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[2018] ZASCA 156
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CTP Limited and Others v Director-General Department of Basic Education and Others (447/2018) [2018] ZASCA 156 (20 November 2018)
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SUPREME
COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
No: 447/2018
In
the matter between:
CTP
LIMITED FIRST
APPELLANT
BONGANI RAINMAKER
LOGISTICS
(PTY) LTD SECOND
APPELLANT
NDABASE PRINTING
SOLUTIONS
CC THIRD
APPELLANT
and
THE
DIRECTOR-GENERAL
DEPARTMENT OF
BASIC
EDUCATION FIRST
RESPONDENT
THE MINISTER
OF
BASIC EDUCATION SECOND
RESPONDENT
LEBONE LITHO
PRINTERS
(PTY)
LTD THIRD
RESPONDENT
NOVUS
HOLDINGS LIMITED FOURTH
RESPONDENT
UTI
SA (PTY)
LTD FIFTH
RESPONDENT
THE
MINISTER OF FINANCE SIXTH
RESPONDENT
NATIONAL TREASURY
TRANSVERSAL
CONTRACTING
OFFICE SEVENTH
RESPONDENT
Neutral
citation:
CTP
JV and another
v
The
Director
-
General
Department of Basic Education and another
(447/2018)
[2018] ZASCA 156
(20 November 2018)
Coram:
Shongwe ADP,
Willis, Zondi, Mathopo JJA, and Mokgohloa
AJA
Heard:
14
September 2018
Delivered:
20
November 2018
Summary:
Procurement
process – Irregularities – Failure to treat bidders
equally – Implementation of consensus seeking
approach
unreasonable – Differential treatment of bidders tainted
process and rendered evaluation procedurally unfair
ORDER
On
appeal from
:
Gauteng Division of the High Court, Pretoria (Murphy J sitting as
court of first instance):
1.
The
appeal succeeds with costs, including costs of two counsel.
2.
The
order of the court a quo is set aside and replaced with the following
order:
‘
(a)
The decision of the first respondent to award the tender to Lebone
Consortium to provide the printing, packaging and distribution
of
workbooks to public schools from 1 April 2017 to 31 March 2020 with
the option of a further two year extension, is constitutionally
invalid.
(b)
The
operation of the invalidity order is suspended until 31 March 2020
pending the award of a lawful tender by the first respondent.
(c)
The
first to fifth respondents are ordered jointly and severally to pay
the applicants’ costs, including costs of two counsel.’
3.
CTP
JV’s and Lebone Consortium’s bids should be re-evaluated
in terms of the functionality stage by the newly constituted
BEC and
BAC.
JUDGMENT
Mokgohloa AJA
(Shongwe ADP, Willis; Zondi and Mathopo JJA concurring):
Introduction
[1] This is an
appeal against the judgment and order of the Gauteng Division of the
High Court, Pretoria dismissing the application
by the appellants
(CTP JV) for an order reviewing and setting aside a decision of the
first respondent, the Director General
Department of Basic
Education (DBE), awarding a tender to the third to fifth respondent
(Lebone Consortium). The tender was for
the printing, packaging and
distribution of workbooks to school learners across the country for
three years with the possibility
of a two year extension.
Background
[2]
Lebone Consortium has been the effective incumbent in respect of the
provision of workbooks since November 2011. On 13 November
2015,
National Treasury invited bids for the tendered work for the period 1
April 2006 to 31 March 2019. This would cover the provision
of the
workbooks for 2017, 2018 and 2019 school years with a possibility of
a further two-year extension. The closing date for
bids was 14
December 2015.
[3]
The tender documents included special conditions of contracts which
indicated that bids would be assessed in a four phase process:
first,
bidders would be measured for compliance against several mandatory
bid requirements; second, the functionality of bidders
would be
assessed against a pre-determined set of criteria and sub-criteria,
measuring a bidder’s ability to perform the
tendered work;
third, bidders which met the functionality threshold would be
allocated a score based on their price and empowerment
credentials;
and fourth, a recommendation and award would be made.
[4]
Clause 2.2 of the special conditions of the contract provided for the
evaluation of bids against four weighted functionality
criteria:
capacity (70%); operation strategy (15%); risk management strategy
(10%); and local economic development strategy (5%).
Capacity was to
be assessed against five sub – criteria: (a) proven experience
in printing, binding, packaging and delivery
of large volumes of
materials; (b) printing capacity; (c) labour capacity; (d) fleet
availability; and (e) warehousing equipment.
Each criterion and
sub–criterion was allocated a weight set out in a table, based
on its relative importance (the weighting
table). Bidders had to
attain a minimum score of 80% for functionality to qualify for
further consideration. The unusually high
level of the threshold was
in recognition of the functional complexity of the tender.
[5]
The high monetary value of the tender required a 90/10 preference
point system in the third phase, with 10 for Broad-Based Black
Economic Empowerment (BBBEE).
[6]
A briefing session was held on 2 December 2015. Thereafter on
8 December 2015, National Treasury distributed a functionality
score card which was intended to be used in conjunction with the
weighting table to determine if bidders met the 80% functionality
threshold.
[7]
In accordance with Regulation 16A6.2 of the Treasury Regulations
[1]
and the DBE’s Supply Chain Management Policy (SCMP), the
process had to first serve before a Bid Evaluation Committee (BEC).
The BEC would make a recommendation to the Bid Adjudication Committee
(BAC). The BAC in turn would make a recommendation to the
Director
General (DG) to make the final award.
[8]
Out of 11 bids received, only Lebone Consortium and CTP JV met the
mandatory requirements. The BEC proceeded to evaluate the
functionality of these two bids. Using the weighting table and the
score card, the BEC awarded Lebone Consortium a score of 93.2%
and
CTP JV a score of 62.67%. It excluded further consideration of CTP
JV’s bid for price and preference and recommended
the award of
the tender to Lebone Consortium. The BAC did not accept the
recommendation and it was suggested that the tender process
should
recommence. Subsequently, the tender was cancelled on 12 April 2016.
[9]
On 29 April 2016, CTP JV launched an application challenging the
lawfulness of the decision to cancel the tender. The
Rule 53
record and reasons revealed that the BEC had concluded that of the
eleven bids, only Lebone Consortium and CTP
JV had met
the minimum requirements, but CTP JV failed to pass the functionality
threshold and has thus been excluded. Upon receiving
this
information, CTP JV withdrew its application.
[10]
In the meantime, Lebone Consortium had filed a counter application
challenging the cancellation decision. This counter application
was
opposed by the DBE and CTP JV. The DBE accepted that the tender ought
to have been cancelled on the grounds, inter alia, that
the
application of the scorecard had caused some confusion to the
prejudice of CTP JV.
[11]
Whilst the decision to cancel the tender and the ensuing litigation
proceeding, an ad hoc arrangement was concluded between
Lebone
Consortium and the DBE to ensure that workbooks would be provided in
the 2017 school year.
[12]
Lebone Consortium’s application was ultimately settled when the
parties reached an agreement which was made an order
of court on
2 February 2017. The relevant parts of the order read as
follows:
‘
i)
The cancellation decisions were set aside.
ii)
The tender validity period was extended until 30 April 2017, and the
bids by Lebone Consortium and CTP JV were also extended
to this time
and could be supplemented only to the extent that this was “strictly
necessary to demonstrate that any agreements
and/ or undertakings
which may have expired and/or lapsed due to the effluxion of time
arising from the delay occasioned by this
litigation, have been
extended and/or replaced on a like for like basis, that in anyway
adds to or remove from the bids originally
submitted in December
2015.
iii)
The bids would be remitted to a new BEC appointed by the DG,
comprising people who had “not been previously involved
in any
aspect of the tender (including in the compilation of the terms of
reference for the tendered work; or participating in
the committees
which previously evaluated the bids submitted in response to the
tender invitation)”.
iv) The DG was
required to appoint independent advisors with expertise in state
procurement to assist the BEC in an advisory role
only, including an
attorney and an auditor, as well as an independent senior counsel who
had not been instructed or otherwise involved
in the earlier review
proceedings.
v)
The BEC would consider the matter on the basis that [Lebone]
Consortium and the CTP JV had met the minimum mandatory requirements
(Phase 1). It would thus commence with a functionality assessment,
based solely on the weighting table - and excluding the scorecard.
The 80% functionality threshold remained in place.
vi)The
new BEC had to finish its task by 1 March 2017. Thereafter the
recommendation would proceed to a new BAC, which would make
a
recommendation to the DG by 6 March 2017.
vii)
The final decision regarding the award of the tender would be made by
the DG by 13 March 2017.’
[13]
On 1 March 2017 the new BEC forwarded a report to the BAC which
recommended that the tendered work be awarded to Lebone Consortium.
The BAC met on 1 March 2017 and 3 March 2017, and similarly
recommended the appointment of Lebone Consortium. Based on these
recommendations,
the DG awarded the tender to Lebone Consortium on 12
March 2017. On 13 March 2017, the DG advised CTP JV that its
tender was
unsuccessful.
[14]
On 7 June 2017, CTP JV instituted proceedings in the high court
seeking to review and set aside the DG’s decision to
award the
tender to Lebone Consortium. The high court dismissed each of CTP
JV’s review grounds. With leave of the high court,
CTP JV now
appeals against that decision.
[15] CTP JV’s
grounds of appeal are four-fold: (a) material irregularities in the
scoring process; (b) failure to consider
senior counsel’s
opinion; (c) failure to have an independent senior counsel appointed
and available to assist the BEC; and
(d) improper involvement of Mr
Subban. Each of these grounds will be considered later.
The Law
[16] The starting
point for an evaluation of the proper approach to an assessment of
the constitutional validity of outcomes under
the state procurement
process is s 217 of the Constitution which provides that:
‘
217
Procurement
(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.’
[17]
The framework within which the policy must be implemented is
prescribed in the Preferential Procurement Policy Framework Act
5 of
2000 (the Procurement Act) and the Public Finance Management Act 1 0f
1999 (the PFMA).
[18]
The proper approach to tender reviews was established in
Allpay
Consolidated Investment Holdings (Pty) Ltd & others v Chief
Executive
Officer of the South African Social Security Agency & others
[2]
as follows:
‘
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 that is done,
the potential practical difficulties that may flow from declaring the
administrative action constitutionally
invalid must be dealt with
under the just and equitable remedies provided for by the
Constitution and PAJA. Indeed, it may
often be inequitable to
require the re-running of the flawed tender process if it can be
confidently predicted that the result
will be the same.’
The consideration
of the bids by the new BEC
[19]
The newly constituted BEC was chaired by Dr Whittle who was the
Deputy DG of the DBE. He was assisted by five high-ranking
officials,
two from the DBE and three from other national departments. The BEC
met on four occasions (on 20 February 2017, 22 February
2017, 24
February 2017, and 28 February 2017). Dr Whittle at the first meeting
noted that the BEC was comprised of very experienced
supply chain
management people. He noted further that this indicated the
seriousness with which the DG and the Minister were approaching
this
matter and that auditors and attorneys were present to ensure a
transparent and fair process.
[3]
[20]
In accordance with the court order, the BEC’s evaluation
process had to commence with scoring the functionality of the
competing bids, (i.e. Lebone Consortium and CTP JV). The court order
also retained the 80% functionality threshold.
[21]
From the onset, the members of the BEC were uncertain about how to
proceed with the scoring. This difficulty was compounded
by the
exclusion of the second scorecard which had provided values to guide
the allocation of a score for any criterion or sub-criterion.
The
weighting table, standing alone, indicated the relative importance of
each line item, but gave no guidance to individual members
of the BEC
regarding the allocation of a score.
[22]
In order to solve this problem, the BEC resolved to first score the
bids individually, allocating ‘raw scores’,
and
thereafter they would discuss their scores and have an opportunity to
adjust them. This approach was described by one member
of the BEC as
‘bringing it to the team level’.
[23] The BEC’s
chosen modus operandi as reflected in the minutes of the meeting of
24 February 2017, was as follows:
‘
4.1
The Chairperson indicated that the Committee would commence by
checking the scores allocated for both bidders (CTP Limited JV
and
Lebone Consortium) and see if there were huge discrepancies.
(a) The Committee
should give the total score and if there were huge discrepancies the
Committee would take a discussion on individual
marks on the score
sheets.
(b) It was suggested
that the Secretariat should record the scores and give the aggregates
scores to both bidders. Based on the
scores given then a discussion
would take place.
(c) It was indicated
that the Committee should first agree if they would work on consensus
or average. The Committee agreed to work
on consensus and not
aggregate; the notes would form part of the recommendation.
(d) If there were
outliers, explanation should be provided on how the evaluator arrived
at those scores. If scores are fairly closely
clustered it would be
an easier discussion.
.
. . .
(f) CTP JV was
scored at 80 points and Lebone Consortium was scored at 92.6 points.
(g) There was a
general consensus that Lebone Consortium was the first bidder to
score the minimum required points on functionality.
(h)
The Committee took a discussion on individual scores (per
functionality criterion) for CTP JV.’
[24] According to
this methodology, the consensus seeking process began with the five
scoring members of the BEC revealing their
overall raw scores for
each bidder, and an average was taken for each. It is recorded in the
BEC minutes that in the initial round
of scoring and averaging, each
member of the BEC scored CTP JV as follows: 80; 84; 75; 87, and 74,
with the average score of the
required threshold of 80%. Lebone
Consortium was scored as follows: 92; 89; 89; 97; and 96, with the
average of 92.6%. After further
discussion and moderation of CTP JV’s
bid, the BEC members changed their scores as follows: from 80 to 81,
from 84 to 78,
from 75 to 77, from 87 to 85, and 74 remained
unchanged. The average score of the CTP JV’s bid was thus
reduced from 80%
to 79%. This resulted in CTP JV failing to meet the
functionality threshold. No similar moderation was done in respect of
Lebone
Consortium bid, which was considered functionality compliant
on the initial raw scoring process on account of the very high scores
awarded by all members of the BEC.
[25]
Most of the debate during moderation of CTP JV’s bid related to
the fleet availability and warehousing equipment sub-criteria
of
capacity requirement. Some members expressed concern that some of the
motor vehicles that would be used by CTP JV due to their
age and
size, were not suited for the tender requirements. As a result CTP
JV’s score on fleet availability was brought down
by almost one
full point. As regards warehousing requirement, some members of the
BEC found that CTP JV did not have the full complement
of warehouse
equipment and after discussions, the scores on this criterion were
reduced from 9.4 to 8.4.
[26] I now return to
appellants’ grounds of appeal.
Material
irregularities in the scoring process and deviation from the
implementation guide
[27]
CTP JV contended that in terms of the court order, the BEC was
required to use the weighted functionality scorecard provided
in the
special conditions when scoring bids for functionality with the
qualification threshold of 80%. There was therefore no need
to resort
to a moderation or consensus-seeking process. Initially when the BEC
considered and scored bids, and before moderation,
CTP JV had
attained an average score of 80% and Lebone Consortium received an
average score of 92.6%. Thus both bidders met the
stringent 80%
functionality requirement. The BEC was thus obliged to have assessed
both bids on price and BBBEE in terms of the
court order and
Regulation 5(7) of the Procurement Regulations which provides
that each tender that obtained the minimum qualifying
score for
functionality must be evaluated further in terms of price and the
preference point system.
[28]
CTP JV submitted further that the moderation process in any event did
not achieve consensus because two of the five BEC members
still gave
CTP JV a score over 80%. The BEC, CTP JV argued, ought accordingly to
have reverted to the original average score of
80%. Indeed, Lebone
Consortium’s original average score was the basis upon which it
was judged to be functionally compliant.
This, CTP JV stated, was
unreasonable and unfair particularly in that the BEC only pursued a
moderation of raw scores allocated
to CTP JV and did not do the same
in respect of Lebone Consortium bid. CTP JV maintained that its
exclusion from an assessment
on price and B-BBEE was procedurally
unfair and unreasonable, and rendered the tender process unfair and
uncompetitive, contrary
to the provisions of s 217 of the
Constitution.
[29]
Whilst reluctantly conceding that the use of the consensus approach
led to the unequal treatment of the bidders, Lebone Consortium
argued
that the BEC was free to establish its own process. It followed this
approach in order to overcome the problem caused by
the absence of a
scoreboard.
[30]
Regarding the deviation from the implementation guide, it has to be
noted that this guide is not legislation but a policy.
The objects of
a policy are to achieve reasonable and consistent decision making, to
provide a guide and a measure of certainty
to the public.
[4]
It is trite that when the government makes a policy, its officials
are not entitled to simply ignore it, but must act in accordance
with
it. They can only deviate from it if there is a reasonable basis for
such deviation in which case that basis should be clearly
articulated.
[5]
[31] The relevant
parts of implementation guide are contained in paragraphs 11, which
reads:
‘
11.1.4
Score sheets should be prepared and provided to panel members to
evaluate the bids.
11.1.5 The score
sheet should contain all the criteria and the weight for each
criterion as well as the values to be applied for
evaluation as
indicated in the bid documents.
11.1.6
Each panel member should after thorough evaluation independently
award his/her own value to each individual criterion.’
In
summary the implementation guide stipulates a process of evaluating
functionality in terms of which each member must assess and
score the
bids independently, following which an average of the scores must be
calculated.
[32]
CTP JV contended that when the BEC opted to evaluate its bid on a
consensus basis at a team level, it departed from the provisions
of
the implementation guide which required the members of the BEC to
score the bids independently and to award their own scores.
It
maintained that the consensus-seeking approach by the BEC was a
rescoring designed to remove CTP JV from contention and to favour
Lebone Consortium. This, the contention proceeded, was done despite a
very significant price discrepancy between the two bids bringing
the
competitiveness and cost-effectiveness of Lebone Consortium bid into
question. CTP JV submitted that since the approach adopted
by the BEC
did not in fact reach its desired purpose of achieving consensus, the
BEC should have reverted to the original average
score of 80%.
[33]
Lebone Consortium submitted that it would have been irrational to
revert to the first round scores, as this would have taken
away the
BEC’s entire focus on consensus-seeking as a laudable outcome.
No one was compelled to make these changes, which
were explicitly
based on the recognition that this raw score was inaccurate (either
because it was too high or too low). The fact
that there were still
differences of opinion did not indicate that the consensus-seeking
process was a failure, it merely indicated
that it had gone as far as
was possible. It would be irrational to ignore the fact that members
had freely acknowledged that their
raw scores were wrong, or
out-of-kilter with those of their colleagues.
[34]
The question then is whether the BEC’s deviation from the
implementation guide was justifiable. The DBE justified the
deviation
on the grounds that the court order excluded the use of the scorecard
and therefore only the weighting table could be
used. It contended
that in complex tenders it is preferable to adopt a consensus rather
than averaging approach. The DBE contended
further that an approach
based on unmoderated scores, and an approach based on averages rather
than consensus, is subjective. It
claimed that the officials of the
BEC were all senior and experienced, this mitigated the dangers of
members influencing each other’s
scores.
[35]
Lebone Consortium argued that there was consensus amongst all members
of the BEC that it far exceeded the 80% functionality
threshold.
Given the high score it received, there was thus no realistic
possibility that the discussion of its bid would have
pushed it below
80%. Thus scrutinizing the individual score of each members of the
BEC would have been a foregone conclusion and
a waste of time.
[36] The court a quo
held that the BEC was not at liberty to do as it may wish. Although
there is room for flexibility in matching
an evaluation process to
the nature of a bid with regard to its value, technical requirements
and complexity, the court a quo held
that a BEC is always obliged to
follow applicable legislative prescription and a process that is
aimed at achieving the constitutional
objectives of a fair,
equitable, transparent, competitive and cost-effective procurement
process. It however held that the differential
treatment of the two
bids was rational, fair and consistent with s 217 of the
Constitution.
[37] The court a quo
held further that there was no need to revisit the issues of
functionality of Lebone Consortium because, given
the initial scores
awarded to it in the two evaluations, and its historical performance
of the tender, it was highly unlikely that
it stood, any chance of
being disqualified on functionality. The court a quo stated:
‘
I
agree with the respondents that the choice of procedure for that
purpose was reasonable in the peculiar circumstances. The
differential
approach to the bids has a rational basis and connection
to the governmental purpose of objectively evaluating the bids. The
approach,
albeit unorthodox, was not materially irregular in that the
purpose of the tender requirements in relation to the evaluation of
functionality was substantively achieved. Moreover, the process
followed was fair and open. Such a conclusion does not comprise
the
“no difference principle” rejected in
All
Pay
(1).’
[38]
In my view, the approach of the court a quo is at odds and
compromises the ‘no difference principle’ rejected in
All
Pay
1.
It conflates procedure and merit by considering that it was
inconsequential and made no difference to the outcome, by predicting
that the result would be a foregone conclusion. It committed the
error identified in
All
Pay
1
in that it considered that the inevitability of a certain outcome is
a factor that should be considered in determining the validity
of
administrative action.
[39]
As stated in
AllPay
1,
[6]
‘[the approach]
undermines the role procedural requirements play in ensuring even
treatment of all bidders. . . . it overlooks
that the purpose of a
fair process which is to ensure the best outcome’. For the
court a quo to hold that it was not necessary
to subject Lebone
Consortium’s bid under moderation because the result would have
been a foregone conclusion, compromised
the process leading to the
bid’s success. Absent any proper evaluation of the bids,
it is difficult to fathom with
certainty what course the process
might have taken if the process of moderation was applied to Lebone
Consortium’s bid.
[40] Although there
was no suggestion of corruption in the adoption of a
consensus-seeking approach adopted by the BEC, it falls
short of the
standard required. It is not so much the separate incidents taken
individually that matters but the aggregate or ‘cluster’
of certain facts. These are (i) the revisiting of the score card of
the CTP JV in regard to the ‘functionality test’;
(ii)
doing so after it had ‘passed’ ( albeit narrowly and not
in the estimation of all the members of the BEC); (iii)
not redoing
the scoring in this regard for the Lebone Consortium ( even though
all members of the BEC were comfortable with the
fact that it had
easily satisfied the necessary requirements); and (iv) thereafter
disqualifying the CTP JV on the ground that
it had failed to meet the
functionality requirement. One is left with a residual sense of
unease. It cannot be said that, viewed
objectively, the exclusion of
CTP JV from further consideration on the ground that it had failed
the functionality test, was fair
in all the circumstances of the
case. A high standard is required. Accordingly, the decision to award
the tender to Lebone Consortium
cannot pass constitutional muster in
terms of s 217 of the Constitution.
Failure to
consider the opinion of Senior Counsel
[41]
The court order directed the DG of the DBE to appoint independent
advisors to assist the BEC in an advisory role only. One
such advisor
had to be an independent senior counsel with procurement expertise.
Pursuant thereto, Ellis SC was briefed to
give advice on aspects of
the process adopted by the BEC. His finding was that there had been
material irregularities in the BEC’s
process and that the
scoring on functionality was irrational, unfair and inequitable. In
his opinion, based on the raw scores of
both bidders, they both
should have been considered for pricing and BBBEE compliance in the
next round. He then recommended that
the matter be returned to the
BEC for consideration.
[42]
CTP JV contended that the DG failed to consider Ellis SC’s
opinion. The DG in his answering stated that he perused Ellis
SC’s
opinion. This averment is not challenged by CTP JV in their replying
affidavit. The fact that the DG did not mention
the opinion of
Ellis SC in his reasons for awarding a tender to Lebone Consortium
does not in itself mean that he had not considered
the opinion.
Furthermore the role of Ellis SC was merely to provide advice. The
court order did not explicitly or impliedly require
that Ellis be
present at the meetings of the BEC and neither was he expressly made
a member of the BEC. The appointment of advisors
was in my view, a
safeguard and not a requirement.
[43]
It has to be noted that the opinion of Ellis SC was undoubtedly a
relevant consideration that could not be ignored. However,
that does
not mean that the opinion had to be followed as this would amount to
an administrator being dictated to by his/her legal
representative.
As stated in
Walele
v City of Cape Town & others
[7]
a decision maker should not merely accept the opinion of a technical
expert, but must independently apply his mind in making a
final
decision and that may include not following expert advice, which he
considers wrong. In the premises I find that the evidence
does not
disclose any reviewable irregularity.
The involvement
of Mr Subban
[44]
CTP JV submitted that Mr Subban, as the project manager for the
tender, should not have been allowed to give a presentation
to the
newly appointed BEC. This submission is based on the fact that the
court order expressly excluded the involvement of any
person who was
previously involved in any aspect of the tender to serve on the newly
appointed BEC. CTP JV submitted further that
Mr Subban in his
presentation, changed the specification of the tender and created new
requirements which were not identified in
the special conditions. The
new requirements are stated as identifying specific risk management
strategy, elevated delivery above
other factors, and made reference
to super link vehicles.
[45] It is rational
for the members of the BEC to make use of the expertise of the most
senior official responsible for the workbook
project in order to
understand the criteria of functionality specified in the bid. As
long as this official does not participate
in the BEC’s
deliberations or decision making. The project manager employed
by DBE would not advise them on the issues
because he had also being
previously involved in the tender process. Mr Subban’s comments
about risk management related to
the risk which ought to be dealt
with in a risk management strategy which is not new to any tendered
work. His observation that
delivery is the most critical part of the
tender, and his reference to 22-wheel super-link trucks, is
self-evident as this tender
is for printing and delivery of
workbooks. Equally important is the use of large vehicles that
will be able to transport
volumes of books across the country. There
is no evidence that Mr Subban participated in the BEC’s
deliberations and
decision making. I find that the involvement of Mr
Subban did not affect the integrity of the bid.
Remedy
[46]
I have found that the decision to award the tender to Lebone
Consortium is in terms of s 6(2)(i) of the Promotion of
Administrative Justice Act (PAJA)
[8]
constitutionally invalid as it violates the requirements of equity,
transparency and objectivity under s 217 of the Constitution.
It
therefore follows that that decision to award the tender to Lebone
Consortium should be declared unlawful in terms of s 172(1)(a)
of the
Constitution. In
AllPay
1
[9]
the Constitutional Court pointed out that once a ground of review
under PAJA has been established there is no room to shy away
from it.
What falls to be considered, are the consequences of the declaration
of invalidity. This involves the determination of
a remedy under s
172(1)(b) of the Constitution and s 8 of PAJA which allows a court
upon declaration of invalidity to make an order
which is just and
equitable. This so because there is a clear distinction between the
constitutional invalidity of administrative
action and the just and
equitable remedy that may flow from it.
[47]
CTP JV, as an aggrieved party is entitled to an appropriate and
effective remedy. But that remedy must be fair to those affected
by
it and yet vindicate effectively the right violated.
[10]
The remedy must be aimed at correcting or reversing the consequences
of the decision taken by the DBE.
[48]
In
AllPay
2
Froneman J stated
[11]
:
‘
This
corrective principle operates at different levels. First, it must be
applied to correct the wrongs that led to the declaration
of
invalidity in the particular case. This must be done by having due
regard to the constitutional principles governing public
procurement,
as well as the more specific purposes of the Agency Act. Secondly, in
the context of public procurement matters generally
priority must be
given to the public good. This means that the public interest must be
assessed not only in relation to the immediate
consequence of
invalidity – in this case the setting aside of the contract
between SASSA and Cash Paymaster – but also
in relation to the
effect of the order on future procurement and social – security
matters’.
[49]
The determination of the just and equitable remedy must be undertaken
in light of the following facts which are either common
cause or were
not seriously disputed. The tender was awarded from 1 April 2017
until 2020 for printing and delivery of workbooks
for the 2018, 2019
and 2020 academic years. After March 2020, it will be subject to
discretionary extension for further two years.
The primary
beneficiaries of the tender are learners and teachers. Due weight
must be given to them as they are most closely associated
with the
benefits of the tender contract. In my view, an order that will
result in the disruption in the teaching and learning
will not be
just and equitable and will be counter – productive as it will
result in hurting those who were meant to benefit
from it. An order
that will result in the violation of the learners’ right to
basic education should be avoided. Provision
of school workbooks
should continue without disruption as education is a constitutional
imperative.
[50]
The parties, recognizing the need to keep the tender contract in
place pending the correction of the invalid decision are agreed
that
it would be just and equitable to suspend the declaration of
invalidity for a limited period while a new tender is undertaken
to
permit Lebone Consortium to perform under the current tender
contract. They, however, disagree on the period of suspension.
CTP JV
contends that the declaration of invalidity should be suspended until
31 March 2019. Lebone Consortium contends that the
declaration of
invalidity should be suspended to allow it to remain in place to
provide workbooks for the 2020 school year. This
contention was
advanced on the basis of the allegation that all bidders including
Lebone Consortium and CTP JV submitted their
bids on the basis that
they would receive a tender award for at least three years. This fact
they took into account in the pricing
of bids, the conclusion of
leases and employment contracts with their employees and other third
parties to enable them to discharge
their obligation under the tender
contract. The Lebone Consortium justifies its contention also on the
basis of time required to
prepare for the provision of workbooks. In
this regard, it contends that the process of design and printing and
collection of data
relating to each school’s requirements for
the 2020 school year has to commence as early as November/December
2018 for the
delivery of the workbooks to take place in January 2020.
[51] In the
circumstances of this matter, given the affluxion of time, the need
to protect the interests of the learners who are
closely associated
with the benefits of the tender contract and that Lebone Consortium
is an innocent tenderer, an order suspending
the declaration of
invalidity of the tender award until 31 March 2020 will be just and
equitable. This will ensure an uninterrupted
provision of workbooks
to the learners and also afford Lebone Consortium an opportunity to
rearrange its contractual relationship
it entered into with third
parties pursuant to the tender contract.
Order
1. The appeal
succeeds with costs, including costs of two counsel.
2. The order of the
court a quo is set aside and replaced with the following order:
‘
(a)
The decision of the first respondent to award the tender to Lebone
Consortium to provide the printing, packaging and distribution
of
workbooks to public schools from 1 April 2017 to 31 March 2020 with
the option of a further two year extension, is constitutionally
invalid.
(b) The operation of
the invalidity order is suspended until 31 March 2020 pending the
award of a lawful tender by the first respondent.
(c) The first to the
fifth respondents are ordered jointly and severally to
pay the applicants’ costs, including
costs of two counsel.’
3. CTP JV’s
and Lebone Consortium’s bids should be re-evaluated in terms of
the functionality stage by the newly constituted
BEC and BAC.
__________________
FE MOKGOHLOA
ACTING JUDGE OF
APPEAL
APPEARANCES
For
the Appellants: S Bundlender (with him A Coutsoudis and M Mbikiwa)
Instructed
by:
Nortons
Inc, Sandton
McIntyre
van der Post, Bloemfontein
For
the First and Second Respondent: M C Erasmus SC (with him E M
Baloyi-Mere and R M Molea
Instructed
by:
The
State Attorney, Pretoria
The
State Attorney, Bloemfontein
For
the Third to Fifth Respondent: G Cilliers SC (with him I Hussain SC
and D Borgstrom)
Instructed
by:
O’Donovan Attorneys,
Johannesburg
Phatshoane
Henney Inc Attorneys, Bloemfontein
[1]
Treasury
Regulation,
GN
R225, GG 27388 of 15 March 2005.
[2]
Allpay Consolidated
Investment Holdings (Pty) Ltd & others v Chief Executive Officer
of the South African Social Security
Agency & others
[2013] ZACC 42
;
2014 (1) SA 604
(CC) (
ALLPAY
1) para 28 – 29.
[3]
Minutes of meeting held on 20
February 2017.
[4]
Arun
Property Development (Pty) Ltd v City of Cape Town
2015 (2) SA 584
(CC) para 47; [2014] ZACC 37
[5]
Kaunda &
others v President of the Republic of South Africa & others
2005
(4) SA 235
(CC) paras 99 and 127.
[6]
Fn 2 para 24.
[7]
[2008] ZACC
11
;
2008 (6) SA
129
(CC) para 69.
[8]
Promotion of Administrative
Justice Act 3 of 2000
[9]
Fn 2 para 25
[10]
Fn 2 para 26
[11]
AllPay Consolidated
Investment v CEO, SA Social Security Agency
2014
(4) SA 179
(CC) para 32;
[2014] ZACC 12