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[2016] ZAGPPHC 842
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Dimension Data (Pty) Ltd v Minister of Justice and Constitutional Development and Another (25737/2016) [2016] ZAGPPHC 842 (20 September 2016)
REPUBLIC
OF SOUTH AFRICA
IN THE HIGH COURT OF
SOUTH AFRICA
GAUTENG DIVISION,
PRETORIA
20/9/2016
CASE
NO: 25737/2016
Reportable:
No
Of
interest to other judges: No
Revised.
In
the matter between:
DIMENSION
DATA (PTY)
LTD
Applicant
And
THE
MINISTER OF JUSTICE AND
CONSTITUTIONAL
DEVELOPMENT
First
Respondent
DATACENTRIX
(PTY)
LTD
Second
Respondent
JUDGMENT
AC
BASSON, J
[1]
This is an application brought on an urgent basis by Dimension Data
(Pty) Ltd (“Dimension Data”) to interdict the
implementation of a tender pending the outcome of an application to
review the first respondent’s (the Minister of Justice
and
Constitutional Development) decision to award the tender to the
second respondent (Datacentrix (Pty) Ltd – “Datacentrix”)
and to start the process
de novo
.
[2]
The bid at issue in this application was advertised on 13 June 2014
and invited tenders for a three year contract for “Court
Recording Technology” (“CRT”). The successful
bidder would be required to provide, supply, maintain and support
digital recording solutions to court rooms countrywide at a costs of
approximately R½ billion.
[3]
The contract was awarded to Datacentrix on 29 January 2015. Dimension
Data as the incumbent service provider administered the
previous
court recording system since its appointment in 2006. The previous
court recording system is known as the “DCRS”
system.
Dimension Data’s bid for the new recording system was
unsuccessful. It is common cause that the DCRS system is out-dated.
[4]
On 31 March 2016 (more than a year after the tender was awarded)
Dimension Data launched a substantial application to review
and set
aside the award. In terms of prayer 2 of the Notice of Motion in the
review application, Dimension Data seeks an order
interdicting the
first and second respondents from implementing the bid award pending
the reconsideration of the award by the first
respondent.
[5]
On 30 May 2016 Dimension Data launched a further application to
interdict the first respondent from implementing the bid awarded
to
Datacentrix this time pending the outcome of the review application.
Dimension Date also seeks an order to maintain the
status quo ante
and to permit Dimension Data to continue providing recording,
maintenance and support services to the courts on a month-to-month
basis on the terms and conditions set out in its contract of
appointment (as extended from time to time). The relief sought in
the
Notice of Motion in this urgent application therefore seeks the
restoration of the “
status quo ante
” which will
have the effect of freezing the further rollout of the CRT system
pending the final determination of the review.
[6]
The present application was initially set down for hearing on 21 June
2016 but was allocated for hearing on 15 September 2016.
Urgency,
however, remains pertinent and both the first and second respondents
have placed the urgency of the application in dispute.
[7]
The present urgent application was therefore only launched some
sixteen months after the decision to award the tender to Datacentrix
was taken.
Urgency
[8]
I have already referred to the fact that the CRT tender was awarded
to Datacentrix on 29 January 2016.
[9]
Dimension Data found out about the award on 3 February 2015 when it
was sent a copy of the award letter in error. In this letter
it is
stated that the award of the tender is conditional on the “successful
conclusion and signing of the SLA [Service Level
Agreement] on or
before 13 April 2016”. The letter further states that the
project implementation phase will commence on
14 April 2015 to 13
April 2016 and that the maintenance and support phase will begin from
14 April 2016 to 13 April 2021. These
dates are important in that it
indicates that as at 3 February 2015, Dimension Data was well aware
of the fact that the implementation
of the tender will commence
during April 2015. Dimension Data was also aware of the fact that the
signing of the SLA was imminent.
[10]
Dimension Data wrote to the department on 4 February 2015 stating,
inter alia
, that the process was non-competitive because only
one vendor was considered technically qualified and that
Datacentrix’s
bid price was higher than that of Dimension Data.
In this letter the department was requested to review the
adjudication process
that was followed. It is further also stated
that it is crucial that this be done prior to the award being
finalised and contracts
signed. Dimension Data also requested reasons
from the department for the awarding of the bid to Datacentrix. The
reasons were
furnished to Dimension Data on 18 February 2015.
[11]
It is important to point out that in this letter dated 4 February
2015, Dimension Data has already identified what is now a
central
point in the review application namely that the bid process was
allegedly non-competitive because only one company was
considered
technically qualified. In this regard I am in agreement with the
submission that nothing had prevented Dimension Data
from approaching
this court for an interdict on an urgent basis as early as February
2015 as the grounds for review had already
been intimated by
Dimension Data in this letter. A review application could also have
been filed soon thereafter. In the review
proceedings Dimension Data
would then have been entitled to call for the record of the decision.
However, no steps were taken to
review the decision and no steps were
taken to interdict the conclusion of the SLA agreement which was
imminent. In respect of
the SLA agreement, Dimension Data was well
aware of the fact that the SLA was due to be signed on or before 13
April 2015.
[12]
On 25 February 2015 the attorneys on behalf of Dimension Data
requested further information from the department. In this letter
it
is expressly stated that Dimension Data’s attorneys held
specific instructions to apply to the court for an interdict
to
prevent the department from contracting with Datacentrix and to
prevent the department from implementing the tender pending
the
review of the decision to award the tender to Datacentrix. Despite
this threat nothing happened.
[13]
On 19 March
2015 Dimension Data requested documentation in terms of the Promotion
of Access to Information Act.
[1]
The said documents were furnished to Dimension Data’s attorneys
on 11 May 2015. These documents included the supply management
policy, the individual scores for Dimension Data by the bid
evaluation committee, comparative statements for technical
functionality
in respect of Dimension Data, the final internal audit
report and the bid document. Even if Dimension Data is correct in its
view
that it could not have launched these proceedings in February
2015, I am in agreement with the submission that as of March 2015,
Dimension Data had sufficient information to launch this application.
However, despite having received these documentation and
despite the
fact that Dimension Data was fully aware of the fact that the
implementation of the contract would commence in April
2015, nothing
happened.
[14]
In mid-July 2015 negotiations with Dimension Data commenced in
respect of the role that Dimension Data would play in the handing
over of the system to Datacentrix. It appears from the papers that
Dimension Data in fact actively participated in the implementation
of
the new contract by, amongst others, facilitating the handing over
process which included the decommissioning and removal of
the old
system. In terms of the agreement concluded with Dimension Data
(“the DCRS Transition and Support Agreement”)
Dimension
Data agreed to ensure that the DRCS systems are operationally
supported and fully maintained until the DCRS systems are
switched
off and removed. Dimension Data therefore agreed to offer its
services of mainlining the DCRS system on a sliding scale,
diminishing with time until it is totally phased out at the end of
September 2016. Dimension Data also concluded an agreement in
terms
of which it would assist in ensuring that the latest data is backed
up on an external hard drive. For these services Dimension
Data would
be paid somewhere in the region of R21 million.
[15]
However, despite the fact that Dimension Data actively participated
since 2015 in the phasing out of the DCRS system no further
steps
were taken either to interdict the implementation of the contract or
to review the decision to award of the bid and despite
threats to do
so made as far back as February 2015.
[16]
A year later on 17 February 2016, Dimension Data, in a letter through
their attorneys, demanded a written undertaking that
there will be no
implementation of the contract and demanded that such an undertaking
be given by 23 February 2016 failing which
an application for an
interdict will be instituted as a matter of urgency. In this letter
their attorneys again listed several
alleged irregularities in the
bid process which, according to Dimension Data, was neither
transparent, unbiased nor fair. In this
letter the attorneys once
again threatened to enforce their rights and to review and set aside
the bid awarded to Datacentrix.
A threat was also made that, should
the department not undertake to immediately desist in implementing
the disputed bid, Dimension
Data would have no alternative but to
approach the court by way of urgency to preclude it from implementing
the bid. In the last
paragraph of this letter it is also stated that
the department would be furnished “with a copy of the interdict
application
and in due course the application to set aside the bid
award”.
[17]
Yet, once again, despite these threats nothing happened until some
five weeks later when on 31 March 2016 the review application
was
launched. Evidently Dimension Data had been advised that no case for
urgency or for interim relief (pending the outcome of
the review
application) could be made in the circumstances.
[18]
Dimension Data then appears to have changed its mind and the urgent
application that was first threatened with in the letter
dated 25
February 2015 and repeated in the letter of 17 February 2016 was
finally launched on 30 May 2016 – some three months
after the
latest threat to launch an urgent application and some sixteen months
after the award of the bid.
[19]
Dimension Data submitted that nothing happened in so far as the
implementation of the CRT system was concerned in 2015 and
that it
was only at the end of January 2015 that the respondents began
rolling out the CRT system. It was then only that the attorneys
on
behalf of Dimension Data on 17 February 2016 requested the
respondents to provide an undertaking that they would desist in
implementing the disputed bid. It was only when such an undertaking
was not forthcoming that Dimension Data launched its review
on 31
March 2016.
[20]
In essence it was therefore submitted on behalf of Dimension Data
that they only had to act once it became clear that the respondents
were intend on “accelerating the roll-out, intend that in
excess of 1000 recorders be installed by the end of May 2016 and
the
balance by mid-September 2016”.
[21]
I have several difficulties with this submission: Dimension Data was
aware of the fact that the tender was awarded as far back
as 29
January 2015. At that time Dimension Data was aware that the
conclusion of a SLA was imminent. It was also aware of the fact
that
further contracts will in all probability be concluded in furtherance
of the implementation of the tender. In the letters
of February 2015
Dimension Data already identified some of the alleged irregularities
in the awarding of the tender. Various documents
were furnished to
Dimension Data and in May 2015 it was furnished with further
documents consequent to a PAJA application. Even
if there may be some
merit in the submission that Dimension Data could not have brought
the urgent application in February 2015,
no persuasive reason exist
as to why the urgent application could not have been launched
somewhere in May or June 2015.
[22]
Dimension Data and the department had concluded a contract in terms
of which Dimension Data undertook to phase out the DCRS
system out of
all the courts on a sliding scale until it was totally phased out at
the end of September 2016. Dimension Data has
sought out this
arrangement and has done so as far back as July 2015. The fact that
Dimension Data has sought out this agreement
as far back as July 2015
is, in my view, further indicative of the fact that it was well aware
of the fact that the contract with
Datacentrix was already in place
and that it was being implemented during the course of 2015.
[23]
Dimension Data also contended that it was not aware that the SLA
agreement between Datacentrix and the department had been
concluded
and that it believed that no steps were taken to implement the
contract in 2015 and that steps were only taken towards
the
implementation of the contract at the end of January 2016 when an
order was placed for equipment. This is factually incorrect.
The SLA
was signed on 27 May 2015. Furthermore, according to the tender
document the rollout was to be implemented in three phases:
Phase I
was the most intense and involved the design and configuration of the
system. By the end of August 2015 the architecture
of the system had
been designed and signed off by the department. The testing phase was
completed at the end of November 2015 and
court staff were trained on
the new system. In the replying affidavit Dimension Data in fact
admits that it was aware of the fact
that the system was tested in
November 2015. Furthermore, Dimension Data was, as already pointed
out, involved in the transition
phase and in fact participated in a
number of meetings in 2015 dealing with the data migration required
for the project. During
October 2015 Datacentrix had also discussed a
data migration strategy plan with Dimension Data. There can therefore
in my view
be no doubt that Dimension Data was aware of the progress
that had been made on the project during 2015.
[24]
In respect of the testing of the system during 2015, Dimension Data
submitted that although it was aware of the testing, it
was unaware
of the results thereof. There is no merit in this submission and it
is, in my view, irrelevant what the results of
these tests were. The
fact remains that Dimension Data was clearly aware of the fact that
the department had commenced with the
roll-out of the contract.
[25]
It was contended on behalf of Dimension Data that it is in the public
interest that this application be dealt with on an urgent
basis and
that an interdict be granted. It was also submitted that it is in the
public interest for this court to interfere with
the award on an
urgent basis to prevent further infringement of the procurement
framework and the perpetuation of unlawfulness
especially in light of
the fact that there are strong indications that the tender process
was, according to Dimension Data, infected
with illegality,
impropriety and corruption.
[26]
I have no quarrel with the submission that it is in the public
interest to interdict perceived invalid administrative acts.
The
dispute in this particular matter is, however, not about the
entitlement of Dimension Data to approach this court for
an
interdict. The dispute is whether Dimension Data is entitled to
approach this court on an urgent basis after it had waited an
extraordinary long time before it finally launched an application to
review and even longer before it brought an application to
interdict
the implementation of the award pending the outcome of the review.
[27]
Our courts have recognised the importance of acting expeditiously in
bringing a legal challenge against the award of a tender
in view of
the fact that a decision to accept a tender is generally immediately
followed by the conclusion of a contract (usually
a SLA) and further
contracts aimed at executing the contract. Our courts have also
recognised that, by not acting expeditiously
in challenging a
decision, it will almost invariably become more difficult at a later
stage to obtain relief simply because of
the risk that, by the time
the court is approached with a legal challenge, the contract may have
already reached an advance stage
of implementation or execution.
[28]
Where a litigant decides to approach the court with an application
for an interdict to prevent the conclusion of a SLA and
to interdict
the implementation of the tender pending the outcome of a review, the
need to approach the court expeditiously becomes,
in my view, even
more pressing.
[29]
In this
regard the court in
Millennium
Waste Management v Chairperson Tender Board
(in
context of a review application) confirmed the need to challenge
perceived invalid administration acts expeditiously
:
[2]
“
[23] The
difficulty that is presented by invalid administrative acts, as
pointed out by this court in
Oudekraal
Estates
,
[3]
is that they often have been acted upon by the time they are brought
under review. That difficulty is particularly acute
when a
decision is taken to accept a tender. A decision to accept a tender
is almost always acted upon immediately by the conclusion
of a
contract with the tenderer, and that is often immediately followed by
further contracts concluded by the tenderer in executing
the
contract. To set aside the decision to accept the tender, with
the effect that the contract is rendered void from the
outset, can
have catastrophic consequences for an innocent tenderer, and adverse
consequences for the public at large in whose
interests the
administrative body or official purported to act. Those interests
must be carefully weighed against those of the
disappointed tenderer
if an order is to be made that is just and equitable.
…
.
[34]
In conclusion there is one further matter that needs to be mentioned.
It appears that in some cases applicants for review approach
the high
court promptly for relief but their cases are not expeditiously heard
and as a result by the time the matter is finally
determined,
practical problems militating against the setting aside of the
challenged decision would have arisen. Consequently
the scope of
granting an effective relief to vindicate the infringed rights become
drastically reduced. It may help if the high
court, to the extent
possible, gives priority to these matters.”
[30]
In
Steenkamp
N.O. v Provincial Tender Board of The Eastern Cape
[4]
the court frowned upon review proceedings that were only instituted a
year after the tender was awarded, although the court
pointed out
that a mere delay does not deprive a litigant of a remedy:
“
[51] In the
present matter the review proceedings to set aside the tender were
initiated very late. It took the dissatisfied
tenderer a year
to approach court. The question must arise whether a review
mounted so late should be looked at favourably
by our courts.
Be that as it may,
in the ordinary
course tenderers who dispute the correctness of an award would
challenge its correctness relatively quickly so that
the question of
out-of-pocket expenses would be unlikely to arise. Even where
there is a delay and a court nonetheless set
aside a tender award, I
do not accept that ordinarily a prudent and diligent successful
tenderer whose award is reversed later
is without remedy. He or
she too may not leap without looking.
[31]
Although I am in agreement with the
sentiments expressed by the court in
Steenkamp
,
the particular circumstances of this case cannot be overlooked: In
this case Dimension Data was aware of the awarding of the tender
and
in fact actively participated in the implementation of the tender by
rendering assistance to the respondents to migrate the
old system to
the new system. It can also not be said that Dimension Data did not
have sufficient information to approach the court
at an earlier stage
especially in light of the letter dated 25 February 2015 in which the
grounds for the perceived invalid procedure
were identified.
Dimension Data has also been alive to the fact that by September 2016
the old system would be switched off and
removed and replaced by the
CRT system. In these circumstances there clearly rests a duty upon a
litigant to act expeditiously
in approaching the court, especially
for urgent interim relief to prevent the first respondent from
implementing the bid awarded
to Datacentrix.
[32]
It
also cannot be overlooked that in this particular case the CRT system
has for all practical purposes been installed. This much
is clear
from the following: As at 13 June 2016 the progress of the project is
as follows: (i) 908 courtrooms have been installed
with the new CRT
system; (ii) 840 courtrooms have been signed-off and a new CRT system
is utilised by the courts; (iii) Dimension
Data has removed a total
of 455 of DCRS equipment in the courts. It is also not in dispute
that by the end of September 2016 –
a mere two weeks away –
the installation of the new CRT system will be completed. As already
pointed out, Dimension Data
has been aware of this time table yet did
nothing to approach this court on an expedited basis. In this regard
I am in particular
agreement with the following statements made in
Tshenolo
Resources (Pty) Ltd v MEC: Northern Cape
Provincial Government
[5]
where the court pointed out that although parties have remedies
available to challenge the non-observance of a process awarding
a
tender, such remedies should be utilised before significant progress
has been made on the execution of the contract:
“
[5] Two
interlocutory matters were raised for prior adjudication. The first
of which was lack of urgency. It is common cause between
the parties
that no competitive bidding process was followed prior to the award
of the road upgrading contract to Nucon Roads by
the MEC. Urgent
review and interlocutory remedies are available to challengers to the
outcome and process of a state tender. See
Steenkamp NO v Provincial
Tender Board Eastern Cape, 2007(3) SA 121 (CC) at 142H-143A (para
51). It is therefore not only prudent
but also necessary for
challengers of non-observance of the constitutionally ordained
processes, the state organ and the defenders
of the award to
adjudicate their dispute before the Court before any significant
progress on the contract has been made. In Darson
Construction (Pty)
Ltd v City of Cape Town and Another 2007(4) SA 488(C) the Court
stated at 506E-H:
‘
On
the facts of this matter, applicant could, indeed, have sought an
interdict immediately after the award of the contract to second
respondent on 17 December 2004. It is true that applicant was invited
to appeal, but, objectively seen, the appeal was the incorrect
remedy. In any event, when applicant became aware that second
respondent was on site and had begun work in terms of the contract,
it could immediately have approached the Court to interdict second
respondent pending the outcome of its appeal. By that time it
was
clear that first respondent was going ahead and allowing second
respondent to execute the contract despite applicant's appeal.
An
application for an interdict would, in all probability, have
brought to the fore that the decision of 17 December 2004
was invalid
and would have prevented the loss which applicant seeks to recover
had applicant, in addition, been able to show its
entitlement to the
contract. An examination of the correspondence sent by or on behalf
of applicant from 10 February until the
launch of the application
demonstrates that applicant knew that it had the right to approach
the court for relief. It regularly
threatened to do so but failed to
follow up on its threats.’”
[33]
In light of the above, I am of the view that the matter is not urgent
and is accordingly struck from the roll with costs.
[34]
In the event the following order is made:
The matter is not urgent
and is struck from the roll with costs such costs to include the
costs of two counsel in respect of both
the first and second
respondents.
_________________________
AC
BASSON
JUDGE
OF THE HIGH COURT
Appearances:
For
the applicant : Adv. P Stais (SC)
Adv.
GD Wickins
Instructed
by : Eversheds Attorneys
For
the First Respondent : Adv. KD Moroka (SC)
Adv.
MM Mojapelo
Instructed
by : The state attorney
For
the Second Respondent : Adv. FA Snyckers (SC)
Adv.
IB Currie
Instructed
by : Tugendhaft Wapnick Banchetti and partners
[1]
Act 2 of 2000.
[2]
[2007] SCA 165 (RSA).
[3]
Oudekraal
Estates (Pty) Ltd v City of Cape Town
2004 (6) SA 222
(SCA) para [46].
[4]
2007 (3) SA 121 (CC).
[5]
[2015] NCHC 27.