About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Free State High Court, Bloemfontein
SAFLII
>>
Databases
>>
South Africa: Free State High Court, Bloemfontein
>>
2019
>>
[2019] ZAFSHC 149
|
|
FMP Contractors (Pty) Ltd v Mangaung Metropolitan Municipality and Others (A46/2019) [2019] ZAFSHC 149 (29 August 2019)
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
number:
A46/2019
In
the matter between:
FMP
CONTRACTORS (PTY)
LTD
Applicant
and
THE MANGAUNG
METROPOLITAN
MUNICIPALITY
1
st
Respondent
BULA MAHLO TRADING AND
PROJECTS
(PTY)
LTD
2
nd
Respondent
MWETI CONSTRUCTION
(PTY)
LTD
3
rd
Respondent
BLACK TOP CIVILS (PTY)
LTD
4
th
Respondent
BATALALA CONSTRUCTION
(PTY) LTD
5
th
Respondent
LESOLE AGENCIES (PTY)
LTD
6
th
Respondent
CALANDRA TRADING 61
(PTY)
LTD
7
th
Respondent
CORAM:
CHESIWE, J
et
MEINTJES, AJ
HEARD
ON:
12 AUGUST 2019
JUDGMENT
BY:
CHESIWE, J
DELIVERED
ON:
29 AUGUST 2019
[1]
This is a review application that was enrolled as an urgent matter in
terms of Rule 6 (12) and brought in terms of Rule 53 of
the Uniform
Rules of Court. The review application was launched on the 27
March 2019. It was placed on the roll for
the 6 May 2019 but
did not proceed and was postponed to the 24 June 2019, where a court
order was issued that the parties are to
file further papers.
On the 24 June 2019 another court order was granted in which the 3
rd
Respondent was granted condonation to file its answering
affidavit and the matter was postponed to the 12 August 2019, and
hearing
of the matter proceeded on the latter date. The 1
st
,
2
nd
and 3
rd
Respondents opposed the
application.
[2]
The Applicant is FMP Contractors (Pty) Ltd, a company duly registered
and incorporated in terms of the relevant Statutes of
the Republic of
South Africa, with its main place of business at 39 Lily Vale Estate
Bloemfontein, Free State.
[3]
The 1
st
Respondent is the Mangaung Metropolitan
Municipality, (the Municipality) a local sphere of government and
organ of state as is
meant in section 239 of Constitution of the
Republic of South Africa, Act 108 of 1996, duly established in terms
of the Local Government:
Municipality Structures Act, with main place
of business at Bram Fischer Building Nelson Mandela Drive
Bloemfontein, Free State.
[4]
The 2
nd
Respondent is Bula Mahlo Trading and Projects
(Pty) Ltd, a company duly registered and incorporated in terms of the
relevant Statutes
of the Republic of South Africa, with its
registered offices at 1520 H Section, Botshabelo, Free State.
[5]
The 3
rd
Respondent is Mweti Construction (Pty) Ltd, a
company duly registered and incorporated in terms of the relevant
Statutes of the
Republic of South Africa, with its registered offices
at Suite 403 Lougerdia Building 1262 Embankment Road Centurion,
Gauteng.
[6]
The 4
th
Respondent is Black Top Civils (Pty) Ltd, a
company duly registered and incorporated in terms of the relevant
Statutes of
the Republic of South Africa, with its registered offices
at 20 Victoria Road Willows Bloemfontein, Free State.
[7]
The 5
th
Respondent is Batalala Construction (Pty) Ltd,
duly registered and incorporated in terms of the relevant Statutes of
the Republic
of South Africa, with its registered offices at 4 Anandi
Office Part West Wing 8 Burke Street Kesington B Randburg Gauteng.
[8]
The 6
th
Respondent is Lesole Agencies (Pty) Ltd, duly
registered and incorporated in terms of the relevant Statutes of the
Republic of
South Africa, with its registered offices at 58 Benbow
Street Welkom, Free State.
[9]
The 7
th
Respondent is Calandra Trading 61 (Pty) Ltd,
a company duly registered and incorporated in terms of the relevant
Statutes
of the Republic of South Africa, with its registered offices
at 1 Piet Street Hilton Bloemfontein, Free State.
[10]
The Applicant sought the following relief in the application-
“
1.
THAT BID NO. MMM/BID442:2017/2018:APPOINTMENT OF PANEL FOR
CONTRACTORS OF TRUNK ROUTES FOR IPTN ROADS INFRASTRUCTURE NETWORK
(Phase 1C Chief Moroka Link Route) is reviewed and set aside
alternatively is declared unlawful and is set aside;
2.
The First Respondent is ordered to appoint the Applicant, together
with those Respondents that scored nearest to the Applicant
in
the evaluation process up to an aggregate of 6 appointed contractors,
for the works as set out in para 2.1 of the notice of
motion.”
[11]
Background on this matter is briefly summarised as follows: On
the 24 November 2017, the Municipality advertised a bid,
MMM/BID
442:2017/2018,
[1]
in which a
Panel of Contractors for construction of trunk routes for the
Integrated Public Transport Network (IPTN) road
infrastructure be
appointed for a period of two years. The Municipality‘s
intention is to construct bus lanes as part
of the roads network due
to its status as a Metropolitan Municipality. The Applicant and 2
nd
to 7
th
Respondents were appointed on this Panel of Constructors.
However, four other companies were appointed on the panel but they
are not part of the application before court neither were they cited
in the application.
[12]
The Bid Specification Committee was clear from the onset on the
advert that the main objective of the advert was to appoint
a Panel
of Contractors. This was to ensure that all bidders be aware of
the intention of the Municipality to appoint a Panel
of Contractors
was to capacitate contractors fast in order to avoid having to
advertise every time if a contract for construction
is to be put on
tender. And thus this process remained cost effective.
[13]
During the period between September and November 2018 the
Municipality appointed 6 of the 13 successful tenderers from the
Panel of Contractors for the construction of the bus lanes. The
Municipality send out letters
[2]
to the 2
nd
Respondent up to 7
th
Respondent, including the Applicant were successfully placed on the
Panel of Contractors.
[14]
On the 17 September 2018 5
th
Respondent was
appointed for the construction of the Moshoeshoe Road which is
approximately 2.2 km at an estimated cost of R36 180 039.43.
The 2
nd
Respondent was appointed on the
14 November 2018 for the construction of Chief Moroka Route which is
approximately
2.6km at an estimated cost of R42 743 884.25.
On the same date of 14 November 2018 the 7
th
Respondent was appointed to construct the IPTN Depot – Civil
and Earth Works at an estimated cost of R40 950 166.
00 and
the 6
th
Respondent was appointed on the 14 November 2018
for the construction Fort Hare Trunk Route (Part B) which is
approximately 1.1
km at an estimated cost of R26 693 238.
00. The 3
rd
Respondent was appointed for the
construction of Moshoeshoe Road (Part B) which is approximately 2.2
km at an estimated cost of
R68 894 185.26. The 4
th
Respondent was appointed for the construction of Fort Hare
Trunk Route (Part A) which is approximately 1,5 km at an estimated
cost of R49 710 744. 40.
[15]
The Applicant on the 17 January 2019 with the assistance of the Legal
Representative address a letter to the Municipality with
objections
to the appointment of the 2
nd
to 7
th
Respondents. the Legal Representative of the Applicant
when no response was received, wrote a formal request in terms
of
section 5 of the Promotion of Administrative Justice Act 3 of 2000
(PAJA) requesting written reasons and documents in respect
of his
unsuccessful allocation for work. The Municipality did not respond.
The Applicant approached the Honourable court
under case number
486/2019 for urgent relief.
[16]
The Applicant was granted the relief sought on the 7 February 2019 as
follows:
“
1.1
The Respondent shall provide the Applicant, within 10 days after the
granting of this order, with full and written reasons for
its
decision to not appoint the Applicant for phase 1 of the execution of
the works related to
BID
NO.
MMM/BID442:2017/2018:
APPOINTMENT OF TRUNK ROUTES FOR IPTN ROADS INFRASTRUCTURE NETWORK,
such reasons to include the following documents:
1.2
Copies of any and all Bid Adjudication Committee Meetings insofar as
they relate to the appointment of
BULA MAHLO TRADING &
PROJECTS (PTY) LTD, MWETI CONSTRUCTION (PTY) LTD, BLACK TOP CIVILS
(PTY) LTD, BATALALA CONSTRUCTION (PTY)
LTD AND LESOLE AGENCIES (PTY)
LTD
for the execution of Phase 1 of the Tender at issue, in as
far as it exist, and should same not exist, the Respondent will
confirm
in writing and give reasons for the non-existence thereof;
1.3
The original Tender Data and Criteria and all and any such documents
indicating on what basis the Respondent would appoint specific
contractors forming part of a Panel of Appointed Contractors to do
specific and related work falling within the scope of the whole
of
the project.
2.
The Respondent shall pay the costs of the application excluding the
costs of the preparation of the application to be heard on
the 7
February 2019 by the Applicant’s advocate.”
[17]
The Municipality complied with the court order and provided the
reasons and the documents on the 21 February 2019, and these
are
attached to the application.
[18]
The issue for determination is whether the court may review and set
aside the allocation of the work to the contractors on
the panel on a
rotational basis and whether the court may sanction the criteria
which the Applicant favours that the points scored
during the tender
process is the basis for the allocation.
[19]
The Applicant’s contention is that the appointment of the
successful contractors is tainted with irregularities; that
the only
reason the Applicant was not appointed was that the Applicant was
involved in another tender. Counsel on behalf the Applicant
during
oral argument and in the Heads of Argument submitted that the
Applicant scored the highest points and said it is very rare
that a
tenderer who scored the highest points do not get appointed as the
successful bidder.
[20]
Counsel on behalf of the 1
st
Respondent submitted in oral
argument that if the Applicant is granted the relief sought, this
will cause disruption in the
progress of the existing contractors who
have done a certain percentage of the work. Counsel submitted
that the Applicant
is not a stranger to the tender process that is
done on a rotational basis, as the Applicant has previously
done such work
and received a tender of R16 million. Counsel
mentioned that the Applicant want the court to prescribe new terms of
the contract
and want to instruct the court what the terms of the
criteria should be. Counsel further indicated that the
Applicant out
of the 14 contractors is the only one who complained.
Counsel submitted that the process was fair as there is no dispute
over the tender process, except that the Applicant scored the highest
point and quoted the lowest costs. He mentioned that
the
Applicant did not allege that there was fraud, nor bias, except that
the attack on the Municipality is simply there was no
objective
criteria. He further submitted that the other contractors on
the panel were not joined in the application and these
contractors
would be prejudiced if a court order is granted and will have an
impact on them. He submitted that these contractors
must be
joined in the current application.
[21]
Counsel on behalf of the 3
rd
Respondent in oral argument
submitted and emphasised that the disruption will be major if the
Applicant is granted the relief sought.
She stated that the 3
rd
Respondent has already established a site office; costs have been
incurred for security and that some of these costs have already
been
paid; and labourers have been appointed. She submitted that the
3
rd
Respondent has appointed five subcontractors who are
already on site. Counsel submitted that the prejudice to the
3
rd
Respondents far outweighs the Applicant’s
interest.
[22]
Section 5 of PAJA provides that:
“
(1)
Any person whose rights have been materially and adversely affected
by administrative action and who has not been given reasons
for the
action may, within 90 days after the date on which that person became
aware of the action or might reasonably have been
expected to have
become aware of the action, request that the administrator concerned
furnish written reasons for the action.
(2)
The Administrator to whom the request is made must, within 90 days
after receiving the request, give that person adequate reasons
in
writing for the administration action.”
[23]
Section 6 of PAJA provides that:
“
(1)
Any person may institute proceedings in a court or a tribunal
for the judicial review of an administration action.
(2)
A court or tribunal has the power to judicially review an
administrative action if-
(a)
the administrator who took it-
(i)
was not authorised to do so by the empowering provision;
(ii)
acted under a delegation of power which was not authorised by the
empowering provision; or
(iii)
was biased or reasonably suspected of bias;
(b)
a mandatory and material procedure or condition prescribed by an
empowering provision was not complied with;
(c)
the action was procedurally unfair;
(d)
the action was materially influenced by an error of law;
(e)
……….
[24]
The Supply Chain Policy of the Municipality which was effective from
1 July 2018 states that:
“
2.1
Effective and efficient service delivery implementation requires the
integration and co-existence of various systems and processes.
One of these processes which require successful implementation in
order to be effective is the supply chain management process
as
prescribed in section 110 of the MFMA;
2.2……….
2.3
The Primary task of the Municipality’s supply chain management
system shall always be to find, cost effective services
providers for
the Municipality. B-BBEE companies will not be treated any
differently from the norm with regard to quality,
expected services
delivery and technical performance. On the other hand, it is
required that all personnel associated with
the Municipality’s
supply chain management system must be made aware of this initiative
and are expected to commit themselves
to its implementation through
good faith, efforts and appropriate purchasing procedures.”
[25]
Section 217 of the Constitution is the starting point for an
evaluation
of
the proper approach to an assessment of the constitutional validity
of state procurement processes. It reads as follows:
“
1.
When an organ of state in the national, provincial or local sphere of
government, or any other institution identified in national
legislation, contracts for goods or services, it must do so in
accordance with a system which is
fair, equitable, transparent,
competitive and cost-effective
.
2.
Subsection (1) does not prevent the
organs of state or institutions referred to in that subsection from
implementing a procurement
policy providing for - (a) categories of
preference in the allocation of contracts; and (b) the
protection or advancement
of persons, or categories of persons,
disadvantaged by unfair discrimination.
3.
National legislation must prescribe a
framework within which the policy referred to in subsection (2) must
be implemented.”
[26]
In order to comply with s 217(3) the legislature adopted the
Preferential Procurement Policy Framework Act, 5 of 2000 (“the
PPPFA”). “Acceptable tender” is defined in s
1 of the PPPFA as “any tender which, in all respects,
complies
with the specifications and conditions of tender as set out in the
tender document”. In Chairperson: Standing
Tender
Committee and Others v JFE Sapela Electronics (Pty) Ltd and Others
[2005] 4 ALL SA 487
(SCA) at paragraph [19] Scott JA pointed out that
the definition of “acceptable tender” must be construed
against the
background of s 217 of the Constitution and
continued as follows:
“
In
other words, whether the tender in all respects complies with the
specifications and conditions set out in the contract documents
must
be judged against these values.” In terms of s 2(1) (f)
of the PPPFA “the contract must be awarded to the
tenderer who
scores the highest points (calculated in accordance with s 2(1)(b)),
unless objective criteria in addition to those
contemplated in
paragraphs (d) and (e) justify the award to another tenderer.”
[27]
The
Local Government: Municipal Finance Management Act, 56 of 2003
is
equally applicable. Procurement is dealt with in Chapter 11 and
the wording of
s 112(1)
echoes that of s 217(1) of the Constitution.
[28]
A tender process implemented by an organ of State is an
“administrative action” within the meaning of the
Promotion
of Administrative Justice Act, 3 of 2000 (“PAJA”).
See: Logbro Properties CC v Bedderson NO and Others
2003 (2) SA 460
(SCA) at para [5]. The Applicant in this case do not attack the
tender process as the Applicant is entitled to
a
lawful and procedurally fair process, which in this case the
procedure to the appointment to a Panel Contractors
was fair and so was the awarding of the tender to the other
contractors. Furthermore, it is well established that the executive
in all spheres are constrained by the principle that they may
exercise no power and perform no function beyond those conferred
upon
them by law. This is the doctrine of legality. See:
Sapela Electronics supra at para [26].
[29]
The proper legal approach pertaining to procurement processes was set
out in the following
dictum
by Froneman, J in Allpay
Consolidated v Chief Executive Officer, SASSA
2014 (1) SA 604
(CC) at
para [22] which I quote:
“
[22]
This judgment holds that:
a.
The suggestion that ‘inconsequential
irregularities’ are of no moment conflates the test for
irregularities and their
import; hence an assessment of the fairness
and lawfulness of the procurement process must be independent of the
outcome of the
tender process.
b.
The materiality of compliance with legal
requirements depends on the extent to which the purpose of the
requirements is attained.
c.
The constitutional and legislative
procurement framework entails supply chain management prescripts that
are legally binding.
d.
The fairness and lawfulness of the
procurement process must be assessed in terms of the provisions of
the Promotion of Administrative
Justice Act, 3 of 2000 (PAJA).
e.
Black economic empowerment generally
requires substantive participation in the management and running of
any enterprise.
f.
The remedy stage is where appropriate
consideration must be given to the public interest in the
consequences of setting the procurement
process aside.”
[30]
Froneman, J continued in
All Pay
supra
at paras [28]
and [29] to summarise the approach to be followed by a court
considering a review application and I quote:
“
The
proper approach is to establish, factually, whether an irregularity
occurred. Then the irregularity must be legally evaluated
to
determine whether it amounts to a ground of review under PAJA.
This legal evaluation must, where appropriate, take into
account the
materiality of any deviance from legal requirements, by linking the
question of compliance to the purpose of the provision,
before
concluding that a review ground under PAJA has been established.”
Once
this exercise has been completed the court must consider the
practical difficulties which may flow from declaring the
administrative
action constitutionally invalid, bearing in mind the
just and equitable remedies provided for in the Constitution and
PAJA.
[31]
In
Bel
Porto School Governing Body and Others v Premier, Western Cape,
[3]
Chaskalson CJ stated at para [89] for a decision to be
justifiable, “…. it should be a rational decision taken
lawfully and directed to a proper purpose.” Ponnan
JA, relying
on
Pharmaceutical Manufacturers Association of South Africa and
Another: In re Ex Parte President of the Republic of South
Africa and Others,
[4]
expressed himself as follows: “It is well established
that an incident of legality is rational decision-making.
It is
a requirement of the rule of law that the exercise of public power
should not be arbitrary. It follows that decisions
must be
rationally related to the purpose for which the power was given.”
[5]
[32]
However, as Nugent JA pointed out in
Minister
of Home Affairs and Others v Scalabrini Centre,
[6]
“…
an enquiry into rationality can be a slippery path that might easily
take one inadvertently into assessing whether
the decision was one
the court considers to be reasonable. As appears from the
passage above, rationality entails that the
decision is founded upon
reason - in contradistinction to one that is arbitrary - which is
different to whether it was reasonably
made. All that is
required is a rational connection between the power being exercised
and the decision, and a finding of
objective irrationality will be
rare.”
[33]
In
Metro
Projects CC v Klerksdorp Local Municipality,
[7]
Conradie JA said the following in para [13]: “In the Logbro
Properties case
supra
,
at 466H - 467C, Cameron JA referred to the 'ever-flexible duty to act
fairly' that rested on a provincial tender committee.
Fairness must
be decided on the circumstances of each case. It may in given
circumstances be fair to ask a tenderer to explain
an ambiguity in
its tender; it may be fair to allow a tenderer to correct an
obvious mistake; it may, particularly in a complex
tender, be fair to
ask for clarification or details required for its proper evaluation.
Whatever is done may not cause the process
to lose the attribute of
fairness or, in the local government sphere, the attributes of
transparency, competitiveness and cost-effectiveness.”
[34]
In
Metro Projects
the Supreme Court of Appeal set aside the award by the Municipality
to the successful bidder and I quote from para [14]: “A
high-ranking municipal official purported to give the ninth
respondent (the eventual successful tenderer) an opportunity of
augmenting
its tender so that its offer might have a better chance of
acceptance by the decision-making body. The augmented offer was
at first concealed from and then represented to the mayoral committee
as having been the tender offer. It was accepted on
that
basis. The deception stripped the tender process of an
essential element of fairness: the equal evaluation of
tenders. Where subterfuge and deceit subvert the essence of a
tender process, participation in it is prejudicial to every
one of
the competing tenderers whether it stood a chance of winning the
tender or not.”
See
also in this regard
Premier,
Free State and Others v Firechem Free State (Pty) Ltd,
[8]
in respect of the requirement that competitors should be treated
equally.
[35]
It is clear from the supply chain policy and Framework Agreement that
the process of appointment to the Panel of Contractors
and allocation
of work was done fairly and the necessary due process was followed.
The document dated 20 February 2019
attached to the application of
the Applicant on page 56, the following is noted: “In
addition to the normal supply
chain process the Bid Adjudication
Committee mandated the user department being IPTN & Project
Consultants, SCM and Legal
Services to negotiate the most
cost-effective construction rates that will be averaged amongst all
qualifying contracts as per
the BAC Executive letter, attached is the
BAC Executive Letter for MMM/BID 442 2017/2018 (annexure B).
Furthermore,
it must be emphasised that the Preferential Procurement Policy
Framework Regulations of 2011 relating to preferential
points ceased
to be applicable the moment the rate were negotiated on an averaged
amount and having the panel being constituted.
For
instance, the process for both projects unfolded in the following
manner:
·
The Panel for the NMT was approved by
the Bid Adjudication Committee on the 12
th
April 2017;
·
A total number of 28 contractors,
ranging from CIDB Grading #CEPE to higher grades were appointed on
the above-mentioned pabel;
·
In the 2016/2017 financial year, the
first batch of contractors from the panel were allocated work.
The process unfolded as
follows:
·
Before the Allocation takes place the
panel is recommended by the Head of Department with the support and
advice of the HOD’s
Technical Managers, it is thereafter
referred to the Chief Financial Officer for approval. The
abovementioned process is
documented in a panel book that is utilized
by the user department for approval of the allocations from various
Panels.
·
The abovementioned process was followed
in allocating work for FMP Contractors, for projects such as those;
Maphisa Road Construction
under NMT to a total project amount of
R7 240 183.
·
Again during the financial year of
2017/2018, the second batch of contractors from the same panel were
allocated work in the same
manner, to fast-track infrastructure
rollout and FMP Contractors was allocated work, having to benefit for
the second time, under
the projects of Botshabelo NMT to a total
project amount of R9 372 463.
·
With the above being said, it is
therefore evident that FMP Contractors were appointed and allocated
work twice from the same panel
list.”
[36]
The Applicant in the Founding affidavit paragraph 18.1 and 18.2
stated that:
“
18.1
I have been advised that the Municipality must have some objective
criteria by which it decides to appoint contractors on the
panel to
do specific work. This cannot be done willy-nilly and at the
whim of whoever is deciding functionary, because that
would defeat
the entire purpose behind section 217 of the Constitution, the
Preferential Procurement Policy Framework Act and
the National
Legislation enacted to give effect to fair administrative
process and regular state procurement.
18.2
I reiterate that FMP scored the highest points. This means that
it must be given preference when the first appointments
were made.”
[37]
In a Letter of Acceptance on page 68 of the Founding Affidavit, in
which the Applicant accepted and signed it on the 20 August
2018,
which states as follows: “I (Company Representative) Moloko
Nduna, hereby on behalf of (Company name) FMP Contractors
acknowledge
that I understand and agreed with the negotiated price rate that are
stipulated in Annexure A, below which were agreed
upon in a price
negotiations in a meeting that was held at Mangaung Supply Chain
management offices on the 20 August 2019.”
The
letter was signed on the same day by the representative of the
Applicant. Thus confirming that throughout the process the Applicant
was involved and participated in the process for the appointment to
the Panel of Contractors.
[38]
In terms of
section 2
(1) (f) of the PPPFA, it is obliged to award a
tender to the tender with the highest scored points, “….
Unless objective
criteria in addition to those contemplated in paras
(d) and (e) justify the award to another tender. The
Municipality’s
main criteria objective in this instance was
that the bid was for a panel of contractors and awarding the ad hoc
on a rotational
construction contracts to the contractors on the
panel.
[39]
As correctly stated by Counsel on behalf of the 1
st
Respondent that the entire process was established to have a Panel of
Contractors to avoid putting the work on tender every time
contractors are needed for construction work. In my view, that
the process was done fair and the court cannot find fault
with the
whole tender process. Indeed the court may not re-write a
contract between the parties in the terms of the other
party’s
wishes or request. Thus the criteria objectives as put out by the 1
st
Respondent were not biased, nor irregular.
[40]
After the tender process was completed, the appointed fourteen
contractors on the panel all agreed on the uniform rates and
costs
that were reflected in the pro forma Bill of Quantities, this
agreement thus rendered the points scored during the tender
process
irrelevant. The letter quoted above in paragraph [37] confirmed
that the Applicant signed and agreed to the agreed
rates. I
must say that when the first tender was allocated to the Applicant on
a rotational basis based on the contractors
on the panel, the
Applicant did not cry foul play. Now the same method was
applied on a rotational basis, the Applicant raised
the issue of
objective criteria. Which was not an issue when the Applicant
was awarded the first tender. This makes
the Applicant’s
conduct questionable.
[41]
The Preferential Procurement Regulations 2017 stipulated that the
evaluation criteria should be objective in giving a fair
shot for a
tender to advance to the next phase of evaluation. Most tenderers are
evaluated on functionality, but an Organ of State
in this instance
the Municipality will indicate in the tender how it will be
evaluated. The Functionality Criteria as listed on
the tender
document, namely; the number of roads projects successfully completed
by the contractors and projects successfully completed
by the
company. When the Organ of State sets these minimum criteria
objectives, the scores are not to be too low, that it
will compromise
quality of the required services and may not be too high that it is
impossible to attain. The Applicant’s
contention that he
scored the highest points and must be allocated work in the IPTN
Projects cannot stand as all fourteen contractors
that where
appointed on the Panel scored high points, by virtue of these high
points they were placed on the Panel of Contractors.
The
parties agreed in a meeting held on 20 August 2018 that a uniform
basis of rates and costs in terms of the pro forma Bill of
Quantities
shall apply and the Applicant signed and accepted the terms of the
agreement.
[42]
Aligning myself with what the court said in
Bel
Porto School Governing Body
supra
that for a decision to be justifiable, “…. it should be
a rational decision taken lawfully and directed to a
proper
purpose.” Thus logic dictates that the Municipality’s
decision was rational and directed to a proper purpose.
The
Municipality in the Answering Affidavit mentioned that the Applicant
was not singled out for not being awarded any work.
Their
decision was mostly based on the fact that the Applicant was still
involved in another project related to roads construction.
Had the
Municipality appointed the Applicant, it would have resulted in
leaving the project it was involved in to attend to the
new one. Thus
availability of the contractors was of the essence. The
Municipality mentioned that the Applicant was no stranger
to the
method use in work allocation on a rotational basis and has a long
standing relationship with the Applicant.
[43]
Both Counsels for the 2
nd
and 3
rd
Respondent submitted that the work is at this stage far advanced and
it would be disruptive to stop all work if a court order is
granted
in favour of the Applicant. The 1
st
Respondent submitted two reports of consultants marked annexure “M1”
and “M2” in respect of the projects.
The Consultants in
annexure “M1” page 213 reported that: “Should the
project be terminated the impact will be
negative for the City of
Mangaung and its citizens. The implications will be financial
and will negatively affect services
delivery as the project would not
be finished on time in line with the programme.” The
report gives the various percentages
of the various work the
contractors have performed up to 30 May 2019. And further
indicate that the percentages reflected
for the contracts may not be
a true reflection of all the works and effort that has taken place,
and stated that: “A lot
of planning was required prior to
commencement of the construction and it is typical in the
construction industry for the rate
of construction to be slow at
beginning, however, the rate of construction progress becomes
exponential as the projects continues
before slowing down again
closer to completion.”
[44]
The second report annexure “M2” on page 219 of the
Answering Affidavit, gives various percentage of the different
constructions as to how far the contractors have performed.
However, in terms of the contract none will have fully completed
in
terms of the agreed dates of completion of the respective contracts.
The report gives the following reasons if the work
is terminated
that:
·
“Current contractors could submit
claims against the Client (MMM) for loss of profit and damage due to
costs incurred to secure
performance guarantees, public ,liability
insurance, and any other penalties associated with the premature
termination of contracts
entered to for the purpose of the project.
·
Works that have been executed thus far
can be vandalised and would then be required to be re-done, at a
greater cost to the client
for removing the existing work and then
again for new replacement installations. This would be
classified as fruitless expenditure.
·
The exposed layer works on the road beds
would be exposed to the elements, possible resulting in a complete
failure of the road
base, requiring the complete rebuild of the road
sections and not just refurbishment, again resulting in fruitless
expenditure.
·
Some of the projects have open trenches
and layer works removed. This would cause public safety issues
as there would be no
one to ensure safety on site.
·
The traffic management that is currently
in place and would not be managed and this could cause extended
inconvenience to the community,
resulting in possible vehicle
collisions and increased risk exposure to the pedestrians as the
equipment will be removed and no
safety measure in place.
·
Currently employed labour for all
projects will be terminated without any guarantees to be re-employed
when the contracts recommences.
·
The stagnation of progress could result
in public service delivery protests, with the associated risks to
public and infrastructure.”
[45]
Indeed it is such that the IPTN project is for and the interests of
the community at large, this is for the convenience of
the residents
of Mangaung since the intention of the Municipality is clear that its
intention is to have bus lanes and to make
transport accessible and
convenient for all. As these bus lanes will be indeed for a
good purpose. Thus the decision
of the Municipality is
justifiable. The project involves people who have already being
employed by the current contractors; costs
have been incurred; the
construction on site has been ongoing. It is correct that
if any court order is granted in
favour of the Applicant, indeed it
will be a major disruption of services that are need for poor people
who need to make use of
these bus lanes. T
he
number of cases of unsuccessful bidders approaching court to
challenge the process of Organ of State when a tender was not awarded
in their favour is on the increase. The end result being while
parties are in court litigating over tenders, the community is
affected by this undue delay and the public interests at large is
affected by way of a poor quality service or increased costs,
as the
contract takes longer to reach completion. Due to delay in the
execution of such projects and pending court cases the Manguang
Metro
lose a lot of tax payers money.
The
interests of the community at large and the interests of the Mangaung
Metro as well as those of the 2
nd
to 7
th
Respondent far outweighs the interests of the Applicant.
[46]
It is trite that fairness in the procurement process is a value in
itself. In
Tera Mobile Radio
(Pty) Ltd v MEC, Department of Public Works
2008 (1) SA 438
(SCA) para 9 the court said: “Fairness is
inherent in the tender procedure. Its very essence is to ensure
that before
government national or provincial, purchases goods or
services, or enters into contracts for the procurement thereof, a
proper
evaluation is done of what is available and at what price, so
as to ensure cost-effectiveness and competiveness. Fairness,
transparency and the other facts mentioned in s 217 of the
Constitution permeates the procedure for awarding or refusing
tenders.”
[47]
According to Lawrence Baxter Administrative law (1984) at 446, I
quote:
“
Administrative
action based on formal procedure defects is not always invalid.
Technically in law it is not an end in itself.
Legal validity
is concerned not with technical but also with substantial
correctness. Substance should not always be sacrificed
to form;
in special circumstances greater good might be achieved by
overlooking technical defects.”
[48]
In
AllPay
Consolidated Investments Holdings (Pty) Ltd & Others v Chief
Executive Officer, South African Social Security Agency
&
Others
,
[9]
at para 96 the court said: “There will be few cases of
any moment in which flaws in the process of public procurement
cannot
be found, particularly where it is scrutinized intensely with the
objective of doing so. But a fair process does not
demand
perfection and not every flaw is fatal.”
[49]
The Applicant raised an issue about the Supply Chain Policy that the
Municipality approved the policy on 31 May 2018, and that
the SCM was
not in place when the Panel of Contractors was appointed. On
the face of it the policy took effect July 2018.
It baffles the
mind that the Applicant participated in the process to be on the
Panel of Contractors, to the extent that the Applicant
signed the
acceptance letter and agreed with the negotiated rates. The
Applicant then had no issue with the Supply Chain
Policy. When
the Applicant realised that work was not allocated to the Applicant,
the issue of the Supply Chain Policy is
now placed in dispute.
[50]
I am satisfied that no irregularities occurred during the appointment
to the Panel of Contractors, as the whole process was
followed in
terms of the tender process. There is nothing unconstitutional about
the tender process, as long as it was open, transparent
and fair. The
Municipality complied with section 217 of the Constitution.
There is nothing wrong that the Municipality did,
and for the fact
that the rotational arrangement was not implemented for the first
time. The Applicant has been part of the ad
hoc rotational system and
previously benefitted in such arrangements and cannot now complain
that it was not part of the objective
criteria that allocation was on
a rotational basis. In the documents submitted for reasons for
the municipality’s decision,
there is nothing that one can
detect that there was any irregularities or unlawful conduct of any
person. The Applicant’s
Representative signed the letter
of acceptance, in which it was agreed on the rates and costs that
will be in line with the pro
form Bill of Quantities. In my
view, if the Municipality’s decision was irrational, unlawful
and hopelessly irregular,
then such decision need to be set
aside.
[51]
I considered the requirements set out in
Trencon
Construction (Pty) Ltd v Industrial Development Corporation of South
Africa Limited and Another,
[10]
a
nd
took into consideration what the court said in
Intertrade
Two (Pty) Ltd v Mec for Roads and Public Works, Eastern Cape and
Another
,
[11]
Plasket J cautioned that: “Courts, when considering the
validity of administration action, must be wary of intruding even
when with the best motives, without justification into the terrain
that is reserved for the administrative branch of government.
These restrains on powers of the courts are universal in democratic
societies such as ours and necessarily mean that there are
limits on
the powers of the courts to repair damage that has been caused by a
breakdown in the administrative process.”
[52]
The SCA in
Gauteng
Gambling Board v Silvestar Development Ltd and Others,
[12]
emphasized that: “since administrators are ‘generally
best equipped by the variety of [their] composition, by experience,
and [their] access to sources of relevant information and expertise
to make the right decision’ a court is required to recognise
its own limitations.” I am thus not satisfied that the
Applicant should be granted the relief sought. It would be
wrong to direct the Municipality to enter into a contract with the
criteria as set out by the Applicant. This means the court
is
requested to rewrite the contract between the successful contractors
and the Municipality, as well as the Applicant.
[53]
The 1
st
Respondent’s contention is that the
Applicant did not join the eight remaining contractors who have not
yet been allocated
any work. And that these contractors have a
direct interests in the matter and have not been cited.
[54]
I now turn to deal with the non-joinder of the remainder of the eight
contractors who have not been allocated any work as they
wait for
their turn. Rule 10 (3) of the Uniform Rules of Court deals with who
should be joined or cited as Applicants/Respondents.
In
Fluxmans
Incorporated v Lithos Corporation of SA (N0. 2),
[13]
the court said at para 5: “Parties may only be joined as a
matter of necessity and not convenience. It is only necessary
if the parties sought to be joined would be prejudicially affected by
the judgement of the court in the proceedings.” In
Judicial
Service Commission and Another v Cape Bar Council and Another,
[14]
where
the court held that: “it has by now become settled law that the
joinder of a party is only required as a matter of necessity
–
as opposed to a matter of convenience – if that party has a
direct and substantial interests that may be affected
prejudicially
by the judgement of the court in the proceedings concerned.”
[55]
Indeed the eight remaining contractors have a direct interest in this
matter as they are part of the contractors who were appointed
on the
Panel of Contractors. The relief sought by the Applicant will
have a direct impact on their rights as contractors
on the Panel of
Contractors, if they are not joined in this application.
[15]
The parties will be bound by the new terms of a new contract; some
will probably have to take over any of the unfinished
contract at a
reduced price and will be held liable for any work defective work
that was done by the previous contractors.
I am satisfied that
the court order if granted in favour of the Applicant will prejudice
any of the parties, specifically the non-joined
parties. It
will be just, equitable and fair to all contractors on the Panel of
Contractors to allow everyone the opportunity
to present their case
before court.
[56]
The 1
st
Respondent’s contention is that the Applicant did not comply
with Section 7 of PAJA which provides that: “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 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 reason.”
[57]
Although Section 7 (1) stipulates 180 days time limit, section 9 (1)
allows for the granting of condonation in appropriate
circumstances
where the proceedings were instituted outside the 180 day. The
3
rd
Respondent was allocated work on the 19
th
September 2018 and the handover of the site was on 18 October 2018.
The Applicant served on the 1
st
Respondent the application
on the 1
st
April 2019. The Applicant indicated that
it became aware of the allocation of the contract through the
grapevine and was
therefore not sure of the date when the allocation
happened. It can therefore not be said by the Municipality that
the application
was outside the 180 days. 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. In my view and in the absence of an application for
condonation
or the absence of an agreement by the parties, in this
case an Organ of state, then the court lacks authority to deal with
the
review under the circumstances.
COSTS
[58]
The 1
st
Respondent submitted that the establishment of the
Panel of Contractors was not under attack, not was the appointment of
the fourteen
contractors under attack. And that the application was
brought before court without any foundation or merit and that
constitute
an abuse of the court processes, thus the application
should be dismissed with costs. The 2
nd
Respondent also
submitted that the application was flawed from the beginning and
should be dismissed with costs.
[59]
The basic rule of costs is that all costs are in the discretion of
the court. The court’s discretion is wide, though
not
unfettered and must be exercised judicially upon a consideration of
the facts of each case. In essence it is a matter
of fairness
to both sides. Taking into consideration the circumstances of the
case; carefully weigh the issues, consider the conduct
of the parties
and consider any other circumstances which may have a bearing on the
issue of costs. In my view the Applicant
acted unreasonably to
bring the matter to court without resolving the matter internally,
for the fact that the rotational system
was in place before and was
applied in tenders where the Applicant was the successful
contractor. In any event costs follow
the successful party.
ORDER
[60]
In the premises, the following order is made:
1.
The Application is dismissed with costs,
including the 3
rd
Respondent’s costs.
_____________
S.
CHESIWE, J
I
concur
________________
S.G. MEINTJES, AJ
On
behalf of Applicant: Adv. S. Grobler
Instructed
by: Graham Attorneys
BLOEMFONTEIN
On
behalf of 1
st
Respondent: Adv. L. H Halgryn SC
Instructed
by: Phatsoane Henney Inc.
BLOEMFONTEIN
On
behalf of 3rd Respondent: Adv. LWF Laughland
Instructed
by: Rosendorff Reitz Barry Attorneys
BLOEMFONTEIN
[1]
Annexure
“MPF1” attached to the Notice of Motion page 26.
[2]
Annexures
MPF1 to MPF7 attached to the Notice of Motion.
[3]
2002
(3) SA 265 (CC).
[4]
2000
(2) SA 674 (CC).
[5]
See
Minister of Home Affairs v Somali Association of South Africa 2015
(3) SA 545 (SCA).
[6]
2013
(6) SA 421
(SCA) at para [65]
[7]
2004
(1) SA 16 (SCA).
[8]
2000
(4) SA 413 (SCA)
[9]
2013
(4) SA 557
(SCA) (Allpay SCA)
[10]
2015
(5) SA 245 (CC)..
[11]
[2007]
149, 2007 (6) 442 (CK), [2008] ALL 142 (CK) (Intertrade) at para 46.
[12]
[2005]ZASCA
19,
2005 (4) SA 67
(SCA) (Silvestar).
[13]
2015
(20 SA 322 (GJ).
[14]
2013
(1) SA 170
(SCA) at par [12].
[15]
Fisheries
Development Corp v Jorgensen and Another
1979 (3) SA 1331
(WLD) at
1336H-1337C; Mega Papers (Pty) Ltd & Another v MEC, Province of
the Eastern Cape Responsible for Education
[2008] JOL 22613
(Ck) at
which Sangoni J said: “The court agreed that they have a
direct and substantial interest and should be have been
joined as
parties to the application.”