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[2019] ZAGPPHC 266
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Council for Geoscience v New Resolution Geophysics and Another (61912/2018) [2019] ZAGPPHC 266 (29 May 2019)
REPUBLIC
OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH
AFRICA
GAUTENG DIVISION, PRETORIA
(1)
REPORTABLE:
NO
(2)
OF
INTEREST TO OTHER JUDGES: NO
(3)
REVISED.
CASE NO: 61912/2018
29/5/2019
In
the matter between:
THE
COUNCIL FOR GEOSCIENCE
APLLICANT
and
NEW
RESOLUTION GEOPHYSICS
FIRST RESPONDENT
YBR
INVESTMENT HOLDING PTY LTD
t/a
AEROPHYSX
SECOND RESPONDENT
JUDGMENT
KUBUSHI J
INTRODUCTION
[1]
The applicant seeks, in this
application, to review its alleged irregular and unlawful decision to
award the tender issued under
request for quotation number SAS818 to
the first respondent. The application is brought on the basis that
the applicant's decision
to award the tender is inconsistent with
section 217 (1) of the Constitution of the Republic of South Africa
("the Constitution"),
and thereby invalid.
THE PARTIES
[2]
The applicant is the Council for
Geoscience ("the Council"), an organ of state established
in terms of the Geoscience
Act 100 of 1993as amended.
[3]
The first respondent is New Resolution Geophysics ("New
Resolution"), a
company which has been awarded the tender in
question, the decision of which the applicant seeks to be reviewed
and set aside.
[4]
The second respondent, YBR Investment
Holdings (Pty) Ltd t/a Aerophysx ("Aerophysx"), is cited as
an interested party
and no specific relief is sought against it.
THE RELIEF SOUGHT
[5]
The applicant has approached court for
an order in the following terms:
5.1
The
applicant's decision of appointing the first respondent for the KDD
extension block high resolution airborne magnetic and radiometric
survey for the applicant, awarded under request for quotation dated
14 February 2018 be reviewed and set aside.
5.2
The
applicant be authorised to re-evaluate all shortlisted quotes, under
request for quotation number SAS818 , dated 14 February
2018.
5.3
Costs of the application in the event of
opposition.
[6]
The first respondent is opposing the
application and raises a number of defences in support of its
argument that the relief sought
by the applicant should not be
granted. The second respondent on the other hand, though cited as an
interested party is taking
part in the proceedings. The second
respondent filed its papers late but such were not opposed. The
second respondent also filed
heads of argument and when the matter
was heard it was represented in court and argued the matter in
support of the relief sought
by the applicant.
BACKGROUND
[7]
The facts of the matter are common cause between the parties unless
where specifically
stated. On or about 28 July 2015, following an
open tender process, the following companies were appointed as
service providers
(''the service providers") for possible future
magnetic/airborne geophysics data acquisition on behalf of the
applicant: Geotech
Aviation South Africa ("Geotech"); New
Resolution Geophysics ("New Resolution"); and YBR
Investment Holdings
(Pty) ltd t/a Aerophysx ("Aerophysx").
[8]
On or about 14 February 2018 the
applicant issued a request for quotations for services from the
service providers, under reference
number SAS818, with amongst other
requirements, the specification to carry out an airborne magnetic and
radiometric survey for
lithological and structural mapping of parts
of the main Karoo Basin in support of the expanded 10 year mapping
Programme in parts
of the Western and Eastern Cape Provinces. The
quotations were to be evaluated on 80/20 (Price and BEE) preference
system.
[9]
The following quotations were received
from the service providers:
9.1
YBR Investment Holdings (Pty) Ltd t/a
Aerophysx at a price of R18 696 819, 20 inclusive of 15% Value Added
Tax ("VAT');
9.2
New Resolution Geophysics at a price of
R18 609 690 inclusive of 14%VAT; and
9.3
Geotech Aviation South Africa at a price
of R23 859 413, 86 inclusive of 14% VAT.
[10]
The Bid Evaluation Committee ("the BEG") of the applicant
met on 2 March 2018 to evaluate
the quotations received. According to
the summary submitted by the BEC to the Bid Adjudication Committee
("BAC"), the
highest scoring bidder was the first
respondent, which scored 90 on price only. The second highest scoring
bidder was the second
respondent with a score of 89.57 on price. Both
bidders did not meet the BEE requirements and thus scored zero in
that regard.
Based on this score sheet, the BEG recommended that the
first respondent, with the highest score, be awarded the tender.
[11]
Based on the score sheet provided by the BEG, the BAC resolved to
recommend the appointment of
the first respondent at the amount of
R18 609 690, 60 VAT inclusive. The recommendation of the BAC is
stated in its minutes of
8 March 2018 as R16 324 290 exclusive of
VAT.
[12]
On 20 March 2018 the recommendation of
the BAG served before the Board of the applicant. The Board approved
the award of the tender
as recommended. Based on the decision of the
Board, a letter of appointment of the service provider, which was a
communication
of the applicant's intention to contract with the
service provider, was issued to the first respondent.
[13]
Sometime, late in June 2018, it came to the attention of the Board
that there was an irregularity
in the decision to award the tender.
The irregularity came about in that when evaluating the bids, the BEC
and subsequently the
BAC missed the fact that the bidders did not use
the same VAT rate. It was discovered that of the three bidders whose
bids have
been shortlisted, Geotech and New Resolution's prices were
calculated on a 14% VAT rate whereas Aerophysx's price was calculated
on a 15% VAT rate. After some investigation and confirmation of the
irregularity it was resolved that the award be cancelled. The
applicant has approached court consequent to the said cancellation.
[14]
It is worthy to state that early in
February 2018 , the Minister of Finance had announced a 1% VAT
increment that was to come into
effect on 1 April 2018. VAT was to
increase from 14% to 15% with effect from 1 April 2018. The tender
was advertised before the
new VAT increment came into operation, and
at the time of the close of the submission of the tender/quotations
the VAT increment
had already been gazetted.
ISSUES
[15]
There are two issues for determination.
The first issue is whether the applicant's decision can be reviewed
and set aside. The second
issue is whether, in the event the
applicant's decision is reviewed and set aside, the matter should be
remitted to the BEC for
a re-evaluation of the bid or the process
should be started
de novo.
I deal with the two issues
separately hereunder.
IS THE DECISION TO AWARD THE
TENDER REVIEWABLE?
The Applicant's Case
[16]
The complaint by the applicant is that
the recommendation by the BEC was made in error as the bidders'
prices were quoted using
different VAT rates.
[17]
According to the applicant, a closer look and consideration of the
quotations revealed that,
in pricing their respective quotations, the
first respondent and Aerophysx, used 14% VAT and the second
respondent used 15% VAT.
The first respondent's quotation is, thus,
inclusive of 14% VAT, which VAT rate was not going to be applicable
at the time of the
execution of the works tendered for because of the
VAT increase of 1% that would have come into effect from 1 April
2018. On closer
scrutiny, the effect is that when the VAT is excluded
from all the quotations, the highest bidder with the lowest base
price appears
to be the second respondent with a base price of R16
258 103, 65, which was lower than the first respondent's base price
by R66
186, 60. This differentiation was missed and/or ignored by the
BEC and the SAC and resulted in the quotations being treated as if
they had the same VAT percentage.
[18]
In the circumstances, the applicant's
submission is that the decision of the BEC and the BAC to recommend
the first respondent is
clearly irregular, and therefore unlawful.
Had the BEC and the BAC applied their mind properly to all the bid
prices exclusive
of VAT, it would have become clear that the highest
scoring bidder is the second respondent and not the first respondent.
Hence
the decision should be reviewed and set aside. The Committees
should also have noted that different VAT rates were used.
[19]
In support of the aforementioned
submissions, the applicant proffered the following grounds to found
its argument, namely:
19.1
The applicant's right to review its
decision:
The applicant's contention is that
the Constitutional Court confirmed the right of an organ of state to
review its own decisions
which are inconsistent with the Constitution
under the principle of legality. As a result, the applicant contends
that in this
instance, the contentious decision should be reviewed
for illegality because it was not rationally connected to the
information
before the BEC and the BAC. I was, in this regard,
referred to the judgments in
State
Information Technology Agency Soc Limited v Gijima Holding (Pty)
Ltd,
[1]
and
The Business
Zone 101O
CC
tis
Emmerentia Convenience Centre v Engen Petroleum Limited and
Others.
[2]
19.2
The applicant's lack of power to
reverse an administrative decision:
The applicant's submission on this
ground is that it is trite that once an administrative decision is
reached, it becomes binding
until set aside by a court of competent
jurisdiction. In this regard, the decision to award the tender once
made, became binding
on the applicant and could only be set aside by
a court of competent jurisdiction. The applicant had, thus, to
approach court for
the decision to be reviewed, so it was argued. In
support of this argument, the applicant is relying on the judgment in
MEC for Health,
Eastem Cape and Another v Kirkland Investments (Pty) Ltd.
[3]
19.3
The imperatives of section 217 (1) of
the Constitution:
The further argument by the
applicant is that section 2 of the Constitution read with section 217
(1) of the Constitution enjoins
a court to declare invalid any law or
conduct that it finds to be inconsistent with the Constitution. The
contention being that
public contracts that have been found to have
been awarded irregularly have in terms of the said sections, been
declared invalid
by our courts. The applicant submitted further that:
(a)
if the applicant's award was unlawful,
it is invalid, thus, the applicant was duty bound not to submit
itself to an unlawful contract;
(b)
the applicant was entitled to
raise
the invalidity of the decision of
the award of tender to the first respondent and seek to have it set
aside. and where invalidity
is proven, as is the case in the current
matter, the court has no discretion but to set the award aside, no
matter how harsh, or
unfair the consequences are to the first
respondent. The applicant referred to the judgment in
Contractprops
[4]
in support of its argument.
The Second Respondent's Case
[20]
By agreement between the parties, the
second respondent, who supported the relief sought by the applicant,
was allowed to argue
before the first respondent. The second
respondent's argument is that:
20.1
Firstly, in accordance with
Gijima,
[5]
the applicant as an organ of state
is entitled to review its decisions under the legality review. The
principle of legality, so
it is argued, is applicable to all
exercises of public power and not only to administrative action as
defined in Promotion of Administrative
Justice Act.
[6]
20.2
Secondly, the first respondent's bid
does not show that it was to absorb the 1% VAT difference. The
argument is that at face value
it is not clear what the bullet point
(which the first respondent alleges indicates its intention to absorb
the 1% VAT difference)
on the first respondent's bid, means. There
are no express words to explain the VAT difference and what the
bullet point does is
to create ambiguity in the bid. The first
respondent's desire to waive the 1% differentiation, confirms the
ambiguity.
20.3
Thirdly, it would have been
fundamentally unfair and unlawful for the applicant to have
negotiated with the first respondent to
waive the 1% VAT difference.
Such negotiations, it is argued, would have invalidated the whole
process as it would not have been
transparent.
20.4
Lastly, the BEC evaluated the bids using
the old Preferential Procurement Regulations instead of the new
Preferential Procurement
Regulations of 2017.
The First Respondent's Case
[21]
The reasons provided by the first
respondent for the variation in the VAT rate are stated in paragraph
28 and 29 of its answering
affidavit as follows:
"28.
The reason for the variation arises from the change to the VAT rate
which would have become effective
on
1 April 2018, as
announced in the National Budget Speech on 21 February 2018. This
according to the first respondent is the reason
why in the body
of
the quotation
reference is made in one of the bullet points
to
the fact that as
at 1 April 2018
a
VAT rate of 15%
will apply. However, in terms of the actual figures stated in the
quotation, the rate
of
14% VAT was
utilised because the tender commenced in March 2018
as
it was supposed
to, the first respondent's first invoice
to
the applicant
would have included
a
VAT rate of 14%
not 15%. Thereafter, from 1 April 2018, as envisaged at the foot of
the quotation, the VAT rate of
15%
would be
applicable. Thus it is apparent that
-
given the
difficulties of having to deal with pricing during periods of time
with variable VAT rates
-
the first
respondent envisaged that it would have to absorb the cost of the
extra 1
%
VAT
that would be payable from 1 April 2018.
29.
In amplification of what I have said above about the fact that the
tender would have had
to have commenced in March 2018, I
say
the following. If
one
has
regard
to the request for quotation, it provides for a time period of 8
months with the final product delivery by 30 November 2018.
.
. .
The first
respondent had calculated that in order to comply with this time
period the first respondent would have had to have commenced
its
operations in March 2018 and the first respondent would have had to
have performed the work and generated an invoice during
March 2018
when the VAT rate was still at 14%."
[22]
There are three defences raised by the
first respondent in opposition to the applicant’s claim that
the decision to award
the claim should be reviewed and set aside,
namely:
22.1
In the first place, it is the first
respondent's contention that it had always intended to absorb the 1%
VAT variation.
22.2
Secondly, the first respondent argues
that upon taking service of the present application, it made a formal
tender to waive the
1% VAT differential to ensure that the overall
VAT inclusive bid price would remain exactly the same. This, it is
suggested, would
have resulted in the overall VAT inclusive bid price
remaining the lowest price with the result that the first respondent
continues
to score the highest number of points.
22.3
Thirdly, the contention is that the
first respondent's bid was responsive in all respects including price
and as such constituted
an acceptable tender. The argument being that
the tender/quotation was compliant,
alternatively
substantially compliant with the bid
conditions and was, as such, fully responsive on all accounts.
22.4
The last submission is that in terms of
the Bid Conditions, the applicant had the power to raise any
discrepancy in regard to the
VAT rate difference and to negotiate
with the first respondent in that regard both before and after the
bid process had closed
and the first respondent's bid had been
accepted. It being contended that since the first respondent's tender
was successful and
as it was placed on the applicant’s list of
preferred service providers, the bid conditions were applicable to it
and to
any subsequent requests for bids or quotations as between the
applicant and the first respondent which also included the request
for quotation in respect of the present project.
DISCUSSION
[23]
It is trite that under the principle of
legality, an organ of state like the applicant has the right to
review its own irregular
decisions. It is also trite that an organ of
state like the applicant lacks the power to reverse its own
administrative decision.
This is so because once an administrative
decision is reached, it becomes binding until set aside by a court of
competent jurisdiction.
However, for the various defences it has
raised, the first respondent's submission is that the decision to
award the tender in
the circumstances of the present matter is not
reviewable and should not be set aside.
[24]
It is common cause that the BEC and the BAC did not realise and/or
ignored that the first respondent
had used a VAT percentage of 14% to
calculate its VAT inclusive price and that the second respondent used
a VAT percentage of 15%.
This resulted in the first respondent's
overall VAT inclusive amount included as a VAT component of R2 285
400 whereas in fact
the VAT component should have been R2 448 643,
50, and the total VAT inclusive amount became R18 609 690, 60 instead
of R18 772
933, 50.
[25]
As such, there is no dispute that an irregularity occurred during the
evaluation of the bid.
I say that the irregularity is common cause,
because on a closer reading of the first respondent's answering
affidavit and heads
of argument, it is clear that the first
respondent concedes that there was an irregularity in the process,
which it seeks to correct
by forgoing the 1% VAT amount.
[26]
Even though the irregularity is
admitted, it is the first respondent's proposition that the award
should not be reviewed because
firstly, the irregularity is
immaterial; secondly the first respondent can absorb the 1% VAT
difference to ensure that the bid
price remains the same; lastly, in
terms of the tender conditions the applicant was obliged to enter
into negotiations with the
first respondent in respect of the VAT
difference.
[27]
As regards the materiality of the
irregularity and/or condition that price must be VAT inclusive, it is
the applicant and not the
court that must decide what should be the
prerequisite for a valid tender, and a failure to comply with
prescribed conditions will
result in a tender being disqualified as
an unacceptable tender under the Preferential Procurement Policy
framework Act;
[7]
unless those conditions are immaterial, unreasonable or
unconstitutional.
[8]
[28]
I am of the view that the first
respondent's supposition that the irregularity is immaterial and
ought to have been overlooked by
the applicant is unsubstantiated.
Although the differential appears to be a minor difference of 1% it
is, however, material in
the sense that it is determinative of which
entity is the highest bidder. It is apparent that when the base
prices of the bidders
are considered the first respondent was able to
quote a lower price because it used a low VAT rate. For instance,
even though the
first respondent's quote of R18 609 690, 60 appeared
to be lower than the second respondent's quote of R18 696 819, 20, it
was
in fact not so. The second respondent's quotation contained the
lowest base price of all bids received in the amount of R16 258
103,
65. This was lower than the first respondent's base price of R16
324 290 by a price of R66 186, 35.
[29]
The issue of the irregularity is material and that it induced the
applicant to have the decision
revisited is correct. I, thus, find
the first respondent's argument of materiality to have no substance
and should be rejected.
[30]
The contention by the first respondent
that it had intended to absorb and/or waive the 1% VAT difference
appears unfounded as well.
The record shows that the first respondent
submitted a quote based on a VAT rate of 14% and a higher base price
of R16 324 290.
The footnote to the first respondent's quote, to
which the first respondent seeks to rely on, reads that only a VAT
rate of 15%
will apply as of 1
April 2018. It does not say that
the first respondent will absorb the VAT increase - there is no such
wording on the quotation and
it cannot be read in. Therefore, when
the BEC met to evaluate the bid it had no knowledge that the first
respondent intends to
absorb the 1% VAT increase. As
per
its
own evidence in the answering affidavit, the first respondent
concedes that it only offered to absorb the 1% VAT increase on
being
served with the founding papers in this application. Even so, the
reduction of the VAT by 1% was never a jurisdictional requirement
of
the bid. The requirement was that price must be VAT inclusive.
[31]
My view is that at the time of compiling
the quotation, the first respondent had no intention at all to absorb
the VAT increment.
This was an afterthought when it realised that it
had used a wrong VAT rate. Besides, if the applicant would allow the
first respondent
to absorb the 1% VAT, it would have been obliged to
allow all the other bidders to do the same in order for the bid to be
transparent.
Thus, there is no factual basis on which it can be said
that it was the intention of the first respondent to absorb the 1%
VAT
increment. More importantly, as already stated, there was no
requirement to absorb the 1% VAT. Allowing it would have resulted in
the amendment of the bid conditions. Such amendment would have been
in contravention of the prescripts of section 2 (1)
(e)
of the Preferential Procurement
Policy Framework Act,
[9]
which provides that
"any
specific goal for which a point may be awarded, must be clearly
specified in the invitation to submit tender''
and
Regulation 11.1.1 of the Procurement Regulations which provides
firstly that, the evaluation of bids must be done in terms of
the
evaluation criteria embodied in the bid document; secondly that, the
amendment of the evaluation criteria after the closure
of the bid is
not allowed as this may jeopardize the fairness of the process.
[32]
Similarly, I find the first respondent's
contention that the applicant was obliged to enter into negotiation
with it before approaching
court to review its decision, to be
superfluous. The reliance by the first respondent on the conditions
of tender, quoted in its
papers, which empowers the applicant to
negotiate, does not assist its case. In actual fact the first
respondent's argument misses
the point. The irregularity complained
about is not in the respondent's tender documents, but is inherent in
the process of evaluation.
I accept that the first respondent's bid
was responsive or compliant,
alternatively
substantially compliant, that is why
it was not rejected. However, the issue herein, as I have stated, has
to do with the irregularity
that happened during the process of
evaluation. In essence, the irregularity complaint of does not have
anything to do with the
first respondent and/or its tender documents.
The irregularity was occasioned by the conduct of the applicant's
officials during
the evaluation process. They failed to note the
different VAT rates and evaluated the bids as if the VAT rate used by
all the bidders
was the same. Once it came to the attention of the
applicant that an irregularity, occasioned by its officials,
occurred, there
was no need to negotiate with the first respondent.
Of importance is that, that the first respondent had used a 14% VAT
rate in
its price calculation was not in itself an irregularity and
that is why I say that there was no need for the applicant to enter
into negotiations with the first respondent. The irregularity
affected all the shortlisted bids and was inherent in the process
of
evaluation.
[33]
Negotiations in such circumstances would
have amounted to the applicant affording the first respondent and
opportunity to amend
its quotation. By implication negotiations under
such circumstances, would have been tantamount to the applicant
allowing the first
respondent to amend its tender to comply with the
jurisdictional requirements of the bid without allowing the other
tenderers to
do so. Such conduct would have been contrary to the
provisions of section 217 (1) of the Constitution which requires all
tender
processes to be fair, equitable, transparent, and competitive.
[34]
The first respondent's grounds for
opposing the application are, therefore, meritless and should be
rejected.
THE REMEDY
[35]
Another relief sought by the applicant
is an order authorising it to re-evaluate all shortlisted quotes,
under request for quotation
number SAS818, dated 14 February 2018.
[36)
The applicant's submission is that the appropriate remedy, should I
find that the BEC and the BAC did not properly apply their
mind to
the bid, is that the matter has to, in justice and fairness, be
remitted back for reconsideration and the court should
not interfere
with the applicant's duty to render just administrative decisions
and/or usurp its functions by substituting the
decision with its own
decision as there are no exceptional circumstances and justification
for the court to do so. I was referred
to the unreported judgment in
Macrovest 102 (Pty) Ltd t/a Business and Mazizi v The Municipal
Manager: Nelson Mandela Bay Metropolitan Municipality and 4 Others,
Case Number 46712012.
[37]
The basis of the applicant’s argument is that the contentious
decision is only unlawful
to the extent of the decisions of the BEC,
BAC and the applicant's Board. As such, it ought to, in justice and
fairness, be remitted
back for consideration first to the BEC to
commence the evaluation process afresh; and then through the
remainder of the procurement
decision making process. I is further
submitted that the procurement process was above board to the point
of submitting bids. The
irregularity is only with the evaluation and
adjudication of the bid, which resulted in the applicant's Board
taking a wrong decision,
so it is argued.
[38]
It is, however, the first respondent's argument that in the event the
court finds that the decision
should in fact be reviewed and set
aside, as I have in this instance found , the tender process should
be started afresh and commenced
de novo.
It should not simply
involve re-evaluation of all shortlisted quotes. The problem with the
re evaluation approach, according
to the first respondent, is
that the applicant believes that it would not be entitled to give the
first respondent an opportunity
to clarify and/or amend its bid. It
is, thus, likely that the first respondent will be excluded from the
re evaluation process
by the applicant. Fairness and justice
dictates that the commencement
de novo
would be more fair and
transparent for the first respondent and the other parties that put
in their bids. Alternatively, if the
re-evaluation approach is
followed the first respondent should be allowed to clarify and/or
amend its bid in order to deal with
the VAT variation issue, so the
argument goes.
[39]
The second respondent's submission is in support of the relief sought
by the applicant to refer
the matter back for evaluation by the BEC
as there is no reason to interfere with the order sought by the
applicant. According
to the second respondent, if it is the
applicant's view that the matter will be best addressed by remittance
back to the BEC for
re-evaluation, it must be allowed to do so.
[40]
I am not in agreement with the argument by the first respondent that
the tender process should
be started
de novo.
As I have
already indicated, the first respondent misses the point of
contention. It is the first respondent' submission that it's
tender
was responsive or compliant,
alternatively
substantially
compliant. I have, also accepted this proposition. I have also made a
finding that the irregularity complaint about
herein does not, in
reality, have anything to do with the first respondent's tender, but
it is inherent in the process. The first
respondent’s bid
having been accepted as responsive, forms part of all the other
tenders shortlisted as responsive for evaluation,
hence there is no
need to start the process afresh as the first respondent's tender is
not being rejected.
[41]
I am in agreement with the submission
made by the applicant that the procurement process was above board to
the point of submitting
bids; and that the irregularity is only with
the evaluation and adjudication of the bid, which resulted in the
applicant's Board
taking a wrong decision. There are bids, including
the first respondent's bid, that have passed master until up to the
point of
submission and are awaiting to be evaluated. The first
evaluation process having being marred by irregularities, it follows
that
the shortlisted bids must be evaluated afresh.
CONCLUSION
[42]
The Supreme Court of Appeal in
Pepcor
Retirement Fund and Another v Financial Services Board and
Another,
[10]
held that if an administrative act has been performed irregularly -
be it as a result of administrative error, fraud or other
circumstances - then, depending upon the legislation involved and the
nature and functions of the public body, it may not only be
entitled
but also bound to raise the matter in a court of law, if prejudiced.
That court explained as follows at para 47 of the
judgment:
"In my view a material
mistake of fact should be a basis upon which a court can review an
administrative decision. If legislation
has empowered
a
functionary to
make a decision, in the public interest, the decision should be made
on the material facts which should have been
available for the
decision properly to be made. And if
a
decision has been
made in ignorance of facts material to the decision and which
therefore should have been before the functionary,
the decision
should (subject to what is said in para [10] above) be reviewable at
the suit of inter alios the functionary who made
it - even thought he
functionary may have been guilty of negligence and even where a
person who is not guilty of fraudulent conduct
has benefited by the
decision. The doctrine of legality which was the basis of the
decisions in Fedsure, Sarfu and Pharmaceutical
Manufactures requires
that the power conferred on
a
functionary to
make decisions in the public interest, should be exercised properly
i.e. on the basis of true facts; it should not
be confined to cases
where the common law would categorise the decision as ultra vires."
[43]
In
State
Information Technology Agency v Gijima Holdings
[11]
the court had this to
say:
"[41]
...
Section
217 of the Constitution insists on
a
system of public
procurement that complies with certain factors. It provides that
'(w)hen an organ of state
.
. .
contracts for
goods or services, it must do so in accordance with
a
system which is
fair, equitable, transparent, competitive, and cost effective'. It
therefore seems reasonable for this court to
infer that, in awarding
the contract, Sita acted contrary to the dictates of the
Constitution. Based on Fedsure, this was at odds
with the principle
of legality and liable to be reviewed and possibly set aside. Indeed,
we have previously held that the principle
of legality would be
a
means by which an
organ of state may seek the review of its own decision. This was in
Khumalo.
[12]
”
[44]
And, in
Contractprops,
above, the court at paragraphs [8] and
[9] thereof held as follows:
"[8]
. . .
to
eliminate patronage or worse, in awarding of contracts, to provide
members of the public with opportunity to tender to fulfil
[government's) needs, and to ensure the fair, impartial, and
independent exercise of the power to award [government] contracts.
If
contracts were permitted to be concluded without any resultant
sanction of invalidity, the very mischief which [procurement
regulations] seek to combat could be perpetuated".
and
"[9]
.
. .
Such
transactions are either all invalid or all valid. Their validity
cannot depend upon whether or not harshness is discernible
in the
particular case."
[45]
It is common cause that the first
respondent used a VAT percentage of 14% instead of 15%. It is also
not in dispute that it was
always the intention of the BEC and the
BAC to recommend the bidder with the highest score to be awarded the
tender. That is. the
intention was to contract with the service
provider with the lowest quoted price. In this instance, the first
respondent's quoted
price was not the lowest.
[46]
It is, thus, undoubtedly so that there
was an irregularity in the awarding of the tender to the first
respondent and the applicant
was not only entitled but bound to
approach court to review such irregularity. The court is said to have
no discretion in such
circumstances but to review and set aside the
contentious irregularity no matter how harsh or unfair the
consequences may be to
the first respondent.
[47]
I conclude, therefore that for all the aforementioned reasons the
applicant has been able to
show that it is entitled to the relief it
seeks in the papers.
COSTS
[48]
The applicant and the second respondent
are successful in the application. In the ordinary course, they would
both be entitled to
costs of suit. However, in the circumstances of
this matter my view is that each party should pay its own costs. Such
a ruling
is arrived at on the basis that the first respondent finds
itself party to this litigation through no fault of its own. Even
though
it is the applicant's submission that the first respondent
should not have opposed the application, I hold, however, that the
first
respondent was entitled and had all the right to oppose the
application if it so desired. The second respondent on the other
hand.
was cited in the papers as an interested party and no specific
relief was sought against it. It, thus, entered the fray at their
own
volition and cannot be heard to insist on payment of their costs. In
light of this, it would, therefore, not be fair or just
to award
costs against the first respondent.
ORDER
[49]
As a result I make the following order:
1.
The
applicant's decision of appointing the first respondent for the KDD
extension block high resolution airborne magnetic and radiometric
survey for the applicant, awarded under request for quotation dated
14 February 2018 is reviewed and set aside.
2.
The
applicant is authorised to re-evaluate all shortlisted quotes, under
request for quotation number SAS818, dated 14 February
2018.
3.
Each
party to pay own costs.
E.M. KUBUSHI
JUDGE OF THE HIGH COURT
APPEARANCES:
Counsel
for Applicant
: Adv. I. Magano
Instructed
by
: Madiseha Attorneys
Counsel
for First Respondent
: Adv. C. Cutler
Instructed
by
: Gillian & Veldhuizen
c/o Roy Suttner Attorneys
Counsel
for Second Respondent
:Adv. G. Solik
Instructed
by
: Morkel De Villiers Attorneys
c/o
Riaan
Bosch Attorneys
Date
heard
: 06 December 2018
Date
of judgment
: 29 May 2019
[1]
2018 (2) SA 23
(CC) para 38- 41.
[2]
[2017] ZACC 2
, para 66.
[3]
(2014) ZACC 6
, para 64--65 .
[4]
Provincial Government of the Eastern Cape and Others v Contractprops
25 (Pty) Ltd [2001] 4 All SA 273
(A).
[5]
Para 35.
[6]
Act No . 3 of 2000.
[7]
Act No. 5 of 2000.
[8]
See Dr JS Moroka Municipality v The Chairperson of the Tender
Evaluation Committee of the Or JS Moroka Municipality (937/2012)
(2013) ZASCA 186
(29 November 2013) para 10.
[9]
Act 5 of 2000.
[10]
(2003)
3
All SA 21
(SCA) para
10 .
[11]
2018 (2) SA 23
(CC) para 41.
[12]
Khumalo and Another v MEC for Education, KwaZulu-Natal
2014 (5) SA
579
(CC).