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[2015] ZAGPPHC 1
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SAAB Grintek Defence (Pty) Ltd v South African Police Service and Others (25286/2013) [2015] ZAGPPHC 1 (16 January 2015)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISON, PRETORIA
CASE NO:
25286/2013
DATE: 16 JANUARY
2015
REPORTABLE
OF INTEREST TO
OTHER JUDGES
IN THE MATTER
BETWEEN
SAAB GRINTEK
DEFENCE (PTY)
LTD
...............................................................................
APPLICANT
AND
SOUTH AFRICAN
POLICE SERVICE
….............................................................
FIRST
RESPONDENT
STATE INFORMATION
TECHNOLOGY AGENCY
(PTY)
LTD
..............................................................................................................
SECOND
RESPONDENT
NATIONAL
COMMISSIONER OF THE SOUTH
AFRICAN POLICE
SERVICE
................................................................................
THIRD
RESPONDENT
MINISTER OF
POLICE
….................................................................................
FOURTH
RESPONDENT
MINISTER OF
PUBLIC SERVICE AND
ADMINISTRATION
..................................................................................................
FIFTH
RESPONDENT
JUDGMENT
MAKGOBA J-
[1] This case
arises‘from a tender process in respect of an Integrated Mobile
Vehicle Data Command and Control Solution (“IMVDCS").
The
Applicant seeks an order against the Respondents in the following
terms:
1. Reviewing and
setting aside the decision of the first respondent purportedly to
cancel bid number RFB 822/2010 (“the tender”).
2. Reviewing and
setting aside the decision of the second respondent not to award the
tender to the applicant,
3. Directing the
second respondent, alternatively the first respondent, within one (1)
month from date of the order to award the
tender to the applicant and
to conclude a contract with the applicant on the same terms and
conditions contained in the tender,
provided that this shall not
preclude the parties from jointly agreeing to amend such terms and
conditions,
4. Directing that
the costs of this application be paid by any respondent opposing the
application.
[2]The factual
chronology of events is essentially common cause or not disputed.
[3] On 13 February
2009 the State Information Technology Agency (“SITA”)
published a Request for Bids (“RFB”)
on behalf of the
South African Police Service (“SAPS”) in respect of the
procurement of the IMVDCS. After the initial
evaluation, the
Applicant (“SAAB”) was shortlisted alongside Brighthouse
Holdings (Pty) Ltd, as a potential supplier.
The RFB was later
withdrawn..
[4] On 3 September
2010, SITA republished the RFB, this time as RFB 822/2010 (“the
tender”) the closing date for the
tender was 4 October 2010.
Saab submitted a bid and was again shortlisted - along with
Brighthouse - as a potential supplier of
the IMVDCS.
[5] Saab was invited
by SITA to present its solution to the Bid Evaluation Committee
(“BEC”) on 29 November 2010. On
13 December 2010 SITA
requested Saab to perform a proof of concept of its solution. Saab
performed the proof of concept on 25 January
2011.
[6] On 2 February
2011, SITA advised Saab that the validity of its bid had expired on 4
January 2011. It requested Saab to extend
the validity of its bid by
90 calendar days. Saab agreed. SITA subsequently requested further
extension of Saab’s bid on
1 April 2011, 2 June 2011 and 1
August 2011.
[7] During the
evaluation process Saab’s combined scores on the paper and
demonstration evaluations were the highest. Saab
was the only bidder
to score above the 70% threshold on both the paper and demonstration
evaluations. On the basis of these evaluations,
the BEC recommended
that Saab be the only bid to proceed with the remaining evaluations
in respect of pricing and Black Economic
Empowerment (“BEE”)
points and on 8 October 2011, the Technical Evaluation Team
recommended to the Recommendation Committee
that the tender be
awarded to Saab.
[8] On 1 November
2011, SITA requested a further extension of Saab’s bid. Saab
agreed. On 4 November 2011, the Recommendation
Committee recommended
to the Procurement Committee that the tender be awarded to Saab.
[9] On 8 November
2011, SITA invited Saab to attend negotiations scheduled to take
place on 11 November 2011. Saab did so. On 17
November 2011, as part
of the negotiations, Saab in response to the request of SITA offered
various discounts on the price.
[10] SITA then
requested further extensions of the Saab bid. It did so on 23 January
2012, on 26 March 2012 and 4 June 2012. Saab
agreed to each. The last
extension purports to result in the validity of the bid being
extended until 4 August 2012, some 22 months
from the tender’s
initial closing date.
[11] On the 8 August
2012, SAPS informed Saab that it had cancelled the tender in a letter
addressed to SITA on 28 May 2012. It
explained the decision to cancel
the tender with reference to the following considerations:
11.1 the time lapse
in the evaluation process, and
11.2 the need for
SAPS to review its business processes.
On 20 August 2012,
SITA informed Saab that it would not be issuing requests for validity
extension because the tender was due to
be cancelled.
[12] The applicant
relies on the following three grounds of review:
12.1 First, that the
cancellation of the tender was unlawful,
12.2 Second, the
respondents had no good reason to cancel the tender, and
12.3 Third, the
SAPS’s decision that the tender be cancelled was made in a
procedurally unfair manner.
[13] The thrust of
Saab’s case is that there was no lawful basis upon which the
tender could have been cancelled, and that
there was no lawful basis
upon which SITA could have refused or failed to award the tender.
In essence Saab
wants to persuade the Court to find that-:
1. the tender was
cancelled unlawfully,
2. there was no good
reason for the tender to have been cancelled,
3. the decision to
cancel the tender was made in a procedurally unfair manner,
4. that SITA Board
should be instructed to award the tender to Saab.
[14] The Respondents
opposition to this application is based on four pillars:
1. The first is that
the order sought against SITA is misplaced in that SITA does not have
the power to decide who to award the
tender to. That SITA merely
makes a recommendation to SAPS who decides whether or not to accept
the recommendation.
2.
The second is that it is common cause that the bid validity period
for the RFB was 90 days after the closing date for submission.
This
meant that the bid expired after 90 days unless it was extended by
agreement. There was no timeous extension by agreement.
Instead the
first extension came 30 days after the bid expired. That the RFB does
not provide for the revival of an expired bid
and therefore
everything that transpired after 4 January 2011 was
ultra
vires
in
view of the fact that there was no valid bid.
3. The third is that
the procurement process itself was fraught with difficulties in that
the evaluation committee adopted a method
of evaluation of the
demonstration of product which was not provided for in the RFB. That
this is contrary to the prevailing procurement
prescripts and casts a
shadow of a doubt on the outcome of the evaluation process.
4. The fourth is
that, even should Saab be successful in persuading the Court to set
aside either of the impugned decisions, there
is no basis for the
Court to grant the exceptional remedy of substituting its decision
for that of SAPS/ SITA by ordering either
to enter into a contract
with Saab.
[15] It will be
convenient to deal first with the second point raised by the
respondents, namely that the bid expired after 90 days
of the closing
date for submission thereof before considering the merits of the
application.
The principal issue
raised herein is the legal consequence of a failure by a public body
to accept within the stipulated period
for the tender proposals, any
of the proposals received.
[16] Furthermore the
question is whether, if the expiry of the tender validity period put
an end to the tender process, it could
subsequently be revived by
agreement between the parties.
[17]
This issue was dealt with squarely in a matter that is essentially on
all fours with this case by Southwood J in the matter,
Telkom
SA Limited v Merid Training (Pty) Ltd and Others, Bihati Solutions
(Pty) Ltd v Telkom SA Limited and Others [2011] ZAGPPHC
dated 7
November 2011 - now reported at
[2011] JOL 26617
(GNP).
[18] In that matter,
as in this one, Telkom published a request for proposals in order to
appoint service providers. The request
for proposals stipulated a
closing date as 12 December 2007, and a tender validity period of 120
days from the closing date, during
which the offers made by bidders
would remain open for acceptance by Telkom. By the time the tender
validity period expired on
12 April 2008, no decision had been taken
by Telkom and the tender validity period had not been extended.
Despite this, Telkom
continued to evaluate and short-list the bids it
had received. It was only after the tender validity period had
expired that Telkom
sent emails to the 15 bidders it had short-listed
requesting them to agree to an extension of the tender validity
period. Some
agreed to do so. The decision to accept the bids of six
respondents was only taken after the expiry of tender validity period
of
120 days. Before any contract had been concluded with the accepted
bidders, Telkom decided, on legal advice, to apply for the setting
aside of its own decision.
[19] Southwood J
then went on to conclude:
“
[14]
The question to be decided is whether the procedure followed by the
applicant and the six respondents after 12 April 2008 (when
the
validity period of the proposals expired) was in compliance with
section 217 of the Constitution.
In
my view it
was
not. As soon the
validity period of the proposals had expired without the applicant
awarding a tender, the tender process was complete-
albeit
unsuccessfully - and the applicant
was
no longer free to
negotiate with the respondents as if they were simply attempting to
enter into a contract. The process was no
longer transparent,
equitable or competitive.
All the tenderers
were entitled to expect the applicant to apply its own procedure and
either award or not award a tender within
the validity period of the
proposals.
It
failed to award a tender within the validity period of the proposals
it received, it had to offer all interested parties a further
opportunity to tender. Negotiations with some tenderers to extend the
period of validity lacked transparency and
was
not equitable or
competitive. In my view the first and fifth respondents’
reliance only on rules of contract is misplaced.
”
[20] I am in
agreement with Southwood J for the reasons given by him. As a result,
it is my view that, in this case, once the tender
validity period had
expired on 4 January 2011, the tender process had been completed,
albeit unsuccessfully.
[21]
The judgment of Southwood J was followed recently by Plasket J in
Joubert Galpin
Searle and Others v Road Accident Fund and Others
[2014] 1 All SA 604
(ECP).
In the latter case
the central issues to be decided were the effect on the tender
process of the expiry of the tender validity period
and whether, if
the expiry of the tender validity period put an end to the process,
it could subsequently be revived.
The Court held that
once the tender validity period had expired, the tender process had
been completed, albeit unsuccessfully. There
were then no valid bids
to accept, so the RAF had no power to accept the expired bids.
[22]
As can be noted above, the decisions of Southwood J and Plasket J are
essentially on all fours with the present case. Recognising
and
following the doctrine of
stare
decisis
I
find myself bound by the judgments of my learned brothers. I find no
cause to deviate from the two judgments. In any event I am
not aware
of another judgment of any other Court, be it the Supreme Court of
Appeal or the Constitutional Court that overruled
the two prevailing
judgments.
[23] Because SAPS
and SITA are organs of State it is required in terms of section 217
of the Constitution, when they contract for
goods and services, to do
so in accordance with a system that is “fair, equitable,
transparent, competitive and cost effective”.
These core
principles of public procurement are given effect by a range of
statutes, such as the Preferential Procurement Policy
Framework Act 5
of 2000 (“PPPFA”) and the
Public Finance Management Act 1
of 1999
{“PFMA”) subordinate legislation such as the
regulations made in terms of the PPPFA and the Treasury Regulations
made
in terms of the PFMA, policies and guidelines.
[24]
In
All Pay
Consolidated Investment Holdings (Pty) Ltd and Others v. Chief
Executive Officer, South African Social Security Agency and
Others
2014(1) SA 604 (CC)
Froneman
J stressed that compliance with the requirements for a valid tender
process, issued in accordance with the constitutional
and legislative
procurement framework is thus legally required and that they are not
merely internal prescripts that may be disregarded
at whim.
[25] The
Preferential Procurement Policy Framework Act 5 of 2000 (“PPPFA”)
defines an “acceptable tender”
as any tender which in all
respects, complies with the specification and conditions of tender as
set out in the tender document.
Once the tender/bid had expired, the
bid is no longer an “acceptable tender” and cannot be
resuscitated after expiry.
[26]
In casu
,
approximately
thirty days had passed after the expiration of the bid before SITA
took steps to secure the first extension. The bid
documents do not
provide any basis for bids to be revived once they have expired.
They also do not
provide for extensions to be granted retrospectively. This means
that, objectively, the bid had expired after 4
January 2011
irrespective of the intention of the parties to extend the bid after
expiration thereof as they purported to do so
on several occasions.
[27] In the present
case and in terms of the RFB, the bid validity in respect of the
tender was 90 days starting from the closing
date for the tender
which was 4 October 2010. The bid was therefore due to expire and did
in fact expire on 4 January 2011. There
were seven further extensions
requested and granted but all these extension were sought and granted
after the bid had already expired
on 4 January 2011.
[28] Having dealt
with the issue of the expiration of the bid validity period, I am of
the view that this issue is dispositive of
the whole case before me.
It is therefore
unnecessary for me to consider the merits of the application.
[29] My finding is
that once the validity period of the proposals had expired with no
extension of the period being arranged before
the expiry of the
validity period, there were no valid bid in existence and an award
could not be validly made. For the reasons
set out above the
applicant has failed to make out a case for review.
[30] In the result
the application is dismissed with costs including the costs
consequent upon the employment of two Counsel.
E.M. MAKGOBA
JUDGE OF THE HIGH
COURT
HEARD ON : 27
November 2014
Judgment
delivered on : 16 January 2015
For the Applicant
: Adv. G Marcus SC
Adv. J. Berger
Instructed by:
Adams & Adams Attorneys
For the
Respondents: Adv. P.M. Mtshaulana SC
Adv. S Hassim SC
Adv. K Pillay SC
Instructed by:
State Attorney