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[2015] ZAGPPHC 2
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CFIT (Pty) Ltd v Minister of Defence and Others (22496/2013) [2015] ZAGPPHC 2 (12 January 2015)
IN
THE HIGH COURT OF SOUTH AFRICA
/ES
(
GAUTENG DIVISION,
PRETORIA
)
CASE NO:
22496/2013
DATE:
12/1/2015
IN THE MATTER BETWEEN
CFIT (PTY)
LTD
..................................................................................................
APPLICANT
AND
THE MINISTER OF
DEFENCE
................................................................
1
ST
RESPONDENT
THE CENTRAL PROCUREMENT SERVICES
CENTRE: DEPARTMENT OF
DEFENCE
...............................................
2
ND
RESPONDENT
THE DEPARTMENTAL CENTRAL PROCUREMENT
BOARD: DEPARTMENT OF
DEFENCE
................................................
3
RD
RESPONDENT
SPECSOFT SOFTWARE SOLUTIONS (PTY)
LTD
................................
4
TH
RESPONDENT
JUDGMENT
PRINSLOO, J
[1] The applicant applies for the
reviewing and setting aside of the respondents' decision to withdraw
the tender issued under the
Request for Proposal concerning the
National Codification System (BID CPSC/B/PC/013/2011R) ("the
tender").
[2] Before me, Mr Vetten appeared for
the applicant and Mr Motepe appeared for the 1
st
, 2
nd
and 3
rd
respondents. There was no appearance for the
fourth respondent. The fourth respondent also did not file any
papers.
[3] The fourth respondent will be
referred to as "Specsoft" and the respondents, as 1
st
to 3
rd
respondents or as "no 1", "no 2"
or "no 3".
Brief synopsis
[4] On 11 May 2012, the first respondent
issued a Request for Proposals ("the RFP") in relation to
the provision of a
codification system for implementation within the
Department of Defence, for a five year period ("the tender").
This is nothing new. The existing codification system was
already implemented in 1982.
[5] The closing date of the bid was 14
June 2012. It had a tender validity period of 120 days.
[6] There were four tenderers, but only
the applicant and Specsoft had passed phase 1 of the process
involving compliance with
mandatory criteria for tender submission.
[7] The applicant and Specsoft were then
allowed to carry on with the tendering process and the other
tenderers were excluded.
[8] No 2 is a committee created within
the Department of Defence responsible for evaluation of the validity
of tenders and for recommending
to the third respondent the most
suitable service provider in respect of the relevant goods and
services.
No 3 is a
departmental Board within the Department of Defence responsible for
awarding tenders upon recommendations from no 2.
[9] No 2 unanimously and repeatedly
(because no 3 kept on referring the matter back to no 2 for
further consideration) recommended
that the tender be awarded to the
applicant.
Broadly speaking, the
applicant scored some 98 points and Specsoft only 35. The
tender price offered by the applicant was
some R119 million
compared to the R348 million demanded by Specsoft. As to
Broad Based Black Economic Empowerment
("BBBEE") the
applicant is a level 3 contributor and Specsoft a (lower)
level 4 contributor.
[10] When no 3 persisted in its refusal
to award the tender and kept on referring the matter back to no 2,
the applicant, through
its attorneys, on 6 December 2012, placed
the respondents on terms to take a decision by 13 December 2012
failing which
steps would be taken in terms of the Promotion of
Administrative Justice Act 3 of 2000 ("PAJA") to force the
respondents
to make a decision.
This threat, clearly,
did not make a favourable impression on no 3, which resolved, on
13 December 2014, to withdraw or "cancel"
the tender.
The applicant's
attorney was not informed of this withdrawal or cancellation and, on
28 February 2013, the applicant obtained
an order from this
court directing no 3 to make a decision in relation to the award of
the tender within 10 days of the service
of that order.
It was only
thereafter, in March 2013, that the applicant was informed of the
cancellation.
[11] The applicant contends that the
cancellation was unlawful because it flies in the face of the
provisions of section 2 of the
Preferential Procurement Policy
Framework Act no 5 of 2000 ("the PPPFA") and also
contravenes the regulations promulgated
in terms of that Act by
Government Notice
R510 of 8 June 2011. The
applicant also contends that the reasons advanced for the purported
cancellation are spurious
and without any merit.
[12] The applicant did not agree with
the stance adopted by the respondents that it complied with the order
of 28 February
2013 by cancelling the tender. The
applicant, initially, asked for declaratory relief to the effect that
the respondents
are in contempt of that order but later abandoned its
quest for that relief.
[13] The respondents, in the
Government
Tender Bulletin
, published another invitation to bidders to
tender for a similar codification system, but the applicant obtained
interdictory relief
restraining the respondents from proceeding with
a new tender process pending the outcome of this case.
[14] There were some interlocutory
skirmishes between the parties when the respondents failed to
timeously and comprehensively furnish
the record of proceedings in
terms of the requirements of rule 53. The applicant also
obtained an order from this court
compelling the respondents to file
the record of their decision and reasons for the decision in the
evaluation and withdrawal of
the tender within 10 days of service of
this order. On a general reading of the papers, the order was
never, in my view,
properly complied with. Northing further
turns on this. I will not dwell on the subject. The
record supplied
enabled the applicant to file a supplementary
affidavit in terms of rule 53.
[15] This application was launched in
April 2013.
[16] The relief now sought by the
applicant, after abandoning the prayer for declaratory relief flowing
from the alleged contempt
of the order of February 2013, and after
amending one of the prayers, now amounts to the following:
1. Reviewing and
setting aside the first, second and/or third respondents' decision to
withdraw the tender issued under the relevant
RFP (the terms "cancel"
and "withdraw" have been loosely applied by the parties
and, for present purposes,
I regard them as having the same
meaning).
2. Reviewing and
setting aside the first, second and/or third respondents' refusal to
take a decision in the tender.
3. Substituting the
first, second and/or third respondents' decision and awarding the
tender to the applicant. (There is an alternative
prayer to refer the
tender back to a differently constituted evaluation committee for
decision in accordance with the tender specifications
and evaluation
procedures, but, before me, the applicant pressed for the main relief
of substituting the decision.)
4. Ordering the
first respondent to pay the costs.
[17] So much for a brief synopsis of the
case. I now turn to the relevant issues in more detail.
The tender process and some notes on
the chronological sequence of events
[18] The RFP was for the "procurement
of (a) ... Compliant Codification System with five year Maintenance
(contract)".
[19] The mandatory evaluation criteria
involved four phases:
1.
phase 1: compliance with mandatory criteria for tender submission;
2. phase 2:
compliance with functionality, specification and scope of work
(a threshold of 70% was required to progress);
3. phase 3: price;
and
4. phase 4: BBBEE.
[20] As mentioned, only the applicant
and Specsoft passed phase 1.
[21] The applicant and Specsoft were
invited to a Power Point presentation of their respective bids to be
held on 27 July 2012.
[22] On 2 August 2012 a minute of the
Technical Evaluation Committee's deliberations was produced.
According to this, both
the tenderers passed the 70% threshold.
Members of no 2, having evaluated the tenders, "concluded
unanimously that
CFIT was the cheapest bidder and possessed
international experience and expertise in accordance with NATO
standards. Accordingly
CFIT was selected by the panel as the
preferred bidder."
[23] On 6 August 2012 no 2 prepared a
submission to no 3, recording all the details and points scored (98
versus 35.74 in favour
of the applicant) and the recommendation
stated: "13 ... the requirement at stake be awarded to Messrs
CFIT (Pty) Ltd with
the highest points (98) and is in accordance with
the specification".
[24] On 8 August 2012 no 3 met to
consider the submission. The recommendation was not accepted
and the matter was referred
back for four reasons which, in my view,
have no merit. The one deals with a calculation error of a
minor nature which is
irrelevant in the greater context of the case
and another one, which is also groundless, as will appear later,
reads as follows:
"(iii) On
paragraph 5(b) of the Power Point verification report it is indicated
that 'CFIT project is based on the five year
contract period as per
bid Terms of Reference (TOR). Specsoft pitched their project
for a life cycle of 20 to 25 years.'
The Board concluded that,
in terms of the period, the bidders was not comparable and advised
that the verification panel should
have asked Specsoft to shrink
everything to five (5) years as per the TOR ... asked Specsoft to
break down their prices so that
it could be understood."
[25] On 21 August 2012 no 2 responded to
the queries raised by no 3 on 8 August 2012 pointing out that
the Technical Evaluation
Process was followed by the evaluation
conducted through the Power Point presentation on 27 July 2012 where
it was established
that both bidders had met the technical
requirements. The process of technical evaluation was described
again by an item-by-item
comparison between the two tenders and this
bid comparison demonstrated the manifest difference in the price
between the respective
tenderers. As indicated, the applicant
scored 98 out of a possible 100 points and Specsoft only 35.74 out of
a total of 100
points. It was recorded that the recommendation
was made in accordance with the so called 90/10 principle.
[26] Importantly, the recommendation
that the contract be awarded to CFIT was repeated. This was now
the second identical
recommendation.
[27] On 30 August 2012 no 3 met to
discuss the minute. In terms of the minutes of their discussion
no 3 again declined to
approve the recommendation. The main
"objection", such as it was, raised in the minute again had
something to do
with the "five year argument" the contents
of which I quoted above. No 3 complained that Specsoft "was
not
afforded the opportunity to give a clear itemisation of costs and
shrink everything to five (5) years as per the last Board resolution
on 8 August 2012". No 3 demanded that the applicant "must
be asked to demonstrate how their product will work on
the ground".
There was an instruction that the two bidders should be called once
again to present to the verification
panel and "this time Mat
Gov should form part of that meeting and sign off".
There was also a
query about licence fees.
[28] On 6 September 2012 the applicant
was invited to attend a second compulsory Power Point presentation on
21 September 2012.
Issues identified for reconfirmation
included that "the presentation must be strictly based on a five
year contract period
as per approved TOR", and "clarity
must be made on cost break down as per already submitted quotation,
especially on
the once-off as well as licence renewal and system
maintenance".
[29] The applicant attended the second
Power Point presentation on 21 September 2012 and so did
Specsoft.
[30] On 1 October 2012 no 2 produced
minutes of the oral presentation carried out by the two bidders on 21
September 2012.
In
the minute, it is disclosed that the two bidders were re invited
to clarify the following:
"(a)
presentation must strictly be based on a five (5) year contract
period as per approved Terms of Reference (TOR);
(b) clarity must be
made on cost break down as per already submitted quotation,
especially on the once-off as well as licence renewal
and system
maintenance;
(c) demonstration
of the system especially on deployment."
The minutes show
that Mr Klein, on behalf of the applicant, "gave a well and
informative presentation including demonstration
of how the
codification system or tool works especially on deployment.
There were no questions asked in terms of the system."
Specsoft also
confirmed that their bid price was for the five year contract.
To this extent it appears, and seems to be common
cause between the
parties, that the two bids were "comparable". Unlike
the conclusion by no 3,
supra
, on 8 August 2012, that
"the bidders was (
sic
) not comparable".
[31] Of particular interest, in my view,
is the fact that the 21 September presentation by the two bidders was
attended by Mr P
M Mokoena who is the Deputy Director of Materials
Governance ("Mat Gov"), also referred to as Materials
Governance and
Risk Compliance or "Mat GRC". Mr
Mokoena prepared a lengthy report on the presentation which is dated
24 October
2012. I must assume that this report was
prepared for the attention of no 3. In the report, Mr Mokoena
also identifies
the three issues which had to be clarified (quoted,
supra
, with reference to the minute by no 2) and in the
report Mr Mokoena,
inter alia
, states that -
"Mr Klein gave
a clear and informative presentation of how the system works.
There was a thorough demonstration on how
the system works on
deployment or mission areas. The system is web based;
information can be loaded offline then be up loaded
when system is
back online."
He said more or less the same about the
presentation on behalf of Specsoft. In the report, Mr Mokoena
again high lighted
the difference in cost between what is offered by
the two bidders: some R119 million by the applicant and some
R348 million
by Specsoft.
Mr Mokoena then offers the following
observation in conclusion: "Both companies/bidders gave clear
presentation respectively
in responding to the issues to be clarified
or addressed." He therefore records that all outstanding
points were regarded
as having been clarified. He confirms that
the soft copies of presentations of both bidders were made available
and given
to representatives of no 2.
[32] Significantly, Mr Mokoena raises no
reservations about any of the bids. More significantly,
Mr Mokoena is the deponent
to the answering affidavit filed on
behalf of the respondents.
[33] On the same date, 24 October 2012,
no 2 finalised a submission to no 3 under the heading
"re-submission on the recommendation
of bid ... for the
procurement of ... National Codification System (NCS) with a five
year maintenance period". This
"re submission"
is a lengthy affair again traversing the whole history of the bids
and the performance of the bidders
and the clear superiority of the
bid of the applicant, and also dealing with the last Power Point
presentation of 21 September
2012.
With regard to the
original "five year argument" raised by no 3 when declining
the earlier recommendation,
supra
,
the following remarks by no 2 in this lengthy re submission are
telling:
"(a)
CFIT
.
The bidder has demonstrated the operation of the system and provided
cost break down for a contract period of five years
as per the
approved TOR. The entire panel was satisfied with the
presentation and believes that it will satisfy the uncertainty
from
the DCPB (
my note
: this is no 3).
(b)
Specsoft
.
The bidder has demonstrated the operation of the system and the panel
confirmed its satisfaction thereof. The bidder
again confirmed
that the offered cost break down was for a five-year period as
requested on the tender documents; therefore the
emphasis on licence
period of 20-25 years was based on their previous experience that the
system has to be sustained for a longer
period. On its final
remarks, the evaluation panel concurred that Specsoft was off the
mark by providing information which
was not requested on the approved
TOR hence this was not a Request for Information (RFI) but Request
for Quotation (RFQ)."
In the re submission, it is then
stated by no 2 that the recommendation has been done in accordance
with Delegated Powers with
a certain reference number and in
accordance with the 90/10 principle.
No 2 then goes on to recommend the
applicant as the successful bidder in the following terms:
"Based on the
consolidated procurement process points and latest Power Point
evaluation outcomes, it is recommended that the
requirement at stake
be awarded to CFIT (Pty) Ltd with the highest points (98) and is in
accordance with the specification.
Points break down:
price 90, B-BBEE status level is 3 which is 8 points
Price: R119 978
750,00 (total price)
Price and delivery:
firm
Delivery period: 5
year maintenance period."
[34] This was now the third time that no
2 recommended that the contract be awarded to the applicant: the
first recommendation was
dated 6 August 2012, the second one
21 August 2012 and the third one 24 October 2012.
[35] It is common cause (also from the
side of the deponent to the answering affidavit) that all concerns
raised by no 3 had been
addressed.
[36] Despite all this, no 3, yet again,
at its meeting of 15 November 2012 did not approve the
recommendation. Its resolution in
this regard reads as follows:
"(a)
Resolution
:
The Board noted that:
(i) The bidders
were called again for clarification of their respective proposals.
(ii) Although the
minutes of the presentation meeting were made available, there is no
clear position and recommendation from the
technical evaluation that
listened to the presentation.
(iii) Not all
issues of concern raised by the DCPB (ie no 3) in its previous
meetings had been addressed.
(iv) Arrogance and
lack of co-operative attitude from the project officer.
(v) Concerns raised
by Mat GRC with regards to the manner in which the bid was handled.
(b)
The Board resolved that:
(i)
The submission was not approved.
(ii) A
sub committee would be appointed to look at the nature of the
nominees, and advice (
sic
) the DCPB (ie no 3) on the way
forward."
Mr Vetten, in comprehensive heads of
argument, pointed out that no such committee was appointed and there
is no minute or record
of any advice submitted by such a committee.
It was argued on behalf of the applicant
that these "reasons" for declining the recommendation for a
third time are incorrect
and amount to misstatements:
1. The bidders did
indeed clarify their bids. This appears from the documents from
which I have quoted, including the report
from Mr Mokoena.
2. There is a
perfectly clear and unequivocal position and recommendation from the
body charged with technical evaluation (no 2)
who had listened to the
presentation.
3. All issues of
concern raised by no 3 had in fact been addressed.
4. The reference to
arrogance on the part of the project officer is irrelevant and the
alleged "lack of co-operative attitude"
may be the result
of frustration on the part of this member of no 2 with no 3's failure
to have executed its functions.
5. There were no
concerns, or at least no legally cognisable concerns, that were or
could have been raised by Mat GRC. Indeed,
this also appears
from the report of Mr Mokoena.
[37] On 4 December 2012, no 2 again
asked for an extension of the tender validity period (until
31 January 2013) which was
granted by the applicant, but, on
6 December 2012, the applicant, through its attorneys, placed no
3 on terms to take a decision
on the award of the tender by
13 December, as I have explained. I mentioned that
this letter of demand incorporates
a notice of the intention of the
applicant to take steps in terms of PAJA in the event of further
failure to take a decision.
This part of the letter is crafted
as follows:
"We remind you
that the decision to award a tender constitutes administrative action
under the Promotion of Administrative
Justice Act, 3 of 2000 ('the
PAJA'), and is defined, in section 1 thereof, to include a refusal to
make a decision; and that in
terms of section 6(2)(g) read together
with section 6(3) of the PAJA, a court has the power to Judicially
Review an administrative
action if the action concerned consists of a
failure to take a decision within a reasonable time."
[38] As I pointed out earlier, this
demand did not appear to go down well with no 3, who resolved, on 13
December 2012, to cancel
the tender. The relevant resolution
reads as follows:
"(a)
Resolution
: Board resolves that the submission contained
numerous irregularities, and had to be cancelled. The Board
further directed
as follows:
(i) The end-user
must be given guidance on the submission, should they wish to
resurrect it. The Department needs to look
at what its needs
are in the short term and in the long term, because they can be
particular solutions which are sustainable for
a short term and a
long term. It is necessary to look at what the needs of the
Department are in the long term and the value
for money.
(ii) The bench mark
report should indicate what necessitated it, the value for money for
the Department, the benefit thereof and
the outcome thereof.
(iii) It was noted
on the individual scoring sheets that some of the elements were not
scored. The Board therefore instructed
that in future any
element which is not for scoring should not be included in the Terms
of Reference (TOR)."
[39] As I pointed out earlier, the
decision to cancel the tender was not communicated to the applicant
until March 2013, more than
three months later. I have referred
to the fact that the applicant, ignorant of the cancellation, and
true to its threat
of 6 December 2012, obtained an order
compelling the respondents to make a decision. This order was
granted on 28 February
2013 and served on 13 March 2013
whereupon the State Attorney, on 28 March 2013, informed the
applicant in writing that
the RFP had been withdrawn.
[40] On 4 April 2013 the applicant
advised the State Attorney that it considered the act of withdrawal
of the tender to be unlawful
and that a review application would be
launched and, in addition, requested reasons for the withdrawal of
the tender. No
reasons were forthcoming and on 18 April
2013 this application was served.
Reasons initially advanced for the
cancellation of the tender
[41] The respondents did not file
reasons in accordance with rule 53. They were ordered to do so
by an order of this court
on 27 June 2013 and placed on terms
regarding the breach of this order in a letter of 24 July 2013.
[42] Eventually, in an affidavit
opposing the contempt application, the respondents, in the words of
counsel for the applicant,
"pinned their colours to the mast by
stating that the reason for the cancellation of the tender was as
stated in the minutes
of 13 December 2012, namely irregularities
('the irregularities justification'), and that these irregularities
had been identified
in the minutes of 8 August 2012".
This has already been dealt with and Mr Vetten submitted, correctly
in my view,
that there is nothing in the minutes of 8 August
2012 that can qualify as an irregularity of the kind that would
justify the
cancellation of the tender. Counsel also reminded
me that the "irregularities justification" for the decision
to
cancel is not pursued in the answering affidavit and he submits
that those "irregularities" relied upon are unsustainable.
With that submission I agree.
[43] I was also referred to authority
for the proposition that a decision-maker is bound by the reasons
that are given – in
this case, those disclosed in the minutes,
since no others were given – and cannot depart from their terms
– see
Jicama 17 (Pty) Ltd v West Coast District Municipality
2006 1 SA 116
(C) at 121E 122D;
National Lotteries Board and
others v South African Education and Environment Project
2012 4
SA 504
(SCA) at 513B-514D and
Van Zyl and others v Government of
the Republic of South Africa and others
2008 3 SA 294
(SCA) at
311D-F.
Reasons later advanced for the
cancellation of the tender
[44] The reasons now advanced in the
answering affidavit, for cancelling the tender, are set out in
paragraphs 9 and 10 of that
document. It is useful to quote the
full text:
"9.1 I pause
to mention that after the presentations of the third respondent,
questions were raised by the Department about
the long term
feasibility of the National Codification System. It became
clear to the Department that even though the applicant's
tender might
appear to be a cheaper option, it did not make an allowance for a
period after the initial five year period.
What was meant was
that the Department had to enter into a further agreement for the
maintenance of this system after five years.
The difficulty
however is that only the applicant will be having the source codes
which are used to operate and maintain the system.
The
Department may then not be in the position to go on an open tender to
obtain a competitive price and value for money but will
be bound to
contract the applicant for a further period after five years.
This may turn out to be expensive because the applicant
will be in a
position where it will have no competition.
9.2 The Department
felt that the point raised by the fourth respondent made sense.
It is better to contract a service provider
for a long term and agree
on the charges upfront. For example, if the system is for
twenty or thirty years the price must
be agreed at this stage with
necessary escalations.
9.3 The Department
realised therefore that the initial Terms of Reference did not cater
for this scenario. A decision was
then taken by the third
respondent to cancel the previous tender on this basis. A
decision was made to issue a new tender
which will take into account
the long term maintenance of the system as already stated above.
The new Terms of Reference
were advertised on 6 December 2013.
I attach a copy thereof hereto as annexure 'PMM4'. A very
important provision that
was added in this Terms of Reference reads
as follows: 'The winning bidder will be required to enter into
a long term maintenance
and support contract with respect to Through
Life Capability Management (TLCM) of Defence Systems.'
10.1 While the
applicant is unhappy about the cancellation and re-issue of the new
Terms of Reference, it is clear that these new
Terms of Reference are
in the interest of the Department. The old Terms of Reference
were not in the interest of the Department
in that the issue of long
term maintenance and the possible cost thereof was not taken into
account. This was a
bona fide
error by the Department
and the new Terms of Reference seeks to correct this error. All
the entities including the applicant
will have an equal opportunity
in the process that will continue to be
fair, equitable,
transparent, competitive and cost effective
. While I
understand the applicant's disappointment in not being awarded the
tender, I deny any insinuation that there is
anything untoward with
the cancellation of the tender." (The emphasis is that of
the drafter of the affidavit.)
[45] In my view, there are a number of
grounds on which these reasons (indeed, there is only one reason,
evidently aimed at the
lack of providing for a longer term
maintenance arrangement) advanced for cancelling the tender can be
challenged, both for lawfulness
and rationality:
1. The reason was
never minuted anywhere as far as I can make out. On the
respondents' own version, as set out in the answering
affidavit, it
was nothing more than an after-thought. The fact that the
purported new Terms of Reference were not reflected
in the old Terms
of Reference is described as a
bona fide
error in the
answering affidavit. To advance this as the reason for the
cancellation, raised only in the answering affidavit,
flies in the
face of the authorities quoted,
supra
, that a decision-maker
is bound by the reasons given (in the minutes referred to in the
first answering affidavit mentioned) and
cannot depart from their
terms later.
2. The rationality
of this purported reason for the cancellation (and the decision to
cancel) must also be seriously questioned
in view of the fact that
the new tender published in the
Government Tender Bulletin
of
6 December 2013 only makes provision for a five year period.
This makes nonsense of the suggestion in the opposing
affidavit that
"though the applicant's tender might appear to be a cheaper
option, it did not make an allowance for a period
after the initial
five year period ..."
Moreover, the
specifications of the existing tender documentation make clear
provision for a maintenance contract to be entered
into with the
successful bidder. Paragraph 8(e) of those specifications reads
as follows:
"8.
Support
and maintain
. The supplier shall offer the following functional
support and maintenance:
...
(e) maintenance and
support contract to be quoted for a minimum of ten years."
In addition, while
both the bidders limited their licence fees for the five year period,
the analysis of no 2 of the tender admissions
and technical
evaluation clearly states that "irrespective of which bidder
wins, the SANDF will have to enter into Service
Level Agreement for
the utilisation of licences after five years". As stated,
this agreement would only be entered into
with the successful
bidder. Entering into such an agreement will not require a new
tender. There is, accordingly, no
need to cancel the present
tender. On behalf of the applicant, repeated submissions were
made in the papers that it is generally
not the practice for organs
of state in this category to enter into tender contracts extending
over a period longer than five years.
The ten year period
provided for in the specifications, is realistic, so it is submitted,
because the Department or principal itself
may wish to resile from
the contract after that period. It stands to reason, as
submitted on behalf of the applicant, that
any continuation with a
service provider beyond five years will continue to involve annual
licence renewal fees. This appears
to be a logical consequence
of entering into a long term maintenance agreement with the
successful bidder, as foreshadowed in the
specifications.
In addition, and on
the same subject, it was argued on behalf of the applicant that the
allegation in the answering affidavit that
"A very
important provision was added in this (the new) Terms of Reference
which reads as follows:
'The winning bidder
will be required to enter into a long term maintenance and support
contract with respect to Through Life Capability
Management (TLCM) of
defence systems.'",
must be open to
serious question. It was submitted by counsel that the (new)
Terms of Reference submitted for approval are
identical to the Terms
of Reference applicable to the present bid, save for this purported
insertion of the alleged "very
important provision": the
(old and new) Terms of Reference consist of twenty typed pages.
In the record before me, it
now has two pages 20 (record pages 388
and 389). Page 388 (the first page 20) now contains, as a new
clause (c), the "very
important provision" whereas the
second page 20 (record page 389) is without this provision and ends
at clause (b).
The difficulty is that the second page 20
follows logically on page 19 (record page 387) which the first page
20 does not do.
It appears that someone inserted the page 20
(record page 388) containing the "very important provision"
but forgot to
remove the old page 20 (record page 389).
In the result, the
respondents' reliance on this "very important provision"
appears to be strained and artificial.
In any event, the
introduction of this clause, questionable as it may be, does not
represent any departure from the existing provision,
in the
specifications,
supra
, and more particularly in paragraph 8(e)
thereof, which provides for the conclusion of a maintenance and
support contract for a
minimum of ten years.
Consequently, so it
was argued on behalf of the applicant, the reason given for the
cancellation of the tender is contrived because
it is exposed in the
fact of the re issue of the tender which is on identical
functional terms to the one that has been issued.
It is argued
on behalf of the applicant that there are clear signs of bias in
favour of the fourth respondent who appears to have
advised the
decision-maker on certain issues if one considers repeated references
to the fourth respondent in the answering affidavit.
See, for
example, paragraphs 6.1, 6.2 and 9.2 of the answering affidavit.
3. The cancellation
of the tender also appears to be unlawful because it flies in the
face of the regulations published in terms
of the PPPFA in
Government
Gazette
R502 of 8 June 2011. Regulation 8 goes under the
heading "
cancellation and re-invitation of tenders
".
Regulation 8(4) reads as follows:
"An organ of
state may, prior to the award of a tender, cancel a tender if –
(a) due to changed
circumstances, there is no longer a need for the services, works or
goods requested; or
(b) funds are no
longer available to cover the total envisaged expenditure; or
(c) no acceptable
tenders are received."
Regulation
8(5) provides:
"The decision
to cancel a tender in terms of sub-regulation (4) must be published
in the
Government Tender Bulletin
or the media in which the
original tender invitation was advertised."
There is no
indication that such an advertisement was placed. Moreover, in
my view, the cancellation of the tender under these
circumstances,
does not fall within the ambit of regulation 8(4): there is clearly
still a need for the services, otherwise the
tender would not have
been re advertised, and such a need appears from the allegations
made in the answering affidavit as
quoted. There is no
suggestion that funds are no longer available and, clearly,
acceptable tenders were received. Under
these circumstances, it
would appear to be unacceptable for the goal posts to be shifted and
the tender to be cancelled.
This cancellation is also not in
line with the provisions of section 2(1)(f) of the PPPFA which
provides:
"The contract
must be awarded
to the tenderer who scores the highest points,
unless objective criteria ... justify the award to another tenderer."
(Emphasis
added.)
The cancellation of
the tender, under these particular circumstances, is also at odds
with the provisions of the General Bid Conditions
that are part of
the tender. Clause 18 stipulates:
"18.
Award of bids.
After prices have
been brought to a comparative level and/or points calculated
according to a preferential points system, the bid
will be awarded
considering the following order of priority:
(a) If the
preferential point system is applicable (
my note
: as in the
present instance), normally
to the bidder with the highest points
,
unless reasonable and justifiable grounds, eg negative previous
service record, negative references, etc, exist for passing over
the
bidder with the highest points ...
(b) ..."
(Emphasis added.)
I am alive to the
fact that clause 18(c) provides that the Department is not obliged to
accept the lowest or any bid, but, in my
view, such a cause of action
should be taken on justifiable grounds, and not following upon a
cancellation based on spurious grounds,
particularly not under
circumstances where the relevant body of the decision-maker (no 2)
repeatedly recommended the award of the
tender to the preferred
bidder.
Is there any
reason not to award the tender to the applicant?
[46] On three occasions, after preparing
voluminous reports reflecting technical evaluation, pricing and other
relevant aspects,
no 2 recommended that the tender be awarded to the
applicant. The later recommendations followed after no 3
requested further
clarification and after a second Power Point
presentation.
[47] The deponent to the answering
affidavit, Mr Mokoena, brought out a report to no 3 suggesting, at
least by implication, that
the award of the tender to the applicant
would be in order. Certainly, no reservations were raised about
the bid of the applicant.
[48] Reasons advanced by no 3, over the
months, in some minutes, such as they are, have no merit, and were
not relied upon in the
answering affidavit. Only one "reason"
was raised, for the first time, in the answering affidavit.
This,
in itself, flies in the face of the authorities quoted.
In my view, and for the reasons mentioned, this "reason"
has been shown to ge groundless and irrational.
[49] The bid of the applicant was vastly
superior to that of Specsoft. This could be the reason for the
decision by Specsoft
not to take part in these proceedings.
[50] The cancellation flies in the face
of statutory provisions referred to and, consequently, is unlawful.
[51] In the circumstances, I am of the
view that the applicant is entitled to the award of the tender.
Grounds of review
[52] The applicant advanced a full array
of grounds falling under section 6 of PAJA. In my view, these
grounds are applicable
and were appropriately raised. A short
overview of the grounds will suffice:
1. No 3 was not
authorised to cancel the tender and was not entitled to do so for any
of the grounds it has advanced.
2. No 3 was biased,
alternatively is reasonably suspected of bias towards Specsoft (many
instances of such perceived or real bias
are listed in the papers).
3. No 3 failed to
comply with the prescripts of the relevant empowering provisions
which required no 2 to determine the functional
compliance of the
tenderer's bid and no 3 to apply the PPPFA to the evaluation process:
had it done so, the applicant would have
been awarded the tender.
4. No 3 took the
decision:
4.1 for an ulterior
purpose, namely the insistance on preferring Specsoft's bid over that
of the applicant when there existed no
objective consideration in
fact or in law to justify such an approach;
4.2 because
irrelevant considerations (eg the 20-25 year life cycle of the bid)
were taken into account and relevant considerations
were not
considered (the fact that both parties offered the same solution with
an equivalent life cycle);
4.3 arbitrarily and
capriciously (none of the reasons advanced withstand scrutiny).
5.
The decision itself:
5.1 contravenes a
law (compare regulation 8(4) and/or section 2(1)(f) of the PPPFA) or
is not authorised by the empowering provision;
and
5.2 is not
rationally connected to –
(a)
the purpose for which it was taken;
(b)
the purpose of the empowering provision;
(c)
the information before no 3; and/or
(d)
the reasons given for it by no 3;
5.3 is so
unreasonable that no reasonable person would have taken such a
decision; and
6. The decision is
otherwise unconstitutional and unlawful because it contravenes the
constitutional requirement for a tender process
and system that is
open, transparent and fair.
[53] Against this background, it was
submitted, correctly in my view, that the decision to cancel/withdraw
the tender falls to be
reviewed and set aside.
[54] Following such a review, the
failure and/or refusal to take a decision on the tender also falls to
be reviewed and set aside
in terms of the provisions of section
6(2)(g) of PAJA. See also
Intertrade Two (Pty) Ltd v MEC for
Roads and Public Works, Eastern Cape, and another
2007 6 SA 442
(CkHc) at 453E-G.
Would it be appropriate, in this case,
for the impugned administrative action to be substituted by this
court in terms of section
8(1)(c) of PAJA?
[55] The appropriate portion of section
8(1) of PAJA provides:
"(1) The court
or tribunal, in proceedings for judicial review in terms of section
6(1), may grant any order that is just and
equitable, including
orders –
(a)
...
(b)
,,,
(c)
setting aside the administrative action and –
(i) remitting the
matter for reconsideration by the administrator, with or without
directions; or
(ii) in exceptional
cases –
(aa) substituting
or varying the administrative action or correcting a defect resulting
from the administrative action; or
(bb) ..."
[56] On this subject, the following is
said in
Gauteng Gambling Board v Silverstar Development Ltd
2005 4 SA 67
(SCA) at 75D-I:
"The power of
a court on review to substitute or vary administrative action or
correct a defect arising from such action depends
upon a
determination that a case is 'exceptional':
section 8(1)(c)(ii)(aa)
of the
Promotion of Administrative Justice Act 3 of 2000
. Since
the normal rule of common law is that an administrative organ on
which a power is conferred is the appropriate entity
to exercise that
power, a case is exceptional when, upon a proper consideration of all
the relevant facts, a court is persuaded
that a decision to exercise
a power should not be left to the designated functionary. How
that conclusion is to be reached
is not statutorily ordained and will
depend on established principles informed by the constitutional
imperative that administrative
action must be lawful, reasonable and
procedurally fair. Hefer AP said in
Commissioner,
Competition Commission v General Council of the Bar of South Africa
and others
2002 6 SA 606
(SCA):
'[14] ... the
remark in
Johannesburg City Council v Administrator, Transvaal,
and another
1969 2 SA 72
(T) at 76D-E that "the court is
slow to assume a discretion which has by statute been entrusted to
another tribunal or functionary"
does not tell the whole story.
For, in order to give full effect to the right which everyone has to
lawful, reasonable and
procedurally fair administrative action,
considerations of fairness also enter the picture. There will
accordingly be no
remittal to the administrative authority in cases
where such a step will operate procedurally unfair to both parties.
As
Holmes AJA observed in
Livestock and Meat Industries Control
Board v Garda
1961 1 SA 342
(A) at 349G "... the court
has a discretion, to be exercised judicially upon a consideration of
the facts of each case,
and ... although the matter will be sent back
if there is no reason for not doing so, in essence it is a question
of fairness to
both sides" ...'"
[57] It has to be stated, that the
learned Judge of Appeal, at 76C-E, issued the following cautionary
remarks:
"An
administrative functionary that is vested by statute with the power
to consider and approve or reject an application is
generally best
equipped by the variety of its composition, by experience, and its
access to sources of relevant information and
expertise to make the
right decision. The court typically has none of these
advantages and is required to recognise its own
limitations (here
follows a reference to a number of decisions including the well-known
case of
Bato Star Fishing (Pty) Ltd v Minister of Environmental
Affairs and others
[2004] ZACC 15
;
2004 4 SA 490
(CC) at paras [46] to [49]).
That is why remittal is almost always the prudent and proper course."
[58] In the language of the statute,
substitution will only take place "in exceptional cases".
It is clear that
due deference must be given to the better equipped
administrative decision-making bodies.
[59] Nevertheless, as Hefer AP stated,
supra
, "considerations of fairness also enter the
picture" and he concluded in the following words (quoted in
Gauteng Gambling Board
at 76B-C):
"This, in my
view, states the position accurately. All that can be said is
that considerations of fairness may in a given
case require the court
to make the decision himself provided it is able to do so."
[60] In the present case, as I have
already attempted to illustrate, the applicant submitted an
impressive and fully compliant bid.
It was vastly superior to
that of its only opponent. It was, at least by implication,
even approved by the deponent to the
answering affidavit. The
evaluation body (no 2) recommended, on three occasions, that the
contract should be awarded to the
applicant. Reservations
expressed on at least two occasions by no 3, were fully addressed and
clarified. This much
is confirmed by the deponent to the
answering affidavit. In the end, no 3 abandoned any
reservations, such as they were,
expressed from time to time to
support its continued refusal to accept the recommendation of no 2.
In terms of the answering
affidavit, the respondents were left with
only one "reason", such as it was, for cancelling or
withdrawing the tender.
This "reason" has been found
to be spurious and unsubstantiated. I have attempted to
illustrate the basis for this
finding. I have expressed the
view that the cancellation of the tender was irrational and
unlawful. The reasons for
this finding have been mentioned.
It is clear that the
respondents require the services offered by the applicant.
There is sufficient funding available.
The closing date of the
tender was already in June 2012, approximately two and a half years
ago. There are clear signs of
bias on the part of no 3.
Its conduct, throughout, was unfair and irrational. The
applicant was only informed
of the decision to withdraw the tender,
some three months after the decision was taken. It is not
improbable that remittal
will result in a hostile reception of the
applicant by the same decision-makers. There is no valid
reason, as I have attempted
to illustrate, for not awarding the
tender to the applicant.
[61] In all the circumstances, I have
come to the conclusion that this is a case where "considerations
of fairness" and
other compelling relevant considerations, as
described, dictate that the administrative action falls to be
substituted by this
court.
[62] In conclusion, I have to state that
a question which has been exercising my mind, on this subject, is
whether a court has the
power to substitute a decision which has not
yet been taken in the first place by the administrative
decision-maker.
It seems to me that
the answer may lie in the following words of the learned Judge in
Intertrade
at 455I-456C (although evidently only expressed as part of the
obiter
dicta
):
"In the light
of the view I take of the appropriate remedy to be awarded, it is not
strictly speaking necessary to deal with
Mr Buchanan
's
argument that the court has no power to take the decision that the
administrative decision-maker ought to have taken, in circumstances
where, as in this case, no decision has been taken. Suffice it
to say that I am not convinced that the argument is sound
that the
remedies listed in
section 8(2)
constituted a closed list. That
argument appears to overlook the open-ended scheme of the remedies
contemplated for breaches
of the right to just administrative action:
a court may, in terms of both
section 8(1)
and
section 8(2)
'grant an
order that is just and equitable' and the orders contemplated
may
include
those that are listed. I see no reason why a
failure to decide an application for a licence or permit, for
instance,
may not, in an appropriate case, be remedied by an order
granting the licence or permit where its grant is a foregone
conclusion
and no purpose would be served in referring the matter
back to the administrative decision-maker: a failure to decide may
sometimes
amount to a constructive refusal."
In the latter
regard, see the authorities quoted in footnote 24 of
Intertrade
at 456.
[63] In the result, I have come to the
conclusion that the application ought to succeed.
Costs
[64] There appears to be no reason why
the normal rule should not be applied, with the costs following the
result. As I stated
earlier, costs are sought, for
understandable reasons, only against the first respondent.
The order
[65] I make the following order:
1. The decision of
the first and/or second and/or third respondent to withdraw/cancel
the tender issued under the Request for Proposal
concerning the
National Codification System (BID CPSC/B/PC/013/2011R) ("the
tender"), is reviewed and set aside.
2. The first,
and/or second, and/or third respondents' refusal and/or failure to
take a decision on the tender is reviewed and set
aside.
3. The tender is
awarded to the applicant.
4. The respondents
are ordered to afford the co-operation which can reasonably be
expected from them to ensure prompt implementation
of the tender.
5. The first
respondent is ordered to pay the costs.
W R C
PRINSLOO
JUDGE
OF THE GAUTENG DIVISION, PRETORIA
22496-2013
HEARD ON: 25 AUGUST 2014
FOR THE APPLICANT: D VETTEN
INSTRUCTED BY: B D K ATTORNEYS
FOR THE
1
ST
, 2
ND
AND 3
RD
RESPONDENTS: J A MOTEPE
INSTRUCTED BY: STATE ATTORNEY