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[2016] ZAGPPHC 1047
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Laser Transport Group (Pty) Ltd and Another v Minister, Department of International Relations and Cooperation and Others (93389/15) [2016] ZAGPPHC 1047 (15 December 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE
NO.: 93389/15
Reportable:
No
Of
interest to other judges: No
Revised.
15/12/2016
In
the matter between:
THE
LASER TRANSPORT GROUP (PTY)
LTD First
applicant
GIN
HOLDINGS (PTY)
LTD Second
applicant
and
THE
MINISTER, DEPARTMENT
OF First
respondent
INTERNATIONAL
RELATIONS AND
COOPERATIONS
ELLIOT
MOBILITY (PTY)
LTD Second
respondent
NEO
THANDO/ELLIOT MOBILITY (PTY)
LTD Third
respondent
JUDGMENT
VAN
DER WESTHUIZEN, A J
1.
To grant a tender and to whom, that is the vexed question in this
application.
2.
The applicants aver that the first respondent did not get it right,
hence this review application.
3.
In tender invitation document DRC0:05-2015/2016, the first respondent
invited tenders or a service provider based in South Africa
to
provide services for the removal, packing, storage (in South Africa)
and insurance of household goods and vehicles of transferred
officials, to and from missions abroad, and domestic moves within the
RSA, of the Department of International Relations and Cooperation
(DIRCO) for a period of four years.
4.
The applicants, as a Joint Venture, responded as well as the second
and third respondents, as a Joint Venture too. The second
and third
respondents were ultimately successful. I shall refer to the second
and third respondents as the respondent Joint Venture
(RJV).
5.
When the applicants were advised that their bid was unsuccessful,
they launched an urgent application in which relief was sought
in a
Part A and Part B scenario. The urgent application was refused for
want of urgency. No decision was made in respect of the
merits.
Thereupon, the applicants amended their notice of motion in respect
of the Part B scenario and proceeded with the relief
claimed in the
amended notice of motion.
6.
The applicants
inter a/ia
seek that the first respondent's
granting of the tender to RJV be reviewed and set aside in terms of
the provisions of the Promotion
Administration of Justices Act, 2000
(PAJA) and that the tender be awarded to the applicants.
7.
The grounds relied upon by the applicants in this regard are:
(a) The award of
the tender to RJV contravenes a law in terms of the provisions of
section 6(2)(f)(i) of PAJA, namely section
2(1)(f) of the
Preferential Procurement Policy Framework Act, 2000 (PPPFA);
(b) A mandatory or
material procedure or condition prescribed by an empowering provision
was not followed as required in section
6(2)(b) of PAJA;
(c) The decision
was taken because irrelevant considerations were taken into account
or relevant considerations were not considered
as required in section
6(2)(h) of PAJA;
(d) It is
unreasonable in terms of section 6(2)(h) of PAJA.
8.
Five potential bidders submitted bids in respect of the invitation
for the services mentioned earlier. In the first phase, three
of the
bidders were considered not responsive and their tenders were
rejected. Only the applicants and RJV were considered responsive.
Their respective bids were then subjected to the remaining phases of
the tender process.
9.
In respect of the second and third phases, both the applicants and
RJV remained as contenders for the tender. Both scored above
the
required threshold of 65 points. Both these phases related to
functionality assessment.
10.
The fourth and fifth phases involved the assessment of the respective
bids on the basis of price and the bidders' BBBEE status.
11.
In this regard the following is of importance:
(a) The ZA Rand
value of the contract exceeded the prescribed maximum and the bids
were to be evaluated on the 90/10 basis
referred to in section
2(1)(b)(i) of the PPPFA;
(b) In terms of the
provisions of section 2(1)(f) of the PPPFA,
" The contract
must be awarded to the tenderer who
scores
the highest points,
unless objective criteria in addition to those
contemplated in
paragraphs (d) and (e) justify the award to another tenderer".
12.
In respect of paper-evaluation the applicants scored the highest
points (66 out of 70) and in respect of BBBEE, the lowest (27
out of
30). RJV scored the lowest in respect of paper-evaluation (62 out of
70) and the highest in respect of BBBEE (28 out of
30). Hence, in
respect of the second and third phases, the applicants were awarded
93 points and RJV 90 points respectively.
13.
The price and BBBEE comparison (90/10) saw that the applicants being
awarded 95 points as opposed to 73 of RJV. The margin being
22
points.
14.
It follows that in terms of the provisions of the PPPFA, the
applicants were to be awarded the tender. This did not happen for
what follows.
15.
The Bid Ajudication Committee (BAC) was not satisfied when the Bid
Evaluation Committee (BEC) recommended that the applicants
and the
third respondent together be awarded the tender. The BAC referred the
matter back to the BEC allegedly seeking clarity
on the method used
to evaluate the bid prices, certain alleged discrepancies in the
applicants' pricing and the BBBEE shareholding
of the bidders. The
BEC reverted with a revised recommendation that the award be granted
to the third respondent.
16.
The BAC awarded the tender to RJV on the alleged basis of re
assessing the estimated pricing schedule in order to confirm
the
reasonableness of the bid. In achieving this re-assessment, all that
was done was to determine a mean by adding all the bids,
including
those of the bidders who were considered non-responsive, and divided
it by five. This method is illogical, contrary to
the stipulated
requirements and without merit. Either a bid is rejected for want of
responsiveness and consequently is of no consequence
during the
further phases of the evaluation process, or it is to be clearly
stated in the bid invitation and in the Terms of Reference
that all
bids would be considered, despite being found non-responsive, when
assessing the responsive bids. In the present instance,
the
invitation to bid and the Terms of Reference are silent in this
regard. In any event, the invoking of a determination of a
mean to
consider the reasonableness of a pricing component is contrary to the
stipulated provision in the PPPFA that the tender
is to be awarded to
the bidder who gains the highest points. The determination of the
"reasonableness" of the pricing
component is not a
requirement in the PPPFA or in the Terms of Reference.
17.
The "reasonableness" of the pricing component has no logic,
nor statistical or commercial foundation. It is irrational.
Per
definition, a lowest pricing bid, which translates into the highest
points allocation, would always be below a "mean".
The very
object of a tender system is to achieve procurement at the best
price, a policy endorsed in section 2(1)(b) of the PPPFA.
In terms of
the provisions of the PPPFA, there is no room for any "re-assessment
of bids". The approach adopted by the
BAC appears to have been
plucked from the air to justify the awarding of the tender to RJV.
18.
The PPPFA
is clear that awarding the tender to the bidder with the highest
points can only be thwarted should objective criteria
exist to upset
such award.
[1]
19.
In this regard, the first respondent alleges
"the question of
objective criteria being a value judgment will differ from person to
person."
There is no merit in that statement. The very
essence of objective criteria is the antithesis of a value judgment
that per definition
is subjective.
20.
The alleged "objective criteria" of value judgment applied,
are:
(a) A desire to
distribute the work;
(b) RJV having a
better BBBEE shareholding than the applicants.
21.
There is no merit in the first respondent's aforesaid contentions.
Had the first respondent intended that there is a desire
to
distribute the word, such requirement was to be stipulated in the
Terms of Reference, which in the present instance it was not.
Applying such requirement constitutes irrelevant and impermissible
methodology.
22.
Furthermore, the respective BBBEE status rating is a separate
criteria already included in the assessment process. It can only
be
invoked once as per the requirements of section 2(1)(f) of the PPPFA
read with section 2(1)(d) of the PPPFA.
23.
Even if there were concerns relating to the BBBEE status of the
applicants, such did not render their bid non-responsive, but
would
merely attract a zero point rating on the points-table applicable.
Applying a zero point rating in respect of BBBEE status
for the
applicants would not deter from the applicants' point-scoring as they
would still hold the highest points allocation. There
is no merit in
that contention either.
24.
There is no merit in the other considerations that the first
respondent seeks to rely on for justification of its decision to
award the tender to RJV. Those considerations are irrelevant, do not
fall under any of the Terms of Reference and are extraneous
to the
provisions of the PPPFA.
25.
It follows that the applicants should have been awarded the tender.
26.
There remain two issues raised by the applicants relating to RJV's
bid. These relate to the requirement of providing a guarantee
for a
specified amount for a stipulated period and the requirement that all
items are to be completed in respect of the pricing
schedule as
contained in the Terms of Reference.
27.
The requirement in paragraph 5.1.4 of the Terms of Reference relating
to the providing of a guarantee reads as follows:
"Submission of
a
bank guarantee or guarantee from
a
reputable
3
rd
party of ZAR15 million for the duration of the contract."
28.
The duration of the contract is a period of four years.
29.
RJV provided a letter from Standard Bank, which at best can be
described as a pat on the back. That letter reads as follows:
"LETTER OF GOOD
STANDING: ELLIOT MOBILITY (PTY) LTD
Elliot Mobility (Pty)
Ltd, herein referred to
as
Elliot Mobility, has banked with
our institution for many years and their accounts are well conducted.
We hereby express our
financial support for Elliot Mobility
as a
bidder for the RFP
issued by the Department of International Relations and Cooperation
under the reference: DIRCO 0512015116. This
is limited to
a
maximum of Fifteen Million Rands and is subject to credit
approval.
We are of the opinion
that Elliot Mobility is creditworthy and we therefore accord
a
Bank Rating Code
"C".
This
letter is given in confidence without any responsibility or
obligation on the part of the Bank or any of its officers. It does
not constitute an expressed or implied offer of funding."
30.
The
respondents allege that the term "guarantee" is not defined
in the Terms of Reference and hence the first respondent
has a
discretion as to the format thereof.
[2]
There is no merit in that contention. The format does not prescribe
the substance. The latter requires a formal assurance that
certain
conditions will be fulfilled or providing financial security.
[3]
31.
The
aforesaid letter in no way constitutes a guarantee in its normal
English meaning.
[4]
It is
subject to two conditions precedent; credit approval and not
constituting an expressed or implied offer of funding. The latter
is
clearly indicative of the non-guaranteeing of a specified amount for
a fixed period. The letter read purposively and contextually
constitutes nothing more than a letter of good standing.
32.
It follows that RJV's bid does not meet the requirements set for the
first and second phases. It further follows that RJV's
bid should
have been regarded as non-responsive.
33.
The applicants further allege that RJV did not complete the pricing
schedule in respect of a specific item in respect of the
port of
Suva. In view of my finding on the issue of the guarantee that was to
have been provided, I do not intend dealing with
this issue.
34.
The respondents did not seriously contend that the "guarantee"
provided by RJV in the circumstances complied with
the requirement
set out in the Terms of Reference and in my view correctly so.
35.
It follows that the decision of the first respondent to award the
tender to the third respondent stands to be reviewed and set
aside.
36.
The issue of the further relief that is sought, namely that the
tender be awarded to the applicants requires consideration.
37.
The
applicant contends that in the particular circumstances of the
present matter, the court is in as good a position to award the
tender as the first respondent.
[5]
They further contend that the court can order a substitution premised
upon the provisions of section 8(1) of PAJA. The applicants
further
contend:
(a)
In the
judgment of
Trencon,
[6]
the Constitutional Court held that:
"[35] Section
8(1)(c)(ii)(aa) must be read in the context of section 8(1). Simply
put, an exceptional circumstances enquiry
must take place in the
context of what is just and equitable in the
circumstances. In
effect, even where there are exceptional circumstances,
a
court
must be satisfied that it would be just and equitable to grant an
order of substitution.
[47]
To my mind, given the doctrine of separation of powers, in conducting
this enquiry there are certain factors that should inevitably
hold
greater weight. The first is whether
a
court is in as good
a
position as the administrator to make the decision. The second is
whether the decision of an administrator is
a
foregone
conclusion. These two factors must be considered cumulatively.
Thereafter; a court should still consider other relevant
factors.
These may include delay, bias or the incompetence of an
administrator. The ultimate consideration is
whether a
substitution order is just and equitable. This will involve
a
consideration of fairness to all implicated parties. It is prudent
to emphasise that the exceptional circumstances
enquiry
requires an examination of each matter on a case-by case basis
that accounts for all relevant facts and circumstances."
(b) The applicants'
bid was extensively assessed and evaluated through a five phase
bidding process that found the applicants
are able to perform the
services at the lowest bid price and were allocated the highest
points.
(c) In view of the
applicants having submitted the only responsive bid, the award of the
tender is a foregone conclusion.
If RJV's bid is not regarded as
non-responsive, the applicants obtained the highest points and the
award remains a foregone conclusion.
(d)
It would
serve no purpose to remit the matter back to the first respondent for
re-adjudication.
[7]
38.
The first respondent's submission that the matter be remitted back to
it to do the re-adjudication is without merit. None of
the premises
raised have any bearing. It relies in this regard on the submissions
made in the second and third respondents' heads
of argument.
39.
There is no merit in the second and third respondents' contentions
regarding the alleged inadequacies of the applicants' bid.
On the
objective facts before court, the first respondent was satisfied that
the applicants' bid complied with the requirements
set in the Terms
of Reference and by the PPPFA. Even if the criticism of the
applicants' BBBEE status is to be accepted as dealt
with above.
40.
Furthermore, all the phases post the responsive determination, were
conducted in the manner prescribed and in accordance with
the Terms
of Reference, but for the award determination.
41.
I am satisfied that exceptional circumstances, referred to in the
Trentcon-matter , supra,
exist in the present instance. This
court is in as good a position as the first respondent to award the
tender and to substitute
the applicants as the successful bidder.
42.
It follows that the applicants are entitled to a substitution order.
I
grant the following order:
(a) The award of
tender "DIRCO 05/2016/17" for the procurement of services
for the removal, packing, storage (in
South Africa only) and
insurance of household goods and vehicles of transferred officials,
to and from missions abroad, and domestic
moves within South Africa
for a period of 4 years to the third respondent, is hereby reviewed
and set aside;
(b) The award of
tender "DIRCO 05/2016/17" for the procurement of services
for the removal, packing, storage (in
South Africa only) and
insurance of household goods and vehicles of transferred officials,
to and from missions abroad, and domestic
moves within South Africa
for a period of 4 years to the third respondent, be awarded to the
applicants;
(c) Contracts
already concluded with the third respondent in respect of services
for the removal, packing, storage (in South
Africa only) and
insurance of household goods and vehicles of transferred officials,
to and from missions abroad, and domestic
moves within South Africa
that are pending are to be honoured.
(d) All new
contracts to be concluded from the date of this order are to be
concluded in accordance with prayer (b) of this
order;
(e) The
respondents, jointly and severally, be ordered to pay the applicants'
costs, including the costs of two counsel where
applicable.
______________________
C
J VAN DER WESTHUIZEN
ACTING
JUDGE OF THE HIGH COURT
On
behalf of Applicants:
W R E Duminy SC
Instructed
by:
Webber Wentzel
On
behalf of First Respondent:
B R Tokota SC
Z
Z Matebese
Instructed
by:
State Attorney
On
behalf of Second and Third Respondents: M
Nowitz
Instructed
by:
Nnochumsohn & Teper
[1]
Section 2(1 )(f) of the PPPFA; cf. Trencon Construction (Pty) Ltd v
Industrial Development Corporation of SA Limited et al 2015(5)
SA
245 (CC) at [62] and [65]
[2]
cf. SA Defence and Aid Fund v Minister of Justice 1967(1) SA 31 (C)
at 34H-35C
[3]
cf. The South African Concise Oxford Dictionary: guarantee
[4]
ibid.
[5]
Theron v Ring van Wellington van die NG Sendingkerk in Suid Afrika
1976(2) SA 1 (A)
[6]
at [35]
[7]
cf. Gauteng Gambling Board v Silverstar Development Ltd 2005(4) SA
67 (SCA) at [28] and [41]