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[2017] ZANCHC 24
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Defensor Eletronic Security Services (Pty) Ltd v Head of Department Northern Cape Department of Health and Another (CA&R659/2016) [2017] ZANCHC 24 (17 March 2017)
IN
THE HIGH COURT OF SOUTH AFRICA
NORTHERN
CAPE DIVISION,
KIMBERLEY
Case
No: CA & R 659/2016
Heard
on: 28/02/2017
Delivered
on: 31/03/2017
In
the matter between:
DEFENSOR
ELECTRONIC
SECURITY
SERVICES
(PTY) LTD
Applicant
(REGISTRATION
NUMBER:
2012/038
8
37/07)
And
HEAD
OF
DEPARTMENT
1
st
Respon
d
ent
NORTHERN
CAPE DEPARTMENT OF HEALTH
MEMBER
OF THE EXECUTIVE COUNCIL
2
nd
Respondent
NORTHERN
CAPE DEPARTMENT OF HEALTH
Coram:
Mamosebo J et Snyders AJ
JUDGMENT
ON REVIEW
MAMOSEBO
J
Introduction
[1]
When
an
organ
of
state
in
the
national,
provincial
or
local
sphere
of
governmen
t
,
or
any
other
institution
identified in
national
l
egislation
,
contracts
for
goods or services it must do so in accordance with a
s
ystem
which is
fair,
equitable,
transparent,
competit
i
ve
and
cost-effecti
ve.
[1]
[2]
The
app
l
icant
is
Defensor
Electronic
Security
Services
(Pty)
Ltd
(Registration
Number
2012/038837/07).
The
first respondent
is
the Head
of
Department: Northern Cape Department of
Health
(HOD). The Second respondent
is
the
Me
m
ber
of
the
Executive
Council:
Northern
Cape
Department
of
Hea
l
th
(MEC).
The
respondents
are
therefore
organs
of
state
as
contemplated
in
s
239
of the
Constitution
[2]
and
s
1
of the Promotion of
Administrative
Justice
Act
[3]
(PAJA).
[3]
This is a review application in terms of Rule 53 of the Uniform Rules
of Court. When the application was heard Part 1 thereof
had become
academic or moot in that the respondents had already provided the
reasons for the administrative action as well as the
record thereof.
The only issue for determination relates to costs which were
reserved. What serves before us is the second part
of the application
which pertains to the constitutional challenge on the validity of the
administrative action taken by the respondents.
[4]
The applicant sought an order in the amended notice of motion in the
following terms:
4.1
That
the period
of
180
days
provided
for
in s
7(1)
of PAJA during which
an
application
for
judicial
review
had
to be brought be
extended,
as
provided
for
in
s
9(1)
of
PAJA
read
with
Regulation
5
[4]
,
for
a
further
period
l
apsing
on
the
day
of
delivery
of
this
notice;
4.2
declaring the HOD's failure to ensure that the applicant's
bid be
considered and adjudicated upon during both the tender offer validity
period and the extended
tender
offer validity period, un lawful and
constitutionally invalid ;
4.3
declaring the HOD's decision to cancel Tender:
NC
DOH/00912014 unlawful and constitutionally invalid;
4.4
reviewing and setting aside the HOD's decision
to
cancel Tender: NC DOH/009/2014;
4.5
extending the tender offer validity period for a period of
60 (sixty)
days from the date of the granting of this order;
4.6
ordering the HOD to ensure that the applicant'
s bid
is considered and adjudicated upon m terms of the evaluation
methodology prescribed in Clause l 0 of
the bid
document, within the extended tender offer validity period
contemplated m the preceding prayer.
Condonation
[5]
Adv Vorster, for the applicants, laboured under the impression that
the condonation would not be opposed since there was no
suggestion to
the contrary. However, counsel for the respondents, Adv Stanton, made
the submission that the respondents are indeed
opposing the
condonation. It would have been prudent for counsel, as officers of
the Court, to have discussed their respective
positions on this
aspect before the hearing commenced.
[6]
The Supreme
Court
of
Appeal
made
the
follow
i
ng
pronouncements
pertaining
to
condonation:
[5]
'In
deciding whether sufficient cause has been shown, the basic principle
is that the Court has a discretion, to be exercised judicially
upon a
consideration of all the facts, and in essence it is a matter of
fairness to both sides. Among the facts usually relevant
are the
degree of lateness, the explanation therefore, the prospects of
success, and the importance of the case. Ordinarily these
facts are
interrelated: they are not individually decisive, for that will be a
piecemeal approach incompatible with a true discretion,
save of
course that if there are no prospects of success there would be no
point in granting condonation. Any attempt to formulate
a rule of
thumb would only serve to harden the arteries of what should be a
flexible discretion. What is needed is an objective
conspectus of all
the facts. Thus a slight delay and a good explanation may help to
compensate for prospects of success which are
not strong. Or
the importance of the issue and strong prospects of success may tend
to compensate for a long delay.'
[7]
Undoubtedly, these proceedings fall within the purview of s 7(1) of
PAJA which stipulates:
"(1)
Any proceedings for judicial review in terms of s 6(1) must be
instituted without unreasonable delay and not later than
180 days
after the date -
(a)
Subject to subsection (2)(c), on which any proceedings instituted in
terms of internal remedies as contemplated in subsection
(2) (a) have
been concluded; or
(b)
Where no such remedies exist, on which the person concerned was
informed of the administrative action, became aware of the action
and
the reasons for it or might reasonably have been expected to
have become aware of the action and the reasons. "
[8]
The applicant's averment is that it only became aware of the outcome
of the administrative acts on 12 June 2015 and urged that
the date be
used as the inception date to calculate the period from which relief
could be reasona bly sought under PAJA. This means
that the review
application should then have been brought on 29 December 2015. Legal
advice was sought from different practitioners.
Each practitioner 's
role
in the matter is explained in the founding papers.
The conundrum was created by the withdrawal of the initial review
application
which necessitated the filing of a fresh application .
The second application was out of time by a period of three months.
Having
considered the explanation tendered for the
delay as well as the importance of this matter I am of the view
that
condonation should be granted in the interests of justice.
Factual
background
[9]
A historical background to the facts is necessary. On Sunday, 13
March 2014, the Northern Cape Department of Health (the department)
issued an invitation in the City Press Newspaper for the submission
of bids for the appointment of a service provider to render
security
guarding services for the Northern Cape Department of Health NC
DOH/009/2014. The tender document was available from the
Projects
Office at a cost of R500 00. It is common cause that the applicant
together with 37 other bidders tendered for this service.
A
compulsory briefing session conducted by Mr Faas, Director: Supply
Chain Management, was held on 16 April 2014 at 10H00 in the
Auditorium of the Kimberley Hospital Complex. The closing date and
time for the bid submissions was 30 April 2014 at 11:00.
[10]
The applicant, represented by Mr Gert Reinier Van Rooyen, its
director, deposited the bid at 10:30 in the Bid Box. Mr Faas
opened
the Bid Box at 11:00. The applicant was allocated bidder number 27.
It is common cause that the other bidders, in exception
of the
applicant, were disqualified as evinced on form "FA20" at
the technical stage, for non-compliance with mandatory
and key
requirements as stipulated in the bid document.
[11]
The expiry of the 90-day validity period was 30 July 2014. From the
papers it seems that the Department now limited their communication
to the applicant only. Mr S Booi: Assistant Director, Supply Chain
Management, addressed an undated communication to the applicant
under
the head: Extension of Validity Period (please respond urgently)
"FA05". The request informed the applicant that
the
validity period of 90 days has expired before the bid adjudication
committee (BIC) could award the bid. The enquiry was meant
to solicit
from the applicant whether it was amenable to extend the validity
period from 30 July 2014 to 28 November 2014. The
applicant was
agreeable. There is a proviso in the communication to the effect
that:
"...should
the
bids
not
be
adjudicated
during
the
current period
, the right
is reserved
to ignore
your bid
if
the
amendment
has
the
effect
of
increasing
or
decreasing
the
bid
price.
"
The bid had still not been awarded during the first extension.
A
second, similar and final request, was addressed to the applicant
extending the period from 28 November 2014 to 09 April 2015.
Still no
award had been made at this stage.
[12]
Despite
several
enq
uiri
es:
on 31 October 2014,
10
November
2014
and
08
December
2014 by
the
applicant
on
the
status
of
the
bid the ambivalence
continued.
The
applicant
lodged
a
compla
i
nt
with
the
office
of the Public Protector
and
in
addition
lodged
a
Request
for
access to the
Record
of
Public
Body
[6]
.
The
applicant
also
served
a
Notice
of
Appeal
on
the
HOD.
The
applicant
was
asked
to
pay
an
initiation
fee
of R40.00 before it could receive a response, which was complied
with.
[13]
The first response to the applicant's erstwhile attorney, Mr Nico
Gouws, "FA 15" dated
28 January 2015,
was by the
department 's Director: Legal Services, Mr DB Ndlovu. He
advised that
the
bid
is
still
pending and has
not
been
awarded
due
to
a
delay
in processing it.
What
this processing entailed is unspecified. He reminded that
the applicant had agreed to an extension of the
validity of the
bid. The applicant states that a meeting was held between its
attorney, Mr Gouws, and the HOD on 16 April 2015
in Gouws' office.
The HOD does not deny that a meeting took place but disputed
the assertion that she said the applicant
will be awarded the bid .
She does not say what decision was taken, if any, at the aforesaid
meeting.
[14]
On 21 May 2015 at 1lh00, a period also after the expiry of the
validity period of 09 April 2015, officials from the Department
Mr
Faas, and Mr Ngcoboti, Director: Management Accounting, visited
the applicant's premises to conduct a
vendor
assessment in terms of Supply Chain
Management Guidelines for Accounting
Officers
pursuant to which a report was compiled.
The report also confirms the
site
inspection. Counsel for the respondents was pressed to explain
why such a visit was undertaken if it was not a
further step towards
ensuring that the successful bid ticked all the boxes. No cogent
explanation was fo1thcoming from the HOD.
[15]
The Supply Chain Management Guide, issued by the National Treasury,
has been in force since February 2004. The following is
pertinent
therefrom: Suppliers should be assessed by the Supply Chain
Management practitioners (SCM), for possible risks such as
the
availability of adequate facilities, financial standing, capacity and
capability to deliver, previous performance in terms
of quality and
service delivery, as well as attainment of goals.
[16]
Counsel for the respondents submitted that it is unknown whether Mr
Faas, holding a rank of Director: SCM went on a frolic
of his own
when he conducted the vendor assessment. But this submission lacks
merit. Mr Faas was entrusted with this bidding
process from
inception and nothing untoward was alleged against him until the
issues of the vendor assessment were laid at the
HOD's door. Mr Faas
was accompanied by another senior official of the department, the
aforesaid Mr Ngcoboti. Nothing was said about
his participation.
Their report clearly stated that the vendor assessment was for supply
chain processes to provide due diligence
assurance as far as the bid
was concerned. The report was destined for the HOD's further bid
process determination.
[17]
The HOD states that Mr Faas was not authorised to conduct a vendor
assessment but was required to conduct a due diligence.
In the SCM
process reference is made to vendor assessment not due diligence as
claimed by the HOD. It is incomprehensible why she
would ask Mr Faas
to conduct due diligence on a lapsed or invalid tender. The
contention by the HOD in relation to the vendor assessment
by Mr Faas
lacks substance. Besides, the applicant cannot be blamed if the
Department muddle or misconstrue their own internal
responsibilities.
[18]
On 08 June 2015 when the applicant did not receive the appointment
letter attorney Gouws was instructed to demand it. He addressed
three
almost identical letters to the HOD, the MEC and the Director: Legal
Services, Mr DB Ndlovu, demanding the appointment letter
be issued by
12 June 2015.
[19]
Interestingly, the said Director: Legal Services, responded on 12
June 2015 in these terms:
"Your
letter dated 09 June 2015 refers.
I
have been advised by Supply Chain that on 21 May 2015 they visited
your client to do vendor assessment and not pre -appointment
due
diligence as you allege.
Regarding
your appeal for access to information we responded on 28 January 2015
and
the
vendor
assessment
is
part
of
the
prelim
i
nary
bid
evaluation.
At
this stage, your client or any other bidder cannot receive the
appointment letter since the
bid
evaluation
and
the
adjudication
committees
have
not
sat
and
advised
the
HOD
on
the
outcome
of
the
bid."
[20]
Mr DD Madyo, Head: Ministry of Health responded under the letter head
of the office of the MEC for Health stating
inter alia:
"The
tender is out-with the prescribed tender period and therefore it is
no longer valid."
[21]
The HOD did not file a supplementary
affidavit. She furnished the
following
explanation in paras 24.6 and 24.7 of her answering affidavit:
"24.6
The tender
was
never
adjudicated
and
the
applicant
cannot
submit
that it should be awarded to it or that the Court
should arrogate to itself the power to award it
to
the applicant. The applicant's application
is stillborn.
24.
7
The reason
of the tender
not
being awarded
to any
o
f the
tenderers appears
from
a letter which the
MEC
for
Health Mr
NM
Jack
wrote
to me on 27
May 2015. 1
attach
a copy
of the letter as
GEM-6.
In
this letter
the
MEC stated
that no appointments
of new
service
providers
of
secu
r
ity
service and other
so-called
urgent
matters
should
be made due to the serious
financial challenges
faced by the Department.
A further
reason
why
the
tender
was allowed
to
lapse
was
the presentation
by
the
Ministerial Task
Team
on
Safety
and Security
arising
from a
meeting
of
the National
Health
Committee on
2
3
1
24 April
2015. I
attach
hereto,
marked
GEM-7, a copy
of the presentation.
As
appears
therefrom,
there
is
consideration
to
provide
in-house
security
personnel
and develop internal management
capability.
"
[22]
It
is
disconcerting
that
no
cogent
explanation
was
furnished
or
exists
why
the
Bid
Eva
l
uation
Committee
(BEC)
and
the
Bid
Adjudication
Co
m
mittee
(BAC)
did
not
deal
w
i
th
the
tender
within
the
validity
period
or
the
two
extended
periods.
In
fact
there is
nothing
i
n
the papers, a concession correctly made by counsel
for
the
respondent
s
,
justifying
the
failure
by
the
respondents
to
make
a
decision.
Counsel
submitted
though,
that
the
tender
offer
validity
period
has
now
lapsed.
The
excuse
proffered
for the
lapse
were that the BEC and
the
BAC did
not
carry
out
their ob
l
igations
within
the
tender
period.
All that
they
said
for
themselves
is
that
they
did
not
meet
but
did
not
give
reasons
for
such
failure.
It
cannot
be
in
the
interests
of
fair
administrative
action
to
be
as
nonchalant
as
that.
See
Allpay
Consolidated
Investment Holdings (Pty)
Ltd
and
Others v Chief
Executive
Officer,
South
African
Social
Security
Agency,
and
Others
[7]
where the Constitutional Court highlighted
the
following: "..[W]ith
reference
to
international
authority
and
experience,
deviations
from fair
process
may
themselves
all
too often be symptoms
of
corruption or
malfeasance
in
the
process.
In
other
words,
an
unfair
process
may
betoken
a
deliberately
skewed
process.
Hence
insistence
on
compliance
with
process
formalities has a threefold purpose: (a) it ensure
s
fairness
to
participants
in the bid
process;
(b) it enhances
the
likelihood of efficiency and
optimality
in
the
outcome;
and
(c)
it
serves
as
a
guardian
against
a
process
skewed
by
corrupt influences.
"
[23]
The applicant's counsel submitted that if the respondents took the
decision to allow the tender to lapse because they did not
want to
cancel it, in effect, amounts to cancellation of the tender. The
failure to provide reasons why the tender validity period
was allowed
to lapse renders the process devoid of transparency. The failure also
signifies that no good cause exists or there
are ulterior motives
which do not call for the applicant's speculation.
[24]
The letter by the MEC is dated 27 May 2015. Therein he instructs the
HOD not to make any financial commitments or appoint new
service
providers. This letter was written long after the tender process had
been completed and the extended periods had elapsed.
The letter was
therefore not integral to the considerations relating to the bids,
the evaluation and adjudication process. It is
unclear what reasons
the HOD had prior to the receipt of the MEC's letter why the process
was not finalised within the set timeframes
and the further
indulgences. Nowhere in the Answering
Affidavit
was I able to locate any reasons other than the letter of the MEC
which has been
ex
post
facto
employed to justify this dereliction of duty.
[25]
Administrative action as contemplated in s 1 of
PAJ A means "any decision taken
or any failure
to take a decision, by -
(a)
an organ of state, when -
(i)
exercising a power in terms of the Constitution
or a provincial
constitution; or
(ii)
exercising a public power or performing a public function
m terms of
any legislation; or
(b)a
natural or juristic person, other than an organ of state, when
exercising a public power or performing a public function in
terms of
an empowering provision, which adversely affects the rights of any
person and which has a direct, external legal effect,
.... and which
is not specifically excluded in the list of exceptions".
[26]
In
Transnet
Ltd
v
Goodman
Brothers (Pty) Ltd
[8]
Olivier
JA
held
that
in
determining
whether
action
constitutes
administrative
action,
the
threshold
requirement
is
whether the body
in
question
"
exercised
a
public power
or
performed
a
public
function".
The
consideration
and
award
of
tenders
has
been
held
to
constitute
administrative
action
under
the
constitution. Cameron
J
A
made the follow
i
ng
pronouncement
in
Logbro
Properties
CC
v
Bedderson
NO
and
Others
[9]
"The
starting point must be that the tender
process constituted an
administrative
action
under
the
Constitution.
This entitled
the
appellant
to
a
la
w
ful
and
procedurally
fair process
and
an
outcome,
where
its rights
were affected
or
threatened,
justifiable in relation
to the reasons
given for
it.
I
say must be since in the light of several decisions of this Court
applying the Constitution's administrative justice provisions
to
governmental tender processes the statement seems obvious. Yet
counsel for the province asserted the contrary.
"
[27]
The bid document specified the following pertaining to the
'bid
validity period':
Responses to this bid received
from vendors will be valid for a period of 120 days counted from the
closing date of the bid.
27.1
Counsel for the applicant urged us to make a finding relating to
the
distinction between a
"bid
validity period"
and a
"bid
offer validity period".
27.2
Counsel submitted that the bid or tender was valid for three
years
(36 months) whereas its bid offer validity period has to be
calculated from the closing date of the bid for 120 days, allowing
for extensions; The two phrases cannot be used interchangeably as it
seems to be the norm currently; that a further difference
lies in the
fact that the tender validity period of three years still has two
years to run whereas the tender offer validity period
was allowed to
lapse.
[28]
Although this argument does not seem baseless, however the main focus
when such matters are brought on review is for the courts
to
determine whether the administrative action following the tender
process was procedurally fair and the system followed was also
fair,
equitable, transparent , competitive and cost-effective. As much as
the end result may be the signing of the contract for
the
implementation of the bid, the courts are mandated by the
Constitution to pay attention also on the fairness of the process.
[29]
Clause 10 of the bid document state the following relating to
Evaluation Criteria and Weightings:
10.1
Mandatory
requirements
All
bid responses that do not meet technical mandatory requirements shall
be disqualified and not be considered for fm1her evaluation.
This is
clearly contrary to the submission made by Ms Stanton, for the
respondents, that all bidders are considered even though
they have
been disqualified at the technical stage. This submission would
render Clause I0 nugatory. It is common cause that the
applicant was
the only bidder who survived the axe. Put differently, the only
bidder left standing to progress to the next phase
after the
technical assessment.
[30]
As authority for her contention Ms Stanton invoked
Telkom
SA
Ltd v
Merid
Trading (Pty) Ltd
&
Others; Bihati Solutions (Pty) Ltd
v
Telkom
SA
Ltd
&
Other
s
[10]
particularly
at
para
14, thereof
where
Southwood
J
pronounced:
"[14]
The question to be decided is whether the procedure followed by
the applicant and the six respondents after 12
April 2008 (when the
validity period of the proposals expired) was in compliance with
section 217 of the Constitution. In my view,
it was not. 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 and competitive.
All the tenderers
were entitled to expect the applicant to apply its own
procedure and either award or not award
a tender within its validity
period of the proposals. If it failed to award a tender within a
validity period of the proposals
it received it had to
offer all interested parties a further opportunity to tender.
Negotiations with some tenderers to extend
the period of validity
lacked transparency and was not equitable and competitive. "
[31]
The Telkom case is distinguishable from
the case
in
casu
for
the following reasons:
31.
1 In the
Telkom
case, Telkom
invited Requests for Proposals in order to appoint service providers
to provide Telkom Network Services when required
by Telkom to
do so. Sixty one proposals were received. The proposals were to be
open for acceptance for a period of 120 days
after the closing date.
The
1
20 days expired
without
the validity
period
having
been
extended.
Although some of the
respondents alleged that the validity period was extended, the Judge
found no factual basis for it.
fifteen proposals were
shortlisted for further consideration. When the validity
period lapsed Telkom had not
accepted any of the proposals. It
is only after the validity period had expired that Telkom sent an
e-mail to the 15 proposers
requesting an extension of the validity
period of their proposals. Several of the proposers accepted the
request to extend by a
further 120 days. No agreement, not even
a tacit agreement, was shown by the respondents to have been entered
into. The six
respondents were recommended and the tender was awarded
to them. Clearly, this is not in line with what is contemplated in s
217
of the Constitution because there were 15 proposals. Telkom did
not apply to Court to have its decision reviewed and set aside.
31.2
In casu
all the other bidders were disqualified at the
technical stage in exception of the applicant. No assessment by both
the evaluation
and adjudication committees was made despite the fact
that the respondents had written to the applicant twice to extend the
validity
period in order that the process could be finalised;
31.3
Despite the contention by the respondents
in casu
that the
validity period had expired and that the tender process was therefore
complete, subsequent further steps were taken by
them after the said
expiry of the validity period. The inference that the tender process
was not complete was firmly planted in
the mind of the applicant.
First, it is stated that the HOD held a meeting with attorney Gouws
pertaining to the applicant's bid
after the closing date; secondly,
there were two extensions of the validity period: initially from 30
July 2014 to 28 November
2014 and thereafter from 28 November
2014 to 09 April 2015. The vendor
assessment report
was conducted six weeks after the date of the
second extension, on 09 April 201 5. If the department 's intention
was not
to proceed with the award of the tender why were all
the aforementioned processes allowed to happen ?
[32]
Incidentally,
counsel
for
the
respondents
submitted
that
the
applicant's
attorney admitted
in
a
letter dated 24
April
2015 ("FA
17")
that
the
validity
of
the
bid
had
expired
therefore
the
applicant
had
conceded
the
expiry
of
the
validity
period.
Counsel
for
the
applicant
argued
that
the
incorrect
legal
concessions
by
an
attorney
should
not
bind
the
Court.
In
Matatiele
Municipality
and
Others v President
of
the RSA and Others
[11]
Ngcobo
J,
writing
for
the
majority pronounced:
"
Here,
we
are
concerned
with
a
l
e
gal
concession.
It is
trite
that
this
Court is not bound by a legal concession
if it
considers the concession
to
be wrong in
law. Indeed,
in
Azanian
Peop
l
es
Organisation
(AZAPO) and
Others v
President
of the Republic
of South Africa
and
Others
[1996] ZACC 16
;
[1996
(4)
SA
671
CC], this Court firmly
rejected the
proposition
that it is bound by
an
incorrect legal concession, holding that, 'if
that
concession was wrong in law [it], would
have
no
hesitation
whatsoever
in rejecting
it'.
Were it to be
otherwise,
this could
lead to
an
intolerable situation
where
this
Court
would
be
bound
by
a
mistake
of
law
on
the part of
a
litigant. The result
would
be
the
certification
of
law
or
conduct
as
consistent
with
the Constitution when
the law
or conduct
in fact
is
inconsistent
with the Constitution.
This would
be contrary
to the
provisions of s
2 of
the Constitution
which provides
that
the 'Constitution
is
the
supreme
law
of the Republic; law or conduct
inconsistent
with
it is invalid'. "
[33]
The
HOD
maintained
in
the Answering Affidavit that
the
adjudication committee
makes
the
decisions
and her
sole
function
was
to
sign
agreements after the
committee
had
made
its
decisions. This assertion cannot
be
correct.
Clause
l
6A6.3
of
the
Supply
Chain
Management
Policy
accentuates
the
duties
of
the
accounting
officer
or
accounting
authority.
Froneman
J
has
succinctly
captured
the
process
in
the
Allpay
Consolidated
case
[12]
,
which
in
my
view
is
on point
in
casu,
that:
"[36]
The object of the Public Finance Management Act is to 'secure
transparency, accountability and sound management
of the revenue,
expenditure, assets and liabilities of the institutions' to which it
applies, SASSA being one of them. Section
51(1)(a)(iii) provides
that an accounting authority for a public entity must
ensure and maintain 'an appropriate
procurement and provisioning
system which is fair , equitable, transparent,
competitive and cost-effective;
. . . . '
[3
7
]
The
Treasury
Regulations issued
pursuant
to
s 76
of
the
Public Finance Management Act require the
development and implementation of an effective and
efficient
supply
chain management
system
for the
acquisition of
goods
and
services
that
must be fair, equitable,
transparent,
competitive
and
cost-effective.
In
the case
of procurement through
a
bidding process
,
the
supply
chain
management
system
must provide
for the
adjudication of bids through
a bid
adjudication
committee; the establishment,
composition and
functioning of
bid
specification
, evaluation and
adjudication
committees;
the
selection
of bid adjudication
members;
bidding procedures ; and the approval
of bid
evaluation and/or adjudication committee recommendations.
The accounting
officer
or
accounting
authority
must
ensure
that
the
bid documentation and
the general conditions of contract are in accordance with the
instructions of the National
Treasury,
and that the bid documentation includes evaluation
and adjudication criteria,
including
criteria prescribed by
the
Procurement
Act
and
the
Broad Based Black Economic Empowerment Act
(Empowerment Act).
"
(Own emphasis)
[34]
It is untenable and to be deprecated in no unce11ain terms that an
accounting officer, vested with statutory powers, could
shirk her
responsibilities and, worse, shift the blame to her subordinates or
the committee that she is exercising authority over.
[35]
Regulation 11 of the Preferential Procurement Regulations, 2011
places a duty to plan for invitation of tenders. It provides:
"11
an organ of state
must,
prior to making an invitation for
tenders
-
(a)
properly
plan for, and, as
far
as possible,
accurately
estimate
th
e
costs
of
the
provision
of services
or goods
for
which an
invitation
for
tenders
is
to
be
made,-
(b)
determine
th
e
appropriate
preference point system to be utilised
in the
evaluation of the tenders; and
(c)
determine
the
deliverables
or
performance
indicators
in terms
of
which a
person
awarded a contract will be
assessed.
"
[36]
The HOD
maintains
that
because
the
MEC
wrote
to
her
on
27
May
2015
instructing
her
not
to
appoint
the
new
service
providers
the
tender
was
allowed
to
lapse.
She
denied
that
any
of
the
applicant's
rights
have
been
infringed.
Sec
33(1)
of
the
Constitution
[13]
confers
the
right
to
reasons
in
writing
on
those
whose
rights
have
been
adversely
affected
by
the
administrative
action.
The
section
affords
everyone
the
right
to
administrative action that
is
lawful,
reasonable
and
procedurally
fair.
It is the applicant's
case
that
the respondents'
failure
to consider
and
adjudicate
upon
its
bid
its
rights to
a
procedurally
fair
administrative
action
had been infringed.
See
Grey's
Marine
Hout
Bay
(Pty)
ltd
and
Others
v
Minister
of
Public Works and
Others
[14]
and
Joseph
and
Others
v
City of Johannesburg
and
Others
[15]
[37]
The respondents cannot
rely
on a discretion
not
to award
the
tender
because
the
discretion
is
constrained
by
Reg 8(4)
[16]
which
stipulates:
"an
organ of state, may, prior to the award of a tender, cancel a tender
if
-
37.1
due to changed circumstances, there is no longer a need for
the services, works or goods requested; or
37.2
funds are
no
longer
available to
cover
the
total
envisaged expenditure;
or
37.3
no acceptable tenders are received.
"
[38]
The HOD did not state in clear
and unambiguous terms during the
extension periods that the funds were no longer available. Belatedly
in the Answering Affidavit she alludes half-heartedly to the
lack of
funds as one of the reasons why the tender was
not awarded. This is a
lame and
dismissible excuse because they still retain
the services of
Karibuni Security Company on
a month to month basis or a three monthly basis. This does
not point
to changed circumstances
where the goods and services are no
longer available.
The fact that the Procurement Framework
Regulations required the HOD in its
strategic planning
to plan i n advance
for goods and services and
set aside
or estimate adequately for its
budget would at the very least showup the HOD as
incompetent.
The advertisement provided for a budget to cover the
total envisaged expenditure.
[39]
Even if the MEC was entitled to withdraw the tender or as claimed by
the HOD 'allowed the bid to lapse', they could
only
exercise such power with due regard to the principles of
administrative justice. They could not do so capriciously
or for
improper or unjustified motives as that would be tantamount to
unjustified administrative action. Had the evaluation committee
and
the adjudication committees sat and evaluated and adjudicated on the
bid within the tender validity period or within the extended
periods,
the tender by the applicant would in all likelihood have been
accepted.
[40]
Adv
Vorster,
appearing
for the applicant, submitted that the applicant
does
not
claim
entitlement
that
the
tender
should
be
awarded
to
it but
that
its
bid
should
be
considered
by
both
the
Bid
Evaluation
Committee
and
the
Bid
Adjudication
Committee.
That
the
applicant
be
afforded
the
opportunity to
make
written
representations
on
any adverse factor.
See
Logbro
Properties CC
[17]
.
Sight should not be lost of the fact that the Director:
Legal
Services
did
not
cite
financial
constraints
as
part
of
the
reaso
n
s
in
his
letter
to
the
applicant
in
explaining
the
delay
in
awarding
the
bid.
[41]
Chaskalson
P,
writing
for
the
unanimous
co
u
rt
m
Pharmaceutical
Manufacturers
Association
of
SA
and
Another:
In
Re
Ex
Parle
President of the Republic
of
South Africa
and
Others
[18]
stated
that
it is a
requirement
of
the
rule
of
law
that
the
exercise
of
public
power
by
the
Executive
and
other
functionaries
should
not
be
arbitrary.
Decisions
must
be
rationally
related
to
the
purpose
for
which
the
power
was
given,
otherwise
they
are
in
effect
arbitrary
and
inconsistent
with
this
requirement.
It follows
that
in
order
to
pass
constitutional
scrutiny
the exercise
of
public
power
by
the
Executive
and
other
functionaries
must,
at
least,
comply
with
this
requirement.
If
i
t
does
not,
it
falls
short
of
the
standards
demanded
by
our Constitution
for
such action.
[42]
It
is my
view
that
the
HOD's
failure
to
ensure
that
the
committees
sit
and
evaluate
and
adjudicate
upon
the
bid
within the
prescribed
time
limits
coupled
with
her
failure
to
make
a
decision
and
by
nonchalantly
allowing
the
validity
period
to
lapse
was
arbitrary
and
hence
unlawful
and
unconstitutional.
From
the
discrepancies
in
the
responses
by
the
following
functionaries:
(a)
the
HOD; (b)
the
Directo
r
:
Legal
Services
and
(c)
the
Head
:
Ministry
of
Health
19, 20
and
21
(above),
it
is
unquestionable
that
the
manner
in
which
the
respondents
dealt
with
this
procurement
process
has
been
shown
not
to be
fair,
equitable, transparent,
competitive
and
cost-effective
and
that,
therefore
,
it will
be
just
and
e
q
uitable
for us
to
intervene.
See
Trencon
Construction (Pty)
Ltd
v
Industrial Development
Corporation
of South
Africa Ltd
and Another
[19]
[43]
What remains
is
the
q
uestion
of
costs.
The respondents' counsel submitted that
the applicants were already furnished with reasons and the record
when they applied for
Part 1 of this application. Even though those
reasons remained unchanged during Part 2 of the proceedings the
applicant could not
forsee that as a reasonable possibility and was
entitled to err on the side of caution. In any event, not much time
and energy
was expended on the issue as to escalate the costs
significantly. There is no need, overall, to draw a distinction
between Part
1 and Part 2 as far as the costs are concerned. There is
no reason why the costs should not follow the result as the applicant
is substantially successful.
[44]
n the result, the following order is made:
It
is ordered:
1.
That the period of 180 days as provided for in
section 7(1)
of the
Promotion of Administrative Justice Act, 3 of 2000
, during which an
application for judicial review had to be brought, be extended, as
provided for in
section 9(1)
of the Act, read with
regulation 5
of
Rules of Procedure for Judicial Review of Administrative Action (No
R966 of October 2009), for a further period, lapsing on
the day of
delivery of the Notice on 20 June 2016.
2.
That the failure by the first respondent (the Head of Depa11ment) to
ensure that the applicant's
bid be
considered and adjudicated upon during the
Tender Offer Validity Period, and the Extended
Tender Offer Validity
Periods, is declared unlawful and constitutionally invalid.
3.
That the decision by the Head of Department to cancel Tender: NC
DOH/00912014 is declared unlawful and
constitutionally invalid;
4.
That the decision by the Head of Department to cancel Tender: NC
DOH/00912014 is reviewed and set
aside.
5.
That the Tender Offer Validity Period be and is hereby extended for a
period of 60 (sixty) days from
date of this order.
6.
That the Head of Department is ordered to ensure that the applicant's
bid is considered and adjudicated
upon in terms of the evaluation
methodology prescribed in Clause 10 of the bid document, within 60
(sixty) days calculated from
the date of this order.
7.
The first and second respondents are to pay the costs of the
application, the one paying, the other
to be absolved.
_______________________
MAMOSEBO
J
NORTHERN
CAPE DIVISION
I
concur
_______________________
SNYDERS
J
NORTHERN
CAPE
DIVISION
For
the applicant:
Adv A Vorster
Instructed
by:
VAlbert Hibbert Attorneys
Haarhoffs
Incorporated
For
the respondents:
Adv A Stanton
Instructed
by:
Office of the State Attorney
[1]
S 2
17
(I )
of
the Constitution of the Republic of South
Africa,
Act
I
08 of I 996
[2]
The Constitution
of
the Republic of South
Africa,
Act 108 of
1996
[3]
The Promotion of Justice Act 3 of 2000 (PAJA)
[4]
of Rules of Procedure for Judicial
Review
of
Administrative
Action (No. R966 of 09 October 2009)
[5]
Melane v Santam Insurance Co Ltd
1962
(4) SA 531
(A) at 532C-F:
[6]
in terms of
s 18(1)
of the
Promotion
of
Access to Information
Act,
2 of 2000
[7]
2014 (
1
) SA 604 (CC) at 615D -
E
( para 27)
[8]
2001 (2) BCLR 176 (SCA);
200
1
(
1)
SA 853(SCA)
para
36
[9]
[2003] 1 All
SA
424
(SCA);
2003 (2) SA 460
(SCA) at 466 para5
[10]
[2011] JOL 2661
7
(GN
P)
[11]
2006 (5) SA 47
(CC) at 698
-
D
(para 67)
[12]
Al
lpay
Consolidated Investment Holdings
(Pty)
Ltd and Others v Chief Executive Officer, South African
Social
Security Agency, and Others 2014 (
I
) SA 604 (CC) at 6
18
D- H (paras 36 and 37
[13]
The 1996 Constitution
[14]
2005 (6) SA 313 (SCA); [2005] ZASCA 43
[15]
2010 (4) SA 55 (CC)
[16]
of the Procurement
Framework
Regulations,
2011
[17]
At para 25
[18]
[2000] ZACC 1
;
2000 (2) SA 674
(CC) at 7090
-
H
(para 90)
[19]
2015 (5) SA 245
(CC) at 248 para
1.