Brief Summary

Tender — Urgent application for interim interdict — Dimension Data (Pty) Ltd sought to prevent the implementation of a tender awarded by the State Information Technology Agency (SITA) pending a review of the tender process — The applicant's consortium was disqualified from the tender due to non-compliance with technical requirements — SITA raised a defense of non-joinder regarding other bidders — Court held that the applicant had made reasonable attempts to obtain information about the winning bidders and that SITA's refusal to disclose this information was in bad faith — Interim interdict granted, preventing SITA from further implementing the tender and ordering disclosure of relevant documentation to the applicant.

Comprehensive Summary

Summary of Judgment

1. Introduction

This judgment concerns an urgent application for interim interdictory relief pending the final determination of a tender review (to be pursued under Part B of the notice of motion). The interim relief sought in Part A was aimed at preventing further implementation of a tender award relating to the provision of IT networking services and CISCO OEM products to government departments.

The proceedings were instituted by Dimension Data (Pty) Ltd as the effective applicant at the hearing. Although Nambiti Technologies (Pty) Ltd and Yotta Zetta (Pty) Ltd were initially cited as co-applicants, they withdrew support for the urgent relief prior to argument. The first respondent was the State Information Technology Agency (SOC) Ltd (SITA), a statutory procurement agency for government. The second respondent was EOH Mthombo (Pty) Ltd, which had been a member of the bidding consortium but was cited as a respondent.

The procedural background, as accepted by the court for purposes of urgency and interim relief, was that the applicant’s consortium (the Akono Consortium) participated in SITA’s Request for Bids RFB 1221/2014. The consortium was ultimately disqualified, and the applicant was informed of the unsuccessful outcome by letter dated 29 January 2016 (received on 8 February 2016). After a sequence of requests for debriefing and documentation, and after SITA declined to give an undertaking not to proceed with implementation pending review, the applicant launched the urgent application on 11 April 2016.

The general subject-matter of the dispute was the lawfulness and fairness of the tender process and tender award, particularly against the constitutional and statutory procurement framework, and whether the applicant had shown sufficient basis to freeze implementation pending the review.

2. Material Facts

SITA issued RFB 1221/2014, a tender process connected to networking services and CISCO OEM-related procurement for government departments. The applicant (Dimension Data) was the main member of the Akono Consortium, which also included Nambiti, Yotta Zetta (Zetta), and EOH Mthombo. The consortium was not a separate legal entity and existed only to bid for this tender.

It was common cause that the Akono bid was disqualified, and that the disqualification was linked to alleged non-compliance by Zetta with three identified tender requirements. The reasons for disqualification (as recorded in the “Functional / Technical Evaluation Report” dated 20 April 2015) were that Zetta did not provide reference letters, did not provide proof of residence, and did not provide letters by an accounting officer or from registered auditors. The applicant’s position was that Zetta’s role was administrative rather than technical, and that the technical requirements should have been assessed with regard to the members responsible for technical execution. SITA maintained that the requirements applied and that consortia were expected to have premises to meet a national footprint requirement, with a period of six months mentioned in relation to establishing premises for BBBEE entities.

A further central factual feature (treated by the court as significant and, in key respects, undisputed) was that SITA did not conduct price evaluations or BBBEE evaluations before awarding the tender. The tender documentation expressly committed evaluation to the PPPFA 90/10 evaluation system. Despite this, SITA’s internal documentation reflected shifting positions over time. In April 2015, SITA’s acquisition management recommended cancellation because price evaluators could not conduct a comparative price evaluation on the costing model provided (where bids were framed as percentage mark-ups rather than Rand prices), leaving SITA unable to determine a winning bidder. In August 2015, documents suggested that bids were analysed and scored under a 90/10 system. Later, in October and December 2015, documents again recorded that price evaluation was not conducted and would be applied only at the RFQ stage, and likewise that BBBEE evaluation was not conducted and would also be applied at the RFQ stage.

On urgency and joinder-related facts, the court accepted that the applicant repeatedly sought information from SITA—particularly the identity of the winning consortium and details of implementation steps—to enable proper litigation management, including potential joinder. SITA initially refused to disclose certain information as “confidential”, only disclosing key details later (including that the winning consortium was led by Business Connexion (Pty) Ltd) and simultaneously raising non-joinder complaints in its answering affidavit.

SITA contended that the matter was effectively academic, alleging that the bulk of the R1 billion budget had been spent, with only around R300 million remaining to be spent soon. The court treated these assertions as relevant to urgency and the potential practical effect of relief, and noted the lack of specificity in SITA’s disclosure on spending and implementation.

3. Legal Issues

The primary legal questions were whether the applicant satisfied the requirements for an interim interdict pending a review, namely whether there was a prima facie right (though open to some doubt), a reasonable apprehension of irreparable harm, a favourable balance of convenience, and the absence of an adequate alternative remedy.

A further set of legal issues concerned procedural and threshold objections, including whether the matter was urgent, whether it had become academic, and whether the application was defective for non-joinder of (i) the initial co-applicants who later withdrew support and (ii) successful and unsuccessful bidders and government departments alleged to have placed orders. An additional issue was SITA’s application to strike out in terms of Rule 6(15).

The dispute required the court to make determinations involving the application of legal standards to the facts, particularly procurement legality and interim interdict principles. It also required evaluative judgments, especially regarding urgency, balance of convenience, the significance of alleged procurement irregularities for prima facie prospects of success, and the appropriateness of a punitive costs order.

4. Court’s Reasoning

The court located the dispute within the constitutional procurement framework, emphasising that section 217 of the Constitution requires procurement systems to be fair, equitable, transparent, competitive and cost-effective. The court further considered the statutory procurement scheme, including the Preferential Procurement Policy Framework Act 5 of 2000 (PPPFA) and the Preferential Procurement Regulations, 2011, as well as the Public Finance Management Act provisions reaffirming procurement standards. The court also noted that tender challenges ultimately fall to be assessed under PAJA, which guarantees administrative action that is lawful, reasonable, and procedurally fair, and provides review grounds under section 6.

A significant feature of the court’s reasoning was its emphasis that the fairness and lawfulness of a procurement process must be assessed with attention to the process, not merely the substantive correctness of the result. The court accepted that an applicant may rely on alleged irregularities to demonstrate potential review grounds, consistent with the approach articulated in Allpay.

On non-joinder, the court rejected SITA’s contention that the applicant should have joined Nambiti and Zetta as respondents after they withdrew support, noting that they were aware of the proceedings and had not filed opposition. As to the argument that successful bidders, other participants, and relevant government departments should have been joined, the court gave weight to the chronology showing that the applicant had sought information needed to effect joinder but that SITA had refused disclosure until after the application was launched. The court regarded it as significant that SITA had withheld information on “confidentiality” grounds yet disclosed it later while raising non-joinder. The court drew a negative inference from the timing and manner in which SITA raised non-joinder, describing it as conduct suggestive of bad faith and inconsistent with a state organ’s obligation not to frustrate effective judicial remedies, referring to Gauteng Gambling Board and Another v MEC for Economic Development, Gauteng 2013 (5) SA 24 (SCA) and authorities cited therein on interference with the administration of justice.

On urgency, the court accepted the applicant’s timeline as demonstrating sustained efforts to obtain debriefing and documentation, and attempts to secure an undertaking to suspend implementation pending review. The court was not persuaded that urgency was self-created. It also considered SITA’s own allegations about rapid expenditure of remaining funds as reinforcing the risk that review relief would become practically hollow without interim intervention.

Turning to the interim interdict requirements, the court applied the established test (as drawn from Olympic Passenger Service (Pty) Ltd v Ramlagan 1957 (2) SA 382 (D)). In assessing the prima facie right, the court emphasised that, at this stage, the applicant needed only to show prospects of success in the review, though open to doubt, alongside the other interdict requirements.

Although the applicant relied on five alleged procurement irregularities, the court held that it was unnecessary to decide all of them for interim purposes because the applicant had shown a prima facie case on at least two. The first was the failure to conduct price and BBBEE evaluations. The court reasoned that the invitation to bid expressly committed SITA to evaluation under the PPPFA 90/10 system. Since that system requires scoring of price and BBBEE, the absence of any price and BBBEE evaluation prior to award was treated as a serious irregularity. The court accepted that SITA’s own documentation reflected inconsistency over time as to whether and how price scoring occurred, and that later documentation plainly stated that price and BBBEE evaluation were deferred to the RFQ stage. The court considered this relocation of mandatory evaluation stages to be prima facie unlawful, particularly given the statutory scheme and the tender’s own commitments.

In relation to BBBEE evaluation, the court underlined the constitutional importance of transformation and economic redress in procurement, and relied on Allpay Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer, South African Social Security Agency, and Others 2014 (1) SA 604 (CC) for the proposition that proper investigation and confirmation of empowerment credentials is mandatory and becomes even more crucial where there is no effective competitive constraint at the later stage. On the papers, it was common cause that BBBEE evaluation was not conducted before the award, supporting the conclusion of a prima facie irregularity.

The court also addressed (though it stated this was not strictly necessary) the complaint concerning the disqualification of the Akono bid due to Zetta’s alleged non-compliance. The court found there to be some merit in the applicant’s submission that the evaluation did not reflect consideration of the consortium’s structure and the delineated roles of members, particularly where the technically executing members (Dimension Data, EOH, and Nambiti) had complied. The court further considered the applicant’s contention that SITA could have sought clarification, especially given that SITA had allowed another consortium (Ubuntu) an opportunity to supplement missing documentation. The court treated this disparity as supporting the prima facie case that the evaluation process may not have been fair.

On irreparable harm, the court accepted that without interim relief the matter could be rendered academic through implementation, and that the applicant had demonstrated a reasonable apprehension of irreparable harm associated with alleged unfair treatment in adjudication and the practical consequences of expenditure and contract execution.

On the absence of an alternative remedy, the court accepted that damages would not be an adequate remedy in this context, highlighting the difficulty of pursuing purely economic loss claims arising from tender disputes.

On balance of convenience, the court applied the principle that prospects of success and balance of convenience are weighed together, as articulated in Olympic Passenger Service. While SITA emphasised prejudice to public service delivery (including orders by the South African Police Service), the court considered that refusing interim relief risked rendering the review academic, and that there was a public interest in scrutiny of the tender under Part B. The court therefore found the balance of convenience favoured granting the interdict.

On costs, the court granted costs on an attorney and client scale, linking this to its disapproval of SITA’s conduct in the litigation context and the principle that state organs should not behave in a manner that undermines the availability of effective remedies, with reference to Gauteng Gambling Board.

Finally, the court dismissed SITA’s Rule 6(15) strike-out application, noting that SITA sought to strike out the founding affidavit as a whole and failed to identify the specific passages objected to as required.

5. Outcome and Relief

The court granted interim relief pending final determination of Part B. SITA was interdicted from further implementing the tender award (RFB 1221/2014) and from taking steps to procure goods or services pursuant to the tender pending the review.

SITA was directed to provide the applicant, within 15 days, with copies of documentation reflecting any advisory opinions, written views, letters or reports from the Competition Commission relating to competition issues in respect of the tender, as well as all correspondence and communications between SITA and the Competition Commission on those issues.

SITA was ordered to pay the applicant’s costs on an attorney and client scale, including the costs of two counsel. SITA’s application to strike out in terms of Rule 6(15) was dismissed.

Cases Cited

Allpay Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer, South African Social Security Agency, and Others 2014 (1) SA 604 (CC).

Agri South Africa v Minister for Minerals and Energy 2013 (4) SA 1 (CC).

Fose v Minister of Safety and Security 1997 (3) SA 786 (CC).

Gauteng Gambling Board and Another v MEC for Economic Development, Gauteng 2013 (5) SA 24 (SCA).

Li Kui Yu v Superintendent of Labourers 1906 TS 181.

Logbro Properties CC v Bedderson NO and Others 2003 (2) SA 460 (SCA).

Olympic Passenger Service (Pty) Ltd v Ramlagan 1957 (2) SA 382 (D).

Tswelopele Non-Profit Organisation and Others v City of Tshwane Metropolitan Municipality and Others 2007 (6) SA 511 (SCA).

Legislation Cited

Constitution of the Republic of South Africa, 1996 (Act 108 of 1996), section 217.

State Information Technology Agency Act 88 of 1988, section 7(g).

Preferential Procurement Policy Framework Act 5 of 2000.

Preferential Procurement Regulations, 2011 (published under GN R502 in Government Gazette 34350 of 8 June 2011, effective 7 December 2011).

Public Finance Management Act 1 of 1999, section 51(1)(a)(iii).

Promotion of Administrative Justice Act 3 of 2000.

Broad-Based Black Economic Empowerment Act 53 of 2003.

Promotion of Access to Information Act 2 of 2000.

Rules of Court Cited

Uniform Rules of Court, Rule 6(15).

Held

The court held that the application was urgent and that urgency was not self-created, given the applicant’s attempts to obtain information, a debriefing, and an undertaking to suspend implementation pending review, coupled with SITA’s lack of transparency and the risk that implementation would render the review academic.

The court held that SITA’s non-joinder complaints could not succeed in the circumstances where SITA withheld information needed to identify and join interested parties until after proceedings were launched, and where joining additional parties at that stage would undermine effective relief. The court expressed disapproval of litigation conduct by a state organ that tends to frustrate judicial remedies.

On the merits of interim relief, the court held that the applicant established a prima facie right, though open to doubt, primarily because the tender award process was prima facie irregular in that SITA did not conduct mandatory price and BBBEE evaluations before awarding the tender, notwithstanding statutory requirements and the tender’s express adoption of the PPPFA 90/10 system. The court further held that there was at least some merit in the contention that the disqualification of the Akono Consortium was irregularly reached.

The court held that the applicant demonstrated a reasonable apprehension of irreparable harm, that no adequate alternative remedy existed, and that the balance of convenience favoured preserving the status quo pending review, particularly to avoid the review becoming academic and to serve the public interest in lawful procurement.

LEGAL PRINCIPLES

Interim interdictory relief requires proof of a prima facie right (though open to some doubt), a reasonable apprehension of irreparable harm, a balance of convenience favouring the applicant, and the absence of an adequate alternative remedy. The assessment entails a judicial discretion in which prospects of success and balance of convenience are weighed together, such that stronger prospects may reduce the extent to which the balance must favour the applicant, and weaker prospects increase that need.

Public procurement is constitutionally constrained by the requirement that contracting by organs of state occur through systems that are fair, equitable, transparent, competitive, and cost-effective, and the legality of the process is assessed independently of whether the outcome appears substantively correct.

Where a tender is expressly subjected to the PPPFA preference point system, the evaluation of price and BBBEE status is not optional or deferrable in a manner that undermines the statutory framework and tender commitments. The failure to ensure that empowerment credentials are properly assessed and confirmed may constitute a material irregularity in procurement, particularly given the constitutional role of procurement in advancing transformation.

A state organ should not conduct litigation in a manner that tends to frustrate a court’s ability to grant effective relief, and conduct of that nature may justify a punitive costs order on the attorney and client scale.

Dimension Data (Pty) Ltd and Others v State Information Technology Agency (SOC) Ltd and Another (28952/2016) [2016] ZAGPPHC 351 (13 May 2016)