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[2018] ZALMPPHC 1
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Raubex Construction (Pty) Ltd v Road Agency Limpopo SOC and Another (4460/2017) [2018] ZALMPPHC 1 (18 January 2018)
IN
THE HIGH COURT OF SOUTH AFRICA
LIMPOPO
DIVISION, POLOKWANE
CASE
NO: 4460/2017
Not
reportable
Revised.
RAUBEX
CONSTRUCTION (PTY)
LTD
APPLICANT
AND
ROAD
AGENCY LIMPOPO
SOC
1
st
RESPONDENT
SEDTRADE
(PTY)
LTD
2
nd
RESPONDENT
JUDGMENT
MULLER
J:
[1]
The applicant, together with the second respondent, and others,
submitted tenders to upgrade a road in the Limpopo Province
in
response to an invitation to tender published by the first
respondent. The tender was awarded to the second respondent by the
first respondent. This application is a sequel to an application for
an interim interdict which was granted against the respondents,
pending the finalization of a review application to set aside the
tender awarded to the second Respondent.
[2]
The application falls to be decided on two grounds for review. The
first ground is that the tender process was completed prior
to the
tender being awarded to the second respondent. The second ground
relied upon by the applicant is that the rejection of the
tender of
the applicant as non-responsive was irrational in that the document
submitted contained the information required
and substantially
complied with the prescribed certificate of authority included
in the tender data documents. The second
ground will only become
relevant if the first ground of review is unsuccessful.
[3]
I will commence with the main ground of review as it may be
dispositive of the application. It is common cause or at least not
in
dispute that a written invitation to tender was published by the
first respondent to invite tenders for the upgrade of a road.
The
invitation contained a closing date of 13 December 2016 when all
tender documents had to be submitted. The invitation stated,
in
addition, that all those tenders submitted on or before 13 December
2016 shall remain valid for period of 90 days to allow the
first
respondent the opportunity consider all the tenders received and to
award the tender to the successful bidder. It is not
in dispute that
the expiry date was 13 March 2017.
[4]
The first respondent addressed letters to all tenderers on 14 March
2017 in terms whereof an extension of the validity date
to 30 April
2017 was sought. The letter stated:
“
Roads
Agency Limpopo SOC Ltd (RAL) hereby request that you extent the
validity period of your proposal/bid which was received by
RAL on or
before the afore mentioned date.
Should
you agree to extend validity of your proposals /bid they shall be
valid until 30 April 2017.
Please
note that this extension is subject to the same terms and conditions
that you adhered to when you submitted your proposal/bid
on or before
the closing date.
Your
response must reach RAL through this e-mail by no later than close of
business Friday 17.03.2017.
Should
RAL receive no response on or the said date, it will be deemed that
you have no intention to extend the validity period of
your
proposal/bid in which case your proposal/bid will not be considered
further for evaluation.”
[5]
Some of the tenderers, which included the applicant and the second
respondent, notified the first respondent of their consent
to the
proposed extension. Those who failed to reply were summarily excluded
from further participation, ostensibly, because their
bids or offers
were invalidated due to the expiration of the 90 days period, on 13
March 2017.
[6]
The tender of the applicant was thereafter rejected as non-responsive
due to the failure by the applicant to complete a prescribed
certificate of authority which was included in documents which
accompanied the invitation to tender. (The applicant did not complete
the prescribed certificate but included in the tender documents a
form which was designed by itself.)
[7]
The applicant contended that if the tender was not awarded within the
tender validity period of 90 days, the tender process
has lapsed. It
was also argued that the tender validity period cannot be extended
after the expiration of the 90 days. It was argued
in the alternative
that the contract was in any event concluded after 30 April 2017
whilst the invitation to tender stipulated
that the contract must
also be concluded during the tender validity period. The relevant
term in the tender document states:
“
C1.1
FORM OF OFFER AND ACCEPTANCE
This offer may be accepted by the
employer by signing the acceptance part of this form of offer and
acceptance and returning one
copy of this document to the tenderer
before the end of the period of validity stated in the tender data,
whereupon the tenderer
becomes the party named as the contractor in
the conditions of contract identified in the contract data.”
The
deponent to a supplementary affidavit on behalf of the first
respondent confirmed that he has signed the offer and acceptance
form
on 25 April 2017.
[8]
The starting point is the acceptance that the tender process
constituted administrative action which entitle all the tenderers
to
a lawful and procedurally fair process and outcome.
[1]
Section 217(1) of the Constitution lays down that when an organ of
state (the first Respondent) contracts for goods or services
it must
do so in accordance with a system which is fair, equitable,
transparent, competitive and cost effective. Several legislative
measures to give effect to section 217 of the Constitution were put
in place. Not all are relevant for the determination of this
application, save to the mention The Preferential Procurement Policy
Framework Act
[2]
together with
the Preferential Procurement Regulations of 2011 and 2017.
[3]
[9]
A decision to award a tender is administrative action.
[4]
In
Telkom
SA Ltd v Merid Trading (Pty) Ltd and Others; Bihati Solutions (Pty)
Ltd v Telkom SA Ltd and Others
[5]
it was held:
“
As soon as the validity period
of the proposals had expired without the applicant awarding a tender
the tender process was complete
- albeit unsuccessfully – and
the applicant was no longer free to negotiate with the respondents as
if they were simply attempting
to enter into a contract. The process
was no longer transparent, equitable or competitive. All the
tenderers were entitled to expect
the applicant to apply its own
procedure and either award or not award a tender within the validity
period of the proposals. It
failed to award a tender within the
validity period of the proposals it received it had to offer all
interested parties a further
opportunity to tender.”
[6]
[10]
In
Joubert
Galpin Seale Inc and others v Road Accident Fund and Others
[7]
the court also considered whether a tender process can be revived
after the process has lapsed. The learned Judge followed the
judgment
in
Telkom
SA Ltd supra
but
also took into account the provisions of the
National
Treasury’s Supply Chain Management: A Guide for Accounting
Officers/Authorities
to
which reference was made in
Allpay
Consolidated Investment Holdings
[8]
as the “constitutional and legislative procurement
framework”
which
formed part of those provisions that both empower and limit the
powers of public bodies involved in procurement of goods and
services. The document contains a step by step guide to be applied in
the procurement of goods and services and provides that an
extension
of bid validity should be requested from bidders before the
expiration date, if justified under exceptional circumstances.
[9]
[11]
An invitation to the public to tender
[10]
for the provision of goods or services is a written invitation to the
world at large to make an offer.
[11]
An offer made pursuant to such an invitation may be rejected or
accepted by the first respondent on the terms and conditions set
forth in the tender documents.
[12]
The tender
documents submitted to the first respondent
in
casu
constitute
offers made which will remain open for acceptance for a period of 90
days from the closing date stipulated for offers
to be submitted by
prospective tenderers. If the first date arrived without any
offer being received, the invitation to invite
offers would lapse and
come to an end.
[12]
Offers which had been made in time, as stipulated, remain valid until
the expiry of the 90 day period. If no offer is accepted
by the first
respondent by the expiry date, all the offers are rendered invalid
and the tender process simply lapse. When the tender
process has come
to an end, the invalid offers can no longer be accepted. Offers that
have been rendered invalid, in my view, cannot
be validated by simply
attempting to extend the validity date
ex post facto
the
lapsed tender process. An agreement with a number of tenderers that
only those who consented to an extension of the tender validity
date
will be eligible for consideration cannot be sustained. No provision
was made in the tender documents that when the tender
process has
come to an end, that offers that had been invalidated as a result,
may be revived by agreement.
[13]
I am in respectfull agreement with the reasoning in
Bosch
Munitech (Pty) Ltd v Govan Mbeki Municipality
[13]
where Murphy J
relying on
Laws
v Rutherfurd
[14]
expressed
himself as follows:
“
Where the mode of acceptance in
a proposed contract is stipulated, it is that mode that must be
followed before a contract is concluded.
Non-compliance with
formalities imposed by one of the parties results in the nullity of
the contract. Where a contract is not concluded
between the parties
because of non-compliance with the prescribed mode of acceptance, no
contractual
vinculum iuris
exists and the parties may not assert
the contractual remedies under the flawed agreement…”
[15]
(footnotes are omitted).
[14]
The decision to invite tenders for goods and services by the first
Respondent and the process followed by the first respondent
in
awarding a tender to a successful tenderer is an administrative
function
as
sanctioned by section 217(1) of the Constitution which requires that
it be done in accordance with a system which is fair, equitable,
transparent, competitive and which is cost effective.
[16]
The Constitution and the associated laws applicable that binds organs
of state in relation to tender contracts entered into between
organs
of state and service providers have had a considerable impact on our
law of contract due to the influence of the Constitution
in this area
of the law. It is not always easy to determine when the
principles of the law of contract are applicable and
to what extent.
However, although the decision to award the tender is administrative,
the principles of the law of contract underpin
that decision.
[15]
.
It was argued by counsel for the first respondent that the letter
written to all tenderers requesting their consent to extend the
tender validity date was a fresh offer made to them (as opposed to an
invitation to make an offer) to contract on the same terms
and
conditions, but with a tender validity date of 30 April 2017. It is
submitted that a new tender process was initiated with
only those
tenderers participating who consented to the extension.
[16]
The argument cannot be accepted. In specifying the terms of the
invitation to tender the first respondent acted from a position
of
superiority as an organ of state and was therefore burdened with a
public duty to follow its own procedure and to act fairly
in
exercising its powers derived from the terms of the invitation to
tender. A fair, transparent and equitable tender process is
not
initiated (nor can it be continued) when a few tenderers consented to
an invitation to revive the lapsed tender process and
thereby
surreptitiously validating their invalid offers retrospectively. The
tenderers, who did not agree to the extension, were
excluded from the
new process. This new tender process did not comply with prescripts
of the Constitution. It can hardly be said
that it was a fair,
competitive and transparent process embarked upon when the public is
excluded from the process.
[17]
A process to invite tenders ought to be initiated afresh. It is for
this reason that the invalid offer by the second respondent
could not
have been accepted after the 90 days validity period has lapsed. Due
to the aforementioned, the purported consent
of the applicant, the
second respondent and others, to extend the date fixed for
acceptance, after it has expired, is of no moment.
The invalidity of
the offers could not be reversed after the date set for acceptance
has lapsed without any offer being considered
and accepted which
brought the tender process to an end. The second process which was
then initiated in terms of the letter addressed
to the tenderers was
flawed and lacked openness, transparency, lawfulness and fairness as
required by section 33 and 217(1) of
the Constitution.
[18]
It was also argued that the invitation to tender was not time based
but costs based. Clause F2.16 of the tender data reads:
“
Tenders
shall remain open for a period of ninety (90) days from the time set
for the opening of Tenders and no Tender may be withdrawn
during this
period.
Should
a Tenderer amend (other than according to F3.9) or withdraw his
tender after the time set for the receipt and opening of
Tenders and
during the period of its validity, but prior to his being notified of
the acceptance of his original Tender, or should
a Tender, after
having been notified that his Tender has been accepted.
(a)give
notice of his inability to execute the Consultancy Agreement /
Contract in terms of his tender, or
(b)fail
to sign a Consultancy Agreement / Contract or furnish the security
within the period fixed in the conditions reflected in
the form of
Tender or any extended period fixed by the Employer; or
(c)fails
to execute the Consultancy Agreement / Contract according to the
defendants
He
shall pay either difference between his Tender and a less favourable
Tender accepted in terms of the provisions of Tender sub
Condition
3.1(d), or if the Employer decides to invite fresh Tenders, all
additional expenses which the Employer has to incur in
this regard ,
as well as any difference between his Tender and accepted new
Tender; provided that the Employer may fully
or partly exempt a
Tenderer from the provisions of this sub condition if he is of the
opinion that the circumstances justify the
exemption.
When,
in the circumstances mentioned in Tender sub Condition 3.10(c) it is
not deemed desirable to invite fresh Tenders, the Employer
may accept
another Tender from those already received”.
[19]
The validity date of the tenders is clearly time based, not only in
respect of the date and time stipulated for the offers
to be
submitted for consideration, but also in respect of the date of their
validity. Any ambiguity, in the written invitation
to tender must be
interpreted
contra
proferentem
.
[17]
[20]
It is, in my view, unnecessary to make any decision with regard the
second issue that the offer was non-responsive due to the
failure by
the applicant to complete the certificate prescribed by the
invitation to tender despite submission of a form designed
by the
applicant.
[21]
The tender awarded to the second respondent must be set aside. The
process should start afresh.
[22]The
applicant was successful and is entitled to its costs, which costs
shall include the costs reserved in respect of the interim
interdict
granted in its favour pending the finalization of this review
application. I make the following order:
ORDER
1.
That
the award of the tender RAL/T640B/2016 upgrading (gravel to
bituminous surface) of road D3556 from N11 at Gilead to D357 at
pudiyakgopa-38.8 kilometre, Waterberg District Limpopo Province (the
tender) is declared invalid and is set aside;
2.
That
any service level agreement concluded between the first and second
respondent relating to the impugned decision be struck down
in
accordance with
Section 8
of the
Promotion of Administrative Justice
Act 3 of 2000
.
3.
That
the first respondent is ordered to pay the costs of the application,
such costs to include the costs reserved on 6 September
2017.
__________________
GC
MULLER
JUDGE
OF THE HIGH COURT
LIMPOPO
DIVISION: POLOKWANE
APPEARANCES
FOR
APPLICANT: WA Van Aswegen
FOR
FIRST RESPONDENT: SK Hassim SC
L
Pillay
DATE
HEARD: December 2017
JUDGMENT
DELIVERED ON: 18 January 2018
[1]
The
Promotion of Administrative
Justice Act 3 2000
; s 33 of the Constitution. Also
Logbro
Properties CC v Bedderson NO and Others
[2003]
1 All SA 424
(SCA) para 5.
[2]
Act 5 of 2000.
[3]
The 2017 regulations as published
under GN R32 in Government Gazette 40553 dated 20 January 2017 took
effect on 1 April 2017.
The 2011 regulation were published under GN
R502 in Government Gazette 34350 dated 8 June 2011.
[4]
Cape Metropolitan Council v Metro
Inspection Services CC
2001(3)
SA 1013 (SCA) para 16-18.
[5]
2011 JDR 0004 (GPN); [2011] ZAGPPPHC
1.
[6]
Para 14. Reliance was placed by the
first respondent on the unreported case of
Defensor
Electronic Security Services (Pty) Ltd v Head of the Department
Northern Cape Department of Health and Another
Case
No CA & R 659/2016 (dated 31 March 2017). The case is
distinguishable on the facts.
[7]
2014 (4) SA 148
(ECP) para 70.
[8]
2014 (4) SA 604
CC para 12-13.
[9]
Para 73.
[10]
A tender as defined in the
Preferential Procurement Regulations 2011 means: “a written
offer or bid in a prescribed or stipulated
form in response to an
invitation by an organ of state for the provision of services or
goods.”
[11]
Trever Investment (Pty) Ltd v
Friedhelm Investment (Pty) Ltd
1982
(1) SA 7
(AD) 16G-H.
[12]
Christie RH.
The
Law of Contract in South Africa
5
th
ed LexisNexis Butterworth Durban
(2006) 42.
[13]
[2015] All SA 674 (GP).
[14]
1924 AD 261.
[15]
Para 32.
[16]
s 33 of the Constitution requires
just administrative action of the process which is lawful,
reasonable and procedurally fair.
[17]
Karson v Minister of Public Works
1996 (1) SA 887
(ECD) 896C-D.