to these proceedings; the argument with regard to
the operation of the 180-day time bar is misplaced.
[76]
The Municipality’s combination of points for functionality and
B-BBEE status level,
to the exclusion of price, amounted to a failure
to apply the preference point system correctly, as prescribed in
terms of section
2(1) of the PPPFA. It also amounted to a failure to
apply the constitutional principle of cost-effectiveness to the
process. Effectively,
the successful bidders were granted a blank
cheque for the supply of the goods and services necessary for the
various water services
projects required for the affected
communities.
[77]
In terms of
section 6(2) of PAJA, a court is granted authority to judicially
review an administrative action where,
inter
alia
, a
mandatory and material procedure or condition prescribed by an
empowering provision was not complied with,
[26]
the action was materially influenced by an error of law,
[27]
the action was taken for a reason not authorised by the empowering
provision or because irrelevant considerations were taken into
account or relevant considerations were not considered,
[28]
or the action itself contravenes a law or is not authorised by the
empowering provision.
[29]
The
court is satisfied that the manner in which the Municipality applied
the preference point system and its consequent decision
to award the
tender to the third, fourth, fifth and sixth respondents tender gave
rise to one or more of the above grounds for
review. The tender
process was unlawful and the court is required to decide what remedy
would be most appropriate in the circumstances.
Appropriate
remedy
[78]
In
AllPay
, the Constitutional Court held, at [25], that
‘
[o]nce a ground of
review under PAJA has been established there is no room for shying
away from it. Sectiion 172(1)(a) of the Constitution
requires the
decision to be declared unlawful. The consequences of the declaration
of unlawfulness must then be dealt with in a
just and equitable order
under section 172(1)(b). Section 8 of PAJA gives detailed legislative
content to the Constitution’s
“just and equitable”
remedy.’
[79]
The
determination of an appropriate remedy is possibly the most difficult
part of the court’s duty in circumstances such as
these. The
applicant’s right to just administrative action and the
public’s interest in the promotion of the efficient,
economic
and effective use of resources by the state
[30]
must be weighed against the principle that public administration must
be development-oriented
[31]
and the fact that the three-year appointment of the successful
bidders for the planning, design and construction required in
relation
to WSIG-funded water services projects is already well past
the half-way mark,
[32]
with
much of the tender already having been executed and plans made to
carry out whatever work remained.
[80]
At the conclusion of argument, the court directed the parties to
submit further affidavits
to address what would constitute an
appropriate remedy in the event that the court found that the
decisions that form the subject
of this application were indeed
unlawful. The purpose of such further affidavits was,
inter alia
,
to provide an indication of the status of the various projects
arising from the award of the tender so as to allow the court to
assess the possible impact that an order would have on the
communities who stood to benefit from the implementation of the
tender.
[81]
The Municipality stated that projects were being implemented at 14
different sites and
indicated the expenditure already incurred, the
outstanding amount still to be spent, and the progress made towards
completion
(expressed as a percentage). This information is
summarised in the table below.
M
unicipality
Village
Expenditure
Outstanding
Completion
Winnie
Madikizela- Matwebu
R7,273,417
R1,792,817
96%
Mandela
Local Dudumeni
R4,765,091
R1,139,995
66%
Municipality Nyaka
R378,002
Nil
100%
Umzimvubu
Local Mount Horeb
R4,660,617
R1,903,320
86%
Municipality
Gobizembe
R919,799
R1,577,458
100%
Ndum-Ndum
R1,159,507
R3,468,679
70%
Dangwana
R996,304
R6,834,615
100%
Matatiele
Local New
Stands
R1,361,849
R3,791,593
43%
Municipality Zimpofu
R4,757,395
R184,562
100%
Pakaneng
R2,693,214
R786,059
100%
Mbizeni
R7,026,730
R398,899
100%
Ntabankulu
Local Zinyosini
R5,078,862
R857,706
0%
Municipality Zamukulungisa
R314,084
R1,893,498
45%
Mabofu
R7,856,467
R973,551
55%
[82]
Notwithstanding the above, further projects are required, which will
have a duration of
12 months and an estimated cost of R100 million.
The Municipality argues that the interruption of the work that is
currently underway
and the possible re-evaluation and re-adjudication
of the bids would result in rehabilitation costs for the projects
still to be
finalised, the risk that incomplete works would be
vandalised, and delays in the delivery of the water services required
by the
affected communities.
[83]
The remaining respondents have furnished progress reports that
correspond, on the whole,
with the information supplied by the
Municipality. Nevertheless, there are discrepancies. It is clear that
a considerable number
of projects have already been completed; it
also clear that a considerable number of projects are still at the
planning stage and
have yet to be commenced.
[84]
The legislative basis for the granting of an appropriate remedy is
section 8 of PAJA. In
Steenkamp NO v Provincial Tender Board,
Eastern Cape
2007 (3) SA 121
, the Constitutional Court held, at
[29], that
‘
[i]t goes without
saying that every improper performance of an administrative function
would implicate the Constitution and entitle
the aggrieved party to
appropriate relief. In each case the remedy must fit the injury. The
remedy must be fair to those affected
by it and yet vindicate
effectively the right violated. It must be just and equitable in the
light of the facts, the implicated
constitutional principles, if any,
and the controlling law. It is nonetheless appropriate to note that
ordinarily a breach of administrative
justice attracts public-law
remedies and not private-law remedies. The purpose of a public-law
remedy is to pre-empt or correct
or reverse an improper
administrative function. In some instances, the remedy takes the form
of an order to make or not to make
a particular decision or an order
declaring rights or an injunction to furnish reasons for an adverse
decision. Ultimately the
purpose of a public remedy is to afford the
prejudiced party administrative justice, to advance efficient and
effective public
administration compelled by constitutional precepts
and at a broader level, to entrench the rule of law.’
[85]
The court
went on to remark that section 8 of PAJA confers on a court a
‘generous jurisdiction’ to make just and equitable
orders.
[33]
The description
was affirmed in
Bengwenyama
Minerals (Pty) Ltd and others v Genorah Resources (Pty) Ltd and
others
2011 (4) SA 113
, where the Constitutional Court held, at [83], that
‘
[t]his “generous
jurisdiction” in terms of section 8 of PAJA provides for a wide
range of just and equitable remedies,
including declaratory orders,
orders setting aside the administrative action, orders directing the
administrator to act in an appropriate
manner, and orders prohibiting
him or her from acting in a particular manner.’
[86]
In its
further affidavit, the applicant in the present matter argues for the
granting of a remedy based on the order made in
Esorfranki
Pipelines (Pty) Ltd and another v Mopani District Municipality and
others
[2014] 2 All SA 493
(SCA). Here, the court dealt with a situation
where a contract had been concluded pursuant to an unlawful tender
process. Moreover,
the parties to the contract had acted dishonestly
and unscrupulously and the JV involved was not qualified to execute
the contract.
[34]
The court
criticised the court
a
quo
for
having permitted the JV to continue to work, notwithstanding the
finding that the award of the tender had been unlawful. The
court
went on to state, at [24], that
‘
[i]n the context
of an unlawful tender process for the acquisition of goods and
services for the benefit of the public, the finding
as to an
appropriate remedy must strike a balance between the need for
certainty, the public interest, the interests of the successful
and
unsuccessful tenderers, other prospective tenderers, the interests of
innocent parties and the interests of the organ of state
at whose
behest the tender was invited.’
[87]
There is no indication, on the papers, that the parties to these
proceedings have acted
dishonestly or unscrupulously. The applicant
has requested the court to refer the appointment of the third,
fourth, fifth and sixth
respondents to the Special Investigations
Unit (‘SIU’) for investigation into possible acts of
corruption and collusion,
the violation of the MFMA and overall
regulatory framework, and for recover of any unlawful payments made.
Inasmuch as the tender
made no provision for the allocation of
preference points for price, thereby inviting the risk of the abuse
of any appointment
subsequently made, no evidence appears in the
affidavits filed by the parties of any corruption or collusion. There
is no basis
upon which the court can make the order sought in that
regard.
[88]
Furthermore,
the applicant has requested the court to make an order along the
lines of that made by the court in
Esorfranki
.
To that effect the respondents would be required to cease all
construction activities immediately and the Municipality would be
required to enlist the assistance of the Department of Water and
Sanitation (‘DWS’) to: appoint an independent engineer
to
prepare a final project report and submit same to the DWS and SIU;
further evaluate the bids that were previously disqualified
for
alleged lack of compliance with the CIDB Act; call upon the
qualifying bidders to submit price proposals for the projects
envisaged and make appointments to the panel on the basis of price
and preference;
[35]
issue a
tender that invites qualifying contractors to submit expressions of
interest for appointment to the panel; and ensure that
the new tender
process, described above, is concluded within 45 days. Moreover, the
Municipality would be required to implement
such temporary measures
as may be necessary to ensure that the affected communities are not
without water.
[36]
[89]
The approach proposed by the applicant has its merits. Nevertheless,
it is complex and
multi-faceted in nature and the court cannot ignore
the fact that the respondents (the Municipality in particular) have
not had
a proper opportunity to deal with the proposal and to inform
the court of its feasibility and probable ramifications. Moreover,
the DWS would be required to play a significant role in the execution
of the order; it is not a party to these proceedings.
[90]
In
Esorfranki
, the court remarked, at [20], that
‘
[i]n the context
of the procurement of goods and services an order declaring the
tender process unlawful means that the decision
to award the tender
and the contract which was entered into pursuant thereto are both
void
ab
initio
.
It has consequently been held that the factual consideration that it
may not be practicable to set the award aside must be given
due
weight in the exercise of the court’s discretion in deciding to
declare the administrative action unlawful and set it
aside. That
discretion takes into account considerations of “pragmatism and
practicality”. Its underlying reason is
the desirability of
certainty.’
[37]
[91]
Accordingly, the finding by this court that the tender process was
unlawful has the consequence
that the contracts concluded between the
Municipality and the remaining respondents are void
ab initio
and unenforceable. From the information supplied by the respondents,
a pragmatic approach is nevertheless called for with regard
to the
projects that are near to completion. There is a small number that
remain and it would be in the interests of the Municipality
and the
remaining respondents, but more especially the affected communities,
that whatever outstanding work needs to be carried
out in relation
thereto be allowed to continue for a limited period of time. Insofar
as the parties may not be in agreement about
which projects are near
to completion, the DWS, under whose auspices the WSIG programme is
being implemented, can be requested
to intervene. It would, however,
not be in the interests of the applicant, other prospective bidders,
or the public at large, to
permit the completion of those projects
that are not near to completion or to permit further projects to
proceed. From the contents
of the Municipality’s further
affidavit, it is evident that the amount still to be spent on
incomplete projects is significant,
while the estimated cost of R100
million for further projects evokes the earlier comments made by the
court in relation to the
granting of a blank cheque for the supply of
the necessary goods and services. This cannot be tolerated.
Relief
and order
[92]
The relief to be granted has as its basis the provisions of section
8(1) of PAJA. The precise
details thereof are informed by the
alternative relief sought by the applicant in terms of its amended
notice of motion.
[93]
In the circumstances, the court is persuaded that it would be just
and equitable to declare
the tender process to be unlawful and to set
aside the appointment of the third, fourth, fifth and sixth
respondents. For obvious
reasons, there would be no basis upon which
to remit the evaluation and adjudication of the bids back to the BEC
and BAC for reconsideration.
Similarly, as already discussed, there
would be no basis upon which to refer the matter to the SIU for
investigation.
[94]
Furthermore, by reason of the likely impact on the affected
communities, it would be just
and equitable to suspend the
declaration of unlawfulness for a limited period of time so as to
allow the completion of those projects
that are near to completion,
where the outstanding work to be carried out is minimal. There is no
basis whatsoever to permit the
third, fourth, fifth and sixth
respondents to commence or continue with any further projects.
[95]
In relation to costs, the court acknowledges that the applicant has
been mostly successful
in its application, it has vindicated its
right to just administrative action. Nevertheless, it cannot be said
that it has secured,
overwhelmingly, the relief that it sought. In
that regard, the court has declined to appoint it to the panel or to
order that the
Municipality distribute work orders amongst the
various service providers; the court has also declined, in relation
to the alternative
relief sought, to remit the matter back to the BEC
and BAC for reconsideration; furthermore, the court has declined to
refer the
matter to the SIU. Consequently, the court is obliged to
take the above into consideration when deciding an appropriate costs
order.
[96]
With regard to the Municipality, however, its unhelpful conduct in
relation to the applicant’s
request for reasons for the
decision to disqualify the applicant’s bid and to appoint the
third, fourth, fifth and sixth
respondents cannot be overlooked.
Moreover, its blatant disregard for the preference point system
prescribed by the PPPFA and the
overriding constitutional principle
of cost-effectiveness within the context of a tender of this
magnitude must attract the criticism
of the court.
[97]
Insofar as the remaining respondents are concerned, there is no
evidence on the papers
of the corruption or collusion alleged by the
applicant. Whereas blame cannot be laid at their feet for the
declaration of unlawfulness
that follows, the remaining respondents
nevertheless elected to oppose the application; ultimately, this has
proved unsuccessful.
[98]
The following order is made:
(a)
the tender process followed by the first respondent with regard to
the evaluation, adjudication
and award of bid number
ANDM/IDMS-WSA/148/04/05/20, Request for Proposals for the Panel of
Service Providers (Consulting Engineers
and Contractors) for the
Planning, Design and Construction of WSIG-funded Projects in the
Alfred Nzo District Municipality (‘the
tender’), is
declared unlawful;
(b)
the first respondent’s decision to disqualify the bid submitted
by the applicant in
response to the tender is hereby reviewed,
declared unlawful, and set aside;
(c)
the second respondent’s decision to award the tender to the
third, fourth, fifth and
sixth respondents and to appoint them to the
panel of service providers in accordance with the tender is hereby
reviewed, declared
unlawful, and set aside;
(d)
any contract entered into by the first respondent and the third,
fourth, fifth and sixth
respondents pursuant to the award of the
tender is declared unlawful and void
ab initio,
and set aside;
(e)
the declarations and effect thereof, in terms of paragraphs (a), (b),
(c) and (d), above,
are suspended for a period of 30 days; and
(f)
the respondents are directed to pay the applicant’s costs,
jointly and severally,
in the event of one paying then the others are
absolved, provided that:
(i)
with regard to the first and second respondents, their liability
shall be limited
to 90% of such costs; and
(ii)
with regard to the third, fourth, fifth and sixth respondents, their
liability shall be limited to
70% of such costs.
JGA
LAING
JUDGE
OF THE HIGH COURT
APPEARANCE
Counsel for the
applicant:
Adv Nyangiwe, instructed by Moletsane PN Attorneys Inc, East London.
Counsel
for the 1
st
and 2
nd
respondents:
Adv Bodlani, instructed by Funani Attorneys, Mthatha.
Counsel
for the 3
rd
to 6
th
respondents:
Adv Ntlokwana, instructed by Kulu Z Attorneys
c/o Gilindoda
Attorneys, Makhanda.
Date
of hearing:
03 February 2022
Date
of final submissions, as directed:
17 May 2022
Date
of delivery of judgment:
14 June 2022
[1]
The wording of the advertisement is not particularly clear and may
well have contributed to the problems associated with the
applicant’s approach to the tender, as shall be seen.
[2]
It is necessary to mention that the above requirements were
contradicted elsewhere in the tender documents, as shall be
discussed
later.
[3]
The BEC’s reason for its disqualification of the applicant, as
apparent from the minutes of the meeting held on 5 August
2020, is
that ‘[n]o CIDB grading required attached [sic].’
[4]
See section 18(1) of the CIDB Act.
[5]
The applicant contends that the tender documents indicated that a
minimum grading of 5CEPE or 6CE was necessary.
[6]
The provisions of section 62(3) of the MSA provides that an appeal
authority, as identified in sub-section (4), must consider
an appeal
and confirm, vary or revoke a decision taken in terms of a delegated
power or duty, but no such variation or revocation
of a decision may
detract from any rights that may have accrued as a result thereof.
[7]
The definitions contained in section 1 of the PPPFA describe an
‘acceptable tender’ as one that, in all respects,
complies with the specifications and conditions of tender, as set
out in the tender documents.
[8]
In particular, section 7(1) of PAJA requires proceedings for
judicial review to be instituted without unreasonable delay and
not
later than 180 days after the date on which: (a) any proceedings
instituted in terms of internal remedies have been concluded;
or (b)
where no such remedies exist, the person concerned was informed of
the administrative action, became aware thereof and
the reasons for
it or might reasonable have been expected to have become aware
thereof.
[9]
Section 62(1) of the MSA. The text provides that:
‘
A
person whose rights are affected by a decision taken by a political
structure, political office bearer, councillor or staff
member of a
municipality in terms of a power or duty delegated or sub-delegated
by a delegating authority to the political structure,
political
office bearer, councillor or staff member, may appeal against that
decision by giving written notice of the appeal
and reasons to the
municipal manager within 21 days of the date of the notification of
the decision.’
[10]
See, too,
Evaluations
Enhanced Property Appraisals (Pty) Ltd v Buffalo City Metropolitan
Municipality and others
[2014] 3 All SA 560
(ECG), decided by a full bench in this division,
as discussed further.
[11]
At [60] and [73] – [74].
[12]
The addressee is understood to be the relevant official responsible
for the Municipality’s supply chain management functions.
[13]
This appears at paragraph 6 of its amended notice of motion, dated
23 August 2021.
[14]
See section 62(3) of the MSA.
[15]
Maximum
Profit Recovery
,
at [16] – [17].
[16]
Consequently, there is no need to consider the second part of the
above respondents’ argument to the effect that the section
62
route was not available to the applicant because any variation or
revocation of the original decision was not permitted to
detract
from any rights that already accrued. This would have rendered the
appeal mechanism ineffective. See
Municipality
of the City of Cape Town v Reader and others
[2009] JOL 22725
(SCA), which confirmed the principle laid down by
the full bench in the court
a
quo
to
the effect that the original decision cannot be reversed on appeal
where it takes away the right that was initially granted.
The
principle was affirmed by this division in
ESDA
Properties (Pty) Ltd v Amathole District Municipality and others
(2635/2014) [2014] ZAECGHC 76 (18 September 2014), at [13].
[17]
See Plasket J’s observations in that regard,
Joubert
Galpin Searle and others v Road Accident Fund and others
[2014] 2 All SA 604
(ECP), at [52] – [55].
[18]
See, too,
Overstrand
Municipality v Water and Sanitation Services South Africa (Pty) Ltd
[2018] 2 All SA 644 (SCA).
[19]
The requirement appears under the heading, ‘Company profile’,
at the eighth bullet point, p 329 of the record.
[20]
This appears in the tender notice and invitation to tender, p 288 of
the record.
[21]
See, too,
AllPay
,
at [45].
[22]
National Treasury has recommended a two-stage bidding process for
turnkey or projects in relation to ‘large complex plants
or
works of a special nature, when it may be undesirable or impractical
to prepare complete detailed technical specifications
in advance.’
See National Treasury, ‘Supply Chain Management: A Guide for
Accounting Officers / Authorities’
(February 2004), para
4.7.9, at 33; accessed at
http://www.treasury.gov.za/divisions/ocpo/sc/Guidelines/SCM%20Jan900-Guidelines.pdf
(8 June 2022).
[23]
See, too,
Bekazaku
Properties (Pty) Ltd v Pam Golding Properties (Pty) Ltd
[1996] 1 All SA 509
(C), at 513.
[24]
See
Mohamed
and another v President of the RSA and others
[2001] ZACC 18
;
2001 (7) BCLR 685
(CC), at [61] – [67], where the court
discussed whether or not a foreign national could be deemed to have
consented to
his deportation or extradition to the United States in
circumstances where the prosecuting authority intended to press
capital
charges.
[25]
At [16] – [18].
[26]
Section 6(2)(b).
[27]
Section 6(2)(d).
[28]
Section 6(2)(e)(i) and (iii).
[29]
Section 6(2)(f)(i).
[30]
In terms of section 195(1) of the Constitution, public
administration must be governed by the democratic values and
principles
enshrined in the Constitution, including the principle
that ‘efficient, economic and effective use of resources must
be
promoted’.
[31]
Section 195(1)(c) of the Constitution.
[32]
The tender stipulated that the appointment to the panel would be for
a period of three years. The Municipality appointed the
third,
fourth, fifth and sixth respondents on or about 1 September 2020,
meaning that the appointment will expire on or about
31 August 2023.
[33]
Steenkamp
NO
, at
[30].
[34]
Esorfranki
,
at [22].
[35]
The reference to ‘preference’ is not completely
understood but for purposes of the judgment it is assumed that this
was a reference to B-BBEE status.
[36]
The applicant has suggested that such measures include the use of
water carts or trucks. Whether this is viable for the affected
communities is not at all apparent.
[37]
See, too,
Seale
v Van Rooyen NO; Provincial Government, North West Province v Van
Rooyen NO
2008 (4) SA 43
(SCA), at [13];
Chairperson,
Standing Tender Committee and others v JFE Sapela Electronics (Pty)
Ltd and others
2008 (2) SA 638
(SCA), at [27] – [28]; and
Eskom
Holdings Ltd and another v New Reclamation Group (Pty) Ltd
2009 (4) SA 628
(SCA), at [9].