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[2015] ZAGPPHC 179
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Valazone 268 CC and Others v Head of Department Mpumalanga Department of Education (49114/2014) [2015] ZAGPPHC 179 (7 April 2015)
REPUBLIC
OF SOUTH AFRICA
IN THE HIGH COURT
OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
CASE NOt 49114/14
IN THE MATTER
BETWEEN:
VALAZONE 268
CC
.........................................................................................................
l
st
APPLICANT
SAMOLLO TRADING
(PTY)
LTD
..............................................................................
2
nd
APPLICANT
SIYAKHANVA
BUSINESS ENTERPRISES
CC
.........................................................
3
RD
APPLICANT
ICONIC VENTRURES
(PTY)
LTD
..............................................................................
4
TH
APPLICANT
IBHOKO TRANSPORT
AND TRADING (PTY)
LTD
..............................................
5
TH
APPLICANT
AN YENDE
CC
...............................................................................................................
6
TH
APPLICANT
ASITHUTHUKENI
BUSINESS ENTERPRISE
CC
...................................................
7
TH
APPLICANT
MAIPI TRADING
CC
....................................................................................................
8
TH
APPLICANT
AND
HEAD OF
DEPARTMENT
MPUMALANGA
DEPARTMENT OF
EDUCATION
.................................................
RESPONDENT
JUDGMENT
KUBUSHI, J
INTRODUCTION
[1] This is a review
application. The applicants are seeking an order to review and set
aside the decision of the respondent to
re-advertise the bid which is
the subject matter of this application.
[2] There are eight
applicants. Applicants 1 to 7 were unsuccessful in their respective
bids. The respondent submits that four of
the seven unsuccessful
tenderers who are applicants before me, were disqualified for
non-compliance with technical and/or compliance
requirements whereas
in fact they had complied. The four have as such filed supplementary
affidavits attaching the documents it
is alleged did not form part of
their respective bid documents. I am also informed that applicant 4
has since abandoned its claim
because its bid was disqualified for
non-compliance with technical and/or compliance requirements.
Applicant 8 is one of the tenderers
that were awarded the tender and
is together with the other successful tenderers currently
implementing the bid on a month to month
basis.
[3] I shall for
convenience, in this judgment, refer to applicants 1, 2, 3, 5, 6 and
7 as applicants 1 to 7 even though applicant
4 is no longer
participating in the proceedings. Where I refer to all the
applicants, that is, applicants 1 to 7 and applicant
8 together, I
shall simply refer to them as the applicants.
[4] The respondent
is the ultimate incumbent responsible for the oversight of the
National Nutrition Programme (which is the subject
matter of the bid)
and for the final approval of the bid.
[5] Before me
applicants 1 to 7 are represented by Mr A Vorster; applicant 8 by Mr
P L Uys and the respondent by Mr Shafeoane.
[6]
The respondent took two administrative decisions in the lifecycle of
the bid. The first administrative decision was taken when
the
respondent awarded the bid. Due to certain irregularities in the
process of awarding the bid, applicants 1 to 7 were dissatisfied
with
the award of the tender and approached the court to have the decision
of the respondent to award the tender reviewed and set
aside. The
respondent was cited as the fourth respondent in that application.
The application was concluded when Janse van Nieuwenhuizen
J
reviewed
and set aside the decision of the fourth respondent to award the bid.
[7] The second
administrative decision was taken when, subsequent to a successful
review of the first decision, the respondent decided
not to award the
bid, but rather to re-advertise it. In the application before me, the
applicants now apply to have the second
administrative decision
reviewed and set aside.
[8] At the
commencement of the proceedings Mr Shakoane applied for condonation
for the late filing of the respondent’s heads
of argument. Mr
Uys opposed the application for condonation on the basis of prejudice
as applicant 8 was not afforded adequate
time within which to deal
with the respondent’s heads of argument. According to Mr Uys,
the heads were received on the Friday
preceding the Tuesday on which
the matter was to be heard. Mr Vorster, on the other hand, left the
matter in my hands. Due to the
intricate nature of the proceedings
and the fact that the matter could not be postponed due to its
urgency, I granted the application.
Heads of argument are, in any
way, for the convenience of the court and I do not think that
condonation will cause applicant 8
any material prejudice.
[9] Mr Vorster
applied for condonation for the failure by applicants 1 to 7 to
comply with the order of Fourie J (This will become
apparent in this
judgment below). There being no objection either from applicant 8 or
the respondent, I granted the application.
HISTORICAL
BACKGROUND
[10] The Mpumalanga
Provincial Department of Education (the Department) published the
following tender in the Mpumalanga Provincial
Supply Chain Management
(SCM) Unit - Bid Bulletin: Volume No: 204, issued on 8 August 2013:
“
Bid
No:
EDU/069/13/MP
[Appointment
of the services provider/s to operate warehouses and supply bulb
foodstuffs, fresh vegetables and fruits to schools
participating in
the National Nutrition Programme within identified CRDP areas for a
period of
(3)
three
years, with the option to extend for another 2 (two) years]."
("the bid”)
[11] One thousand
one hundred and thirty five bids were submitted to the Provincial
Supply Chain Management Office of the Department.
Included in this
number were the bids of the applicants. Only seventeen bids were
awarded and, included in this number is the bid
of applicant 8.
[12] Due to some
alleged irregularities in the bid process, applicants 1 to 7 launched
a review application (the first review application)
to review and set
aside the decision of the fourth respondent to award the bid to the
aforesaid seventeen tenderers.
[13] In that review
application, all the successful tenderers were cited as respondents.
As already stated in paragraph [6] of this
judgment, the current
respondent was cited as the fourth respondent. It should be noted
that even though applicant 8 was cited
as one of the respondents in
the first review application, it did not oppose the relief sought
therein because the irregularities
mentioned in that review
application did not relate to the bid submitted by it Actually, none
of the successful tenderers in that
application filed any papers in
opposition to the application.
[14] The first
review application was launched in two parts. The relief sought in
Part I of the application was aimed at achieving
an expedited hearing
of the review application and Part II was in respect of the substance
of the review. Part I of that application
was heard and adjudicated
in favour of the applicants by Preller J. Part II was heard and
adjudicated, also in favour of the applicants,
by Janse van
Nieuwenhuizen J, to whose judgment and order I shall return in due
course.
[15]
Due to the nature of the bid, that is, providing meals to thousands
of disadvantaged and impoverished children, and in the
interests of
the beneficiaries of the bid, applicants 1 to 7 opted not to seek a
relief that would have suspended the implementation
of the tender
pending a judicial review, janse van Nieuwenhuizen J took this
approach by applicants 1 to 7 into consideration and
ordered that the
status quo
in
respect of the implementation of the bid be maintained until the
fourth respondent has reconsidered and re-adjudicated upon the
bid.
Hence, the companies which were awarded the tender continued with the
implementation of the bid.
[16] Janse van
Nieuwenhuizen J found that the awarding of the bid to the incumbent
bidders and the disqualification of other bidders,
constituted
improper and prejudicial conduct, maladministration and abuse of
power in state affairs, and as a result, made the
following order:
“
1. ...
2....
3.
THAT the awarding of Bid Number: EDU/069/13/MP (Appointment of the
services provider/s to operate warehouses and supply bulb
foodstuffs,
fresh vegetables and fruits to schools participating in the National
Nutrition Programme within identified
CRDP
areas for a period of (3)
three years, with the option to extend for another 2 (two) years)
(the bid), to the fifth to twenty first
respondents. Is reviewed and
set aside.
4. THAT the bid is
remitted to the fourth respondent for reconsideration, who is ordered
and directed to consider and adjudicate
upon the bid, having due
regard to this judgment, within one (1) month of the granting of this
order.
5.
THAT
the
status quo in respect of the implementation of the bid is maintained
until the fourth respondent has reconsidered and re-adjudicated
upon
the bid.
6. THAT the second,
third and fourth respondents pay the costs of the application on a
scale as between attorney and client jointly
and severally, the one
paying, the others to be absolved.”
[17]
The bid was indeed remitted to the fourth respondent who, as I have
said, is the respondent in the current application. After
considering
and adjudicating on the bid (at least according to the respondent),
and due to certain flaws found to exist in the
bids, the fourth
respondent decided not to award the bid but to re-advertise it and to
maintain the
status
quo
in
respect of the successful tenders. This is the decision which the
applicants in the current review application (the second review
application) seek to have reviewed and set aside.
[18] In an effort to
satisfy the judgment and order of Janse van Nieuwenhuizen J, the
respondent appointed a Bid Evaluation Committee
(BEC) and a Bid
Adjudication Committee (BAC) to assist in implementing the judgment
and order.
[19] The BEC was
appointed by the respondent on 17 June 2014 with a directive to
conclude all the processes by 20 June 2014. Out
of the 1135 initial
bid documents received by the SCM office, only 1099 bid documents
were received and evaluated by the BEC. All
bids received by the BEC
were evaluated for compliance to requirements as stipulated in the
specification document being, for compulsory
returnable documents and
compliance to requirements checklist. And, in view of the
irregularities observed, the BEC resolved not
to continue with the
evaluation process in terms of the Preferential Procurements Policy
Framework Act 5 of 2000 (PPPFA) which
would determine bids that were
found to have qualified for the final stage and, instead, sent its
recommendations to re-advertise
the bid to the BAC.
[20] During their
evaluations, the BEC discovered the following discrepancies in the
bid documents:
1. There were two
bid documents that were not relevant to the bid in question but
belonged to the cleaning services for Maxa Building
(EDU/071/1MP) and
appeared in the bid certificates issued by the Provincial SCM Unit
for the bid under consideration (EDU/069/13/MP);
2. There were three
(3) other bid documents that were without bid numbers but appeared in
the bid certificate issued by the Provincial
SCM Unit;
3. According to the
SCM Unit procedures and processes, all bid documents must bear the
central SCM stamp in all pages indicating
the closing date of the bid
as one of the control measures. There were documents which did not
bear the Provincial SCM Unit stamp
(some pages were not stamped;
furthermore two bid documents were not stamped at ail). The BAC was
made aware that bid No. (EDU/079/14/MP)
for mobile classrooms had
similar discrepancies of bid documents partially stamped by the
Provincial SCM Unit and based on the
Treasury opinion, it was
resolved that the bid be re-advertised. The Department is currently
implementing this resolution.
4. Furthermore, upon
evaluation, four of the initial seventeen successful bids were
disqualified.
5. The BEC also
observed that the process seemed to have been tampered with and that
should that be proven correct, the Department
would be exposed to the
risk of a plethora of litigation.
[21] The BEC after
consideration of the bid evaluation process, recommended:
(a)
that
the BAC consider the report submitted by the BEC;
(b)
that
the BAC consider options of re-advertising the Bid (EDU/069/13/MP)
based on the submission provided.
[22] On receipt of
the recommendations from the BEC, the BAC, on 23 June 2014,
considered the BEC report and took note of the irregularities
highlighted therein. After deliberating on the submitted BEC report
the BAC recommended to the HOD that tender EDU/069/13/MP be
re-advertised. The reasons of the BAC were that there were documents
that had not been stamped by the Provincial SCM Unit and there
was no
way of verifying that the documents were submitted legally; and that
there was a huge discrepancy in the number of documents
in the
submission certificate and the number of documents that could be
physically counted. The BAC further recommended that the
current 17
service providers be contracted on a month to month basis until the
tender is re-advertised and awarded and that Treasury
be made aware
of the encountered irregularities. The BACs final recommendation was
that bid EDU/069/13/MP be re-advertised in order
to avoid further
litigation.
[23] Following the
recommendations by the BAC to the respondent the respondent approved
the recommendations and made a decision
to re-advertise the bid.
[24] Pursuant to the
decision taken, the respondent reported as follows to the applicants:
1.
On
26 may 2014, the Gauteng Division of the High Court of South Africa,
Pretoria, under Court number 3258/2014 and
per
Janse
van Nieuwenhuizen J delivered a judgment, reviewing and setting aside
the award of Bid Number EDU/069/MP [Appointment of service
provider/s
to manage, operate warehouses and supply bulb foodstuffs, fresh
vegetables and fruits to schools participating in the
National
Nutrition Programme with identified CRDP areas for a period of (3)
three years, with the option to extend for another
two (2) years];
2
.
Amongst
others and of essence herewith, the Bid was remitted to me for
reconsideration and I was also ordered and directed to consider
and
adjudicate upon the Bid, having regard to the judgment, within 1
month.
3.
Having considered the judgment
and having applied my mind thereto and to the laws of the Republic
thereto, and in order to promptly
comply with it, on 02 june 2014,1
requested from Treasury a list of all Bidders for tender:
EDU/069/13/MP, requested the Bid documents
from the Director General
and also requested from the Auditor General the Bid Documents for the
appointed Service Providers, for
purposes of consideration.
4. Consequent
thereto and in order to satisfy the judgment, on 17 June 2014 I
appointed a Bid Evaluation Committee and on 18 June
2014, a Bid
Adjudication Committee for purposes of assisting me in the
consideration and adjudicating the Bid.
5.
These
committees, as I directed, sat considered and adjudicated upon the
Bid, having regard to the judgment, the laws of the Republic
and all
relevant factors and considerations. Thereafter they made
recommendations to me.
6.
On 23 June 2014, I received the recommendations from the aforesaid
committees, which I thoroughly considered and also applied
my mind
thereto. Having considered the recommendations and applied my mind as
aforesaid and in order to ensure that the processes)
and the
decision(s) thereof comply with the laws of the Republic, including
the law as alluded to in the Judgment, I am of the
view that fair,
just, impartial, objective,equitable, transparent, competitive
administration of justice and fairness in the circumstances
require
that the Bid be re-advertised.
DECISION
7. In conclusion,
the Tender for the [Appointment of service provider/s to manage,
operate warehouses and supply bulb foodstuffs,
fresh vegetables and
fruits to schools participating in the National Nutrition Programme
with identified CRDP areas for a period
of (3) three years, with the
option to extend for another two (2) years] is to be re-advertised.
8. Furthermore, in
order not to disrupt the programme, the current 17 service providers
shall be contracted on a month to month
basis until the appointment
of a new Service Provider or Providers.”
[25] On 3 July 2014,
applicants 1 to 7 launched the current review application. The
application was launched in two parts as in
the first review
application. Part I of the application was heard and decided in
favour of the applicants by Fourie J. In essence
Fourie J authorised
and directed an expedited review of the awarding of the tender.
Consequent to the order granted by Fourie J,
the applicants amended
their respective notices of motion and delivered supplementary
affidavits in support thereof in respect
of the relief sought in Part
II of the review application. The review application is thus before
me in its amended format.
[26] When making a
determination on Part I of the current review application, and upon
application by applicant 8, Fourie J made
an order joining applicant
8 as an applicant to the proceedings.
APPLICATION BV
RESPONDENT TO DISMISS THE APPLICANTS’ CASE
[27] There are two
issues which I intend to deal with before going into the main case.
These issues were both raised by the respondent
during argument,
namely, whether the applicants’ case should be dismissed on the
basis that they failed in their founding
papers to allege bias on the
part of the respondent; secondly, whether applicant 8’s case
should be dismissed on the basis
that it during argument abandoned
the remedy it sought in its review application.
Dismissal of the
Applicant's Case
[28] The oral
argument advanced by Mr Shakoane on behalf of the respondent is that
the applicants do not in their founding papers
and evidence, allege
or attack the findings and recommendations of the BEC and the BAC, on
which the respondent relied for her
decision, as having been
influenced by bias and corruption. According to Mr Shakoane, the
applicants are as a result, non-suited
for tending belatedly and
during argument to attack and accuse the respondent of bias and
corruption or that her decision to re-advertise
was designed or
calculated to assist those of the tenderers whose house was not in
order to getting the opportunity to get their
house in order.
[29] As the issue
was raised for the first time during argument before me, I directed
Mr Shakoane to prepare supplementary heads
of argument and to refer
me to specific authorities on the issue. Counsel did indeed furnish
me with the supplementary heads of
argument. The applicants were also
served but opted not to respond thereto. I was, in the supplementary
heads of argument, referred
to the judgment in South African Post
Office v De Lacy (19/08)
[2009] ZASCA 45
2009 (5) SA 255
(SCA) para
14 as authority for the proposition advanced by Mr Shakoane.
[30] I, however, did
not find the supplementary heads of argument or in particular the
authority referred to therein, of assistance.
Paragraph 14 of the
judgment to which Mr Shakoane specifically referred me to, reads as
follows:
“[1
4]
Gore makes it clear, when read with Steenhamp, that irregularities
falling short of dishonesty, incompetence on the part of those
who
evaluated the tenders, and even conduct that amounts to negligence,
will
not found a claim for damages
at
the hands of an unsuccessful tenderer. A claim will lie only if it is
established that the award of the contract to the rival
was brought
about by dishonest or fraudulent conduct on the part of one or more
of the officials for whose conduct SAPO is vicariously
liable, but
for which the contract would have been awarded to the complainant.
Needless to say, the
onus
rested
upon the respondents to establish, as a matter of probability, that
the award of the contract was brought about by conduct
of that bind,
and if that
onus
was
not discharged the claim had to fail.”
(my
emphasis).
[31] I am not
persuaded that this authority finds application in the circumstances
of the current matter before me. The above quoted
paragraph indicates
dearly that the requirements of the allegation of bias or negligence
should be alleged where the claim is for
damages. That case differs
from the current matter in that, in this instance, the applicants are
not claiming damages but are seeking
to review an administrative
decision. That there are no allegations of bias or corruption in the
applicants’ founding papers;
or that Mr Vorster canvassed such
allegations during oral argument does not make the applicants
non-suited, in my view.
Dismissal of
Applicant 8's Case
[32] I am equally
not convinced by the second point raised in respect of applicant 8.
In its papers filed of record, applicant 8
seeks the following
relief:
“
1
.
...
2. That the decision
of the respondent to re-advertise Bid No: EDU/069/13/MP is reviewed
and set aside and replaced with the following
decision:
2.1 That Bid No:
EDU/069/13/MP is awarded to the first to eighth applicants on an
equal distribution basis;
2.2 That the
respondent is ordered to negotiate and conclude service level
agreements with the first to eighth applicants for a
period of 3
(three) years, with the option to extend for another 2 (two) years,
within one month from the date of the order;
2.3
That the
status quo
be
maintained until the respondent has concluded service level
agreements with the first to eighth applicants.
3. That the
respondent be ordered to pay all the costs in respect of Part I of
the application and the costs of Part II of the application
on an
attorney and client scale.
4. That the eighth
applicant be granted further and/or alternative relief."
[33] In summary, the
submission by applicant 8 is that the court should review and set
aside the administrative decision of the
respondent and should
substitute that decision with a decision to award the tender to
applicant 8 and any other applicant who qualifies
for the tender.
Applicant 8’s contention is that it is not necessary for the
court to re-adjudicate and evaluate its bid
since the bid has been
adjudicated upon and applicant 8 was found to comply in all respects
with the requirement of the tender.
Accordingly, applicant 8 required
of the court to sanction its implementation of the tender by awarding
the tender to it, and to
any other applicant who qualifies, on an
equal distribution basis.
[34] This is the
case which Mr Uys moved in argument before me, but, later abandoned
on behalf of applicant 8. And, relying on the
prayer for ‘further
and alternative relief, Mr Uys, on behalf of applicant 8, moved in
common cause with applicants 1 to
7 that its bid be remitted to the
respondent for reconsideration and adjudication.
[35] Mr Shakoane
objected to this move by Mr Uys and prayed for the dismissal of
applicant 8’s application.
[36]
The prayer for 'further and alternative relief has been held in
numerous cases to be redundant and mere verbiage. This superfluous
relief has been held not to entitle a court to grant relief that is
inconsistent with the factual statements and the terms of the
claim
expressed in the papers. It is my view that a party who seeks relief
must set out clearly and precisely the relief he or
she seeks from
the court in his or her pleadings for the other party to know what
case he or she has to meet. If no such case is
set out the proper
route is to apply for amendment.
1
Based on this reasoning, my view is that applicant 8 ought to have
applied for the amendment of its papers in order to entitle
it to the
new prayer it seeks.
[37] The new relief
applicant 8 seeks is, however, ancillary to the main relief to have
the decision of the respondent reviewed
and set aside. It is a remedy
which applicant 8 seeks in the event that its main relief is granted.
In that sense it does not mean
that applicant 8 is non-suited in
these proceedings, its main relief must still be considered.
THE ISSUE
[38] The broad issue
to be determined is whether the decision of the respondent to
re-advertise the bid instead of awarding it should
be reviewed and
set aside. Simply put, the issue is whether the decision taken by the
respondent to cancel the tender rather than
award it, violated the
applicants
1
rights to procedural fairness in terms of the
Promotion of Administrative Justice Act No 3 of 2000 (PAJA). The
second issue relates
to the appropriate remedy to be granted in the
event of the first issue being decided in favour of the applicants.
LAW
[39]
It is well established that a decision to award government tenders
constitutes administrative action. This entitles the applicants
to a
lawful and procedurally fair process and, where their rights are
affected or threatened, to an outcome which is justifiable
in
relation to the reasons provided for it.
2
[40]
It is also well established that the cause of action for the judicial
review of administrative action now ordinarily arises
from the
provisions of PAJA; it follows that PAJA finds application in this
process.
3
[41] The grounds for
judicial review under PAJA are contained in s 6 and provide as
follows:
“
6.
Judicial review of administrative action
(1)
...
(2) A court or
tribunal has the power to judicially review an administrative action
if -
(a)
the
administrator who took it -
(i) was not
authorised to do so by the empowering provision;
(ii) acted under a
delegation of a power which was not authorised by the empowering
provision; or
(iii) was bias or
reasonably suspected of bias;
(b)
a
mandatory and material procedure or condition prescribed by an
empowering provision was not complied with;
(c)
the
action was procedurally unfair;
(d)
the
action was materially influenced by an error of law;
(e)
the
action was taken -
(i) for reasons not
authorised by the empowering provision;
(ii) for ulterior
purpose or motive;
(iii) because
irrelevant considerations were taken into account or relevant
considerations were not considered;
(iv) because of the
unauthorised or unwarranted dictates of another person or body;
(v) in bad faith; or
(vi) arbitrarily or
capriciously;
(f)
the
action itself -
(i) contravenes a
law or is not authorised by the empowering provision; or
(ii) is not
rationally connected to -
(aa)
the
purpose for which it was taken;
(bb)
the
purpose of the empowering provision;
(cc)
the
information before the administrator; or
(dd)
the
reasons given for it by the administrator;
(g)
the
action consists of failure to take a decision;
(h)
the
exercise of the power or the performance of the function authorised
by the empowering provision, in pursuance of which the administrative
action was purportedly taken, is so unreasonable that no reasonable
person could have exercised the power or performed the function;
or
(i)
the
action is otherwise unconstitutional or unlawful.
(3)...”
THE RELIEF SOUGHT
AND THE DISPUTE BETWEEN THE PARTIES
[42] Applicant 8 in
its founding papers reconciles itself with the reasons advanced by
applicants 1 to 7 as grounds of review of
the second administrative
decision of the respondent. I shall therefore, deal with their cases
together.
[43] In the amended
papers, applicants 1 to 7 seek the following relief:
“
1.
that the applicants’ non-compliance with the order of the
Honourable Mr Justice Fourie, dated
24
July
2014
be condoned;
2. reviewing and
setting aside the decision by the respondent not to award, and to
re-advertise Bid: EDU/069/13/MP;
3. ordering the
respondent to consider the l
rt
-3
rd
& 5
th
to 7
th
applicants' bid in terms of the evaluation
methodology prescribed in paragraph 9 of the bid document, within 15
(fifteen) days
of the granting of the order?
4. provide the
applicants with a written report, within 20 (twenty) days of the
granting of the order, on the outcome of the evaluation
process, with
specific reference to:
4.1 the valuation
criteria used for measuring functionality of the applicants*
respective bids;
4.2 the weight that
was attached to each criterion;
4.3 the applicable
values that were utilised when scoring each criterion;
4.4 the score for
functionality obtained by each individual application;
4.5 the points
scored by those applicants, who scored the minimum threshold of 70%
for functionality, in respect of price and equity
ownership;
5. ordering the
respondent to consider those applicant/s, if any, who scored the
minimum threshold of 70% for functionality, and
who scored the
highest overall points, for recommendation.**
[44] Central to the
applicants' case is the question whether or not the respondent when
making the decision to re-advertise the
bid, acted within the
boundaries of the court order granted by Janse van Nieuwenhuizen J.
The main contention being that the respondent
unlawfully
re-advertised the bid when she should have adjudicated upon the bid
and awarded it. The first issue to determine is
whether the
respondent had the authority to re~ advertise the bid. This question
encapsulates four sub-questions, namely, whether
(a)
the
decision to re-advertise was subversive of the court order;
(b)
the
decision to re-advertise was contrary to the public procurement
policy;
(c)
the
decision to re-advertise was irrational; and
(d)
the
decision of the respondent to maintain the
status
quo
with
respect to the implementation of the bid was unlawful.
Re-advertisement
Subversive of the Court Order?
[45] The submission
by the applicants is that the respondent failed to comply with the
order of court in that the bids were only
checked for technical
compliance and not adjudicated upon, whilst the court order directed
the respondent to consider and adjudicate
the bids. According to the
applicants, the respondent should have adjudicated upon the bids as
is provided for in the court order,
the bid document and legislation
which govern the procurement process under review.
[46] Regulation
16A6.2 of the Treasury Regulations 2005 promulgated in Government
Gazette 27388 dated 15 March 2005, provides for
the constitution of
three committees pursuant to a bid invitation, namely:
(a)
The
Technical Evaluation Committee;
(b)
The
Bid Evaluation Committee; and
(c)
The
Bid Adjudication Committee
The regulation also
provides for the approval of the BEC and BAC recommendations.
[47] It is common
cause that the respondent appointed two committees, namely, the BEC
and the BAC, to assist her to consider and
adjudicate the bid. It is
not in dispute that when the BEC sat, it only checked the bid for
technical compliance and having found
the various discrepancies as
stated in its report, recommended to the BAC that the bid be
cancelled and re-advertised. Similarly,
having considered the
recommendation contained in the report of the BEC, the BAC
recommended to the respondent the re-advertisement
of the bid. The
respondent, after careful consideration of the recommendations
contained in the report of the BAC, took a decision
to re-advertise
the bid.
[48] Does it mean
that, in this way, the bid was not adjudicated upon? If not, what is
it that the respondent, including the two
committees, should have
done for them to have adjudicated the bid?
[49] The evaluation
methodology contained in the bid document for the Bid EDU/069/13/MP
is stated thus:
“
9.
EVALUATION METHODOLOGY
9.1 General
The
evaluation shall be conducted by the Bid Evaluation Committee (BEC)
on the basis of functionality
(100),
price
(90)
and equity ownership
(10).
9.2
Evaluation Phases:
9.2.1
Phase
I
- Functionality;
9.2.2
Phase II - Point of allocation for
price and equity ownership; and
9.2.3 Phase III -
Recommendations."
This is what the BEC
should have done for it to have evaluated the bid. However, as is
apparent from the BEC report this process
was not followed.
[50] Is this what
the judge intended the BEC to do when it ordered and directed the
respondent to consider and adjudicate the bid?
[51]
The determination of the issues in this application depends on the
proper interpretation of the judgment and order of Janse
van
Nieuwenhuizen J. It has been held that the starting point is to
determine the manifest purpose of the order. In interpreting
a
judgment or order, the court's intention is to be ascertained
primarily from the language of the judgment or order in accordance
with the usual well-known rules relating to the interpretation of
documents. As in the case of a document, the judgment or order
and
the court's reasons for giving it must be read as a whole in order to
ascertain its intention.
4
[52] The judgment
and order as it stands is not ambiguous and the language used does
not require any interpretation. The intention
of Janse van
Nieuwenhuizen J is, as such, clear and unequivocal. The respondent is
ordered and directed to “reconsider”,
“consider”
and “adjudicate” the bid.
[53] The words
“reconsider”, “consider” and “adjudicate”
are in no way ambiguous as well. I
looked up the meaning of the words
accessed through the Google search engine from the Free
Merriam-Webster Dictionary. The words
are defined as follows:
“
reconsider”
is described as: ‘to think carefully about (something or
someone) again especially in order to change a
choice or decision you
have already made’.
“
consider”
means: 'to think carefully about (something) typically before making
a decision’.
“
adjudicate”
means: 'to make an official decision about who is right in a
dispute
'.
This is the same
definition provided by the respondent in her heads of argument
derived from Thesaurus: English (U.K.).
[54] The bid
document, however, does not use the words “consider” and
“adjudicate”. The word used is “evaluation”.
The definition given to “evaluate” in the Free
Merriam-Webster Dictionary accessed through the Google search engine,
is 'to judge the value or condition of (someone or something) in a
careful and thoughtful way'.
[55]The bid document
allows for a two-step process which must be followed before a tender
may be awarded. The first step is a disqualification
process. Put
differently, a compliance process. Bidders are required to furnish
what is termed 'compulsory returnable documents’.
Failure by
the bidders to attach any one of the compulsory documents leads to
the disqualification of their bids. The second step
is the evaluation
process. This step requires the BEC to evaluate the bids for
functionality, price and equity ownership.
[56] This, in my
understanding is what the judge had in mind and expected the
respondent to comply with, when the court ordered
and directed her to
consider and adjudicate the bid.
[57] However, the
respondent's contention is that she could not proceed to the second
step of the process because she found that
the bid documents might
have been tampered with and if this was proven to be correct, might
lead the Department to further unnecessary
litigation, and, as such,
resolved not to continue with the evaluation process.
[58] Having found
the discrepancies, was the respondent entitled not to proceed to the
second step of the evaluation process? By
so doing did it subvert the
court order? My view is that she did.
[59] The
respondent’s submission is that since the award of the bid to
the initial 17 incumbent service providers was set
aside by the
court, the bid was back to the stage of “prior to it being
awarded”. It is the respondent’s contention
that by
remitting the bid to her, the court left it in her discretion to
decide whether to award the bid or to cancel and re-advertise
it or
negotiate with the current bidders. Having considered all the factors
before her and the recommendation by the BEC and the
BAC she
exercised her discretion in favour of re-advertising the bid By
exercising her discretion, the respondent’s assertion
is that
she proceeded to reconsider and adjudicate the tender. She is
however, wrong. The court order as I have found is not ambiguous,
it
enjoined the respondent to consider and adjudicate the bid. And, it
meant that having checked the bids for compliance the respondent
was
supposed to have proceeded to the first phase of the next step in the
evaluation process, that is, to check the bids that complied
for
functionality.
[60] It is,
therefore, clear that the bids were not adjudicated upon either by
the committees or the respondent The BEC having considered
the bid
documents for technical compliance only, means that the BAC and the
respondent also considered the bids for technical compliance
since
the information that was referred to them, which they considered at
the time they took the decision to re-advertise, was
on technical
compliance only. For the bids to have been adjudicated upon the BEC
should have proceeded to consider the bids through
all the stages of
evaluation as envisaged in the bid document and referred its findings
thereon to the BAC and eventually to the
respondent. This process,
however, was not undertaken.
[61] I am in
agreement with the applicants in their submission that the privilege
to re-advertise the tender was neither reserved
in the order of court
nor was it reserved in the bid document. My view is that, the
respondent having found that the tender process
and/or the bid
documents have been tempered with, instead of resolving to
re-advertise the bid, should have approached the court
for an order
to re-advertise. This she did not do but took it upon herself to act
in contravention of the court order and re-advertise
the bid.
[62] The argument by
the applicants that the respondent should have disregarded all the
bids that were non-compliant at the disqualification
stage is, thus,
correct. There were 522 bid documents that fully complied with ail
the requirements for submission of bids. Put
differently, 522 bidders
had furnished all the ‘compulsory returnable documents’.
They, therefore, qualified to proceed
and be evaluated for
functionality. The respondent was duty bound, in compliance with the
court order, to evaluate those bids for
functionality, price and
equity ownership.
[63] It is so that
in any bidding process of the magnitude of the current bid, there
will be invariably bids which are invalidated
for various reasons.
The irregularities discovered by the BEC should not have invalidated
the legitimate bids and should not have
constituted legitimate
grounds to cancel and re-advertise the bid.
[64]
Although the provisions of the law do not determine the scope of
discretion that the respondent has when contemplating to cancel
a
tender, however, procedural fairness, as argued by Mr Uys, demanded
that the respondent in reconsidering the tenders and taking
a
decision to re-advertise the bid, should have afforded all the then
successful tenderers an opportunity to make representations
on any
factor that led her not to award the tender at all. it is common
cause that the respondent took the decision to re-advertise
the bid
without informing the then successful bidders of her intention to do
so. That opportunity not having been afforded, the
respondent’s
decision has to be set aside on this ground as well.
5
Non Compliance
with the Preferential Procurement Regulations
[65] The applicants’
attitude is that the reasons for cancellation and re-advertisement of
the bid are in conflict with the
legislative framework applicable to
the procurement process. In other words, the reason provided by the
respondent to re-advertise
the bid is in contravention with the
Preferential Procurements Policy Framework Act 5 of 2000 (PPPFA) and
the Regulations published
under it in 2011 (the Preferential
Procurement Regulations, 2011) which prescribe the manner in which
tenders should be adjudicated,
and the circumstances which should
exist for a tender to be cancelled.
[66]
The respondent on the other hand, relying on the provisions of
regulation 8 (4)
(b)
of
the Preferential Procurement Regulations, submits that a bid may be
cancelled, prior to it being awarded where funds were no
longer
available to cover the total envisaged expenditure. The contention
being that in the light of possible litigation from other
disgruntled
bidders, should there be proof that the bids were tampered with,
there would be no telling the costs that the department
would incur
in litigation should the bid not be cancelled. Taking into account
the costs incurred in the first review, the current
review and the
cost of the NSNP itself, there were clearly no funds available to
cover the total envisaged expenditure, so it was
argued.
[67] In terms of
regulation 8 of the Preferential Procurement Regulations, 2011, a bid
may be cancelled, prior to it being awarded,
under the following
circumstances:
(a)
due
to changed circumstances, there was no longer a need for the
services, works or goods requested; or
(b)
funds
were no longer available to cover the total envisaged expenditure; or
(c)
no
acceptable bids were received.
[68] Although the
law allows that during a tender process, and before a binding
agreement is entered into between the respondent
and a successful
bidder, a tender may be cancelled, the cancellation of the tender is
not an absolute right of the respondent As
stated in paragraph [67]
of this judgment, there are circumstances under which a tender may be
cancelled and which the respondent
must have complied with before
cancelling the bid. In cancelling the tender, the respondent received
her powers directly or indirectly
from the Regulations alone and
could only act within its limitations, express or implied.
[69]
The respondent does not state that a budget for the implementation of
the tender is no longer available, but seems to suggest
that the
costs of possible litigation is a factor which should be taken into
consideration when applying regulation 8 (4)
(b).
This,
however, is incorrect. Costs of possible litigation cannot be
considered as a factor when the regulation is invoked. The
respondent’s reliance on regulation 8 (4)
(b)
is
further contradicted by the respondent’s statement to extend
the program for a further three years.
[70] Mr Shakoane
went at great length, during argument, to try and convince me as to
how the costs of litigation will have an effect
on the envisaged
funds of the tender. I, however, remain not persuaded as there was no
legal basis which he could use to support
his argument. It is a
well-known fact that during the budgeting process of a Department,
funds are specifically allocated for each
tender (the envisaged
expense) and that the costs of any litigation that may ensue in
respect of a tender are not paid from its
budget but from the
Department’s litigation budget
[71] What is even
worse, Mr Shakoane could not convince me of any potential litigation
against the Department in respect of this
tender. He was at pains to
explain to me how he foresees further litigation ensuing in respect
of this tender. His argument that
the joinder of applicant 8 in these
proceedings was indicative of the probabilities that the floodgates
will be opened is unsustainable.
If any of the bidders intended to
approach the court, they would already have done so.
[72] His further
argument that probabilities are that if an order is granted in favour
of the applicants, the other bidders will
litigate, is also not
supported by any evidence and is at best speculative. The extent of
such envisaged litigation, if any, is
unknown as well.
[73] It Is,
therefore, my view that the underlying reason given by the respondent
is no justification to cancel and re-advertise
the bid. The decision
as such is in contravention of the applicable law.
The Decision is
Irrational
[74] The applicants
submit further that the respondent's decision to re-advertise the
tender was irrational. According to the applicants,
in the absence of
irregularities pertaining to their bids, the respondent was enjoined
to proceed to evaluate the bids in terms
of the evaluation criteria
embodied in the bid document. Only in the event of the applicants, or
any other bidder who qualifies
to be evaluated as prescribed in the
bid document, failing to achieve the minimum qualifying score for
functionality, may they
be finally disqualified, and if no responsive
bids remain, may the tender be cancelled and re-advertised.
I agree.
The
decision to Maintain the Status Quo with Respect to the
Implementation of the Bid is
Unlawful
[75]
The contention of the applicants is that the decision of the
respondent to maintain the
status
quo
with
respect to the implementation of the bid, pending its
re-advertisement, and to enter into “month-to month”
agreements
with the previously successful bidders, has no legal
basis. It is unlawful and therefore
ultra
vires.
It
gives validity to transactions which are unlawful, so it is
contended.
[76]
My view, however, is that, even if the applicants' assertions are
correct, the circumstances of this tender are such that a
lacuna
cannot
be allowed. Put differently, it means that the circumstances of the
tender are such that its implementation cannot be suspended
pending
the finalisation of the litigation and/or the tender processes.
Applicants 1 to 7 were well aware of such circumstances
when they
launched the first application and opted not to request an order
suspending implementation of the tender.
[77]
Janse van Nieuwenhuizen J, without giving any reasons in her
judgment, ordered that the
status
quo
in
respect of the implementation of the bid be maintained until the
respondent has reconsidered and re-adjudicated upon the bid.
I have
to assume that Janse van Nieuwenhuizen J took the approach by
applicants 1 to 7 into consideration when she granted the
order.
[78]
A long argument ensued during the hearing of this application about
the status of the judgment and order of janse van Nieuwenhuizen
J
should I grant an order setting aside the decision of the respondent
to re-advertise. My view is that the
status
quo ante
will
be retained. Once the decision of the respondent to re-advertise is
no longer in place, the position reverts to the initial
order of
Janse van Nieuwenhuizen J which ordered the respondent to reconsider
and re-adjudicate the bid and to maintain the
status
quo
in
respect of the implementation of the bid.
[79] Pursuant to the
aforementioned grounds, it is my view that the respondent's decision
to cancel and re-advertise the bid ought
to be reviewed and set
aside.
THE REMEDY
[80] It, therefore,
follows that, the decision having been set aside the applicants are
entitled to the remedy they seek in their
notice of motion. The
applicant should also be afforded this remedy since it was also
successful in its claim for setting the respondent’s
decision
aside.
COSTS
[81] Applicant 8
applied for an order for costs on an attorney and client scale. I,
however, am not of the opinion that the circumstances
of this case
justify an order for costs on a punitive scale. The present
proceedings depended on the interpretation of the judgment
and order
of janse van Nieuwenhuizen J. I do not think that the respondent
should be penalised for interpreting the order wrongly.
The
applicants being the successful parties are entitled to their
ordinary costs of suit.
ORDER
[82] In the
circumstances, the following order is granted:
1. The order marked
with an “X” an initialled is made an order of court.
E.M.
KUBUSHI
JUDGE
OF THE HIGH COURT
APPEARANCES
HEARD
ON THE: 05 MARCH 2015
DATE
OP JUDGMENT: 07 APRIL 2015
APPLICANT'S
COUNSEL: ADV. P A VAN NIEKERK SC
APPLICANT'S
ATTORNEY: DE KORTE DU PLESSIS INC
RESPONDENT'S
COUNSEL : ADV. C WOODROW
RESPONDENT’S
ATTORNEY: SNYMAN DE JAGER ATTORNEYS
REPUBLIC OF SOUTH
AFRICA
IN THE HIGH COURT
OP SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
CASE NO: 49114/14
IN THE MATTER
BETWEEN:
VALAZONE 268
CC
.............................................................................................
1
st
APPLICANT
SAMOLLO TRADING
(PTY)
LTD
....................................................................
2
nd
APPLICANT
SIYAKHANYA
RUSINESS ENTERPRISES
CC
.............................................
3
RD
APPLICANT
ICONIC VENTRURES
(PTY)
LTD
....................................................................
4
TH
APPLICANT
IBHOKO TRANSPORT
AND TRADING (PTY) LTD
....................................
5
TH
APPLICANT
AN VENDE
CC
....................................................................................................
6
TH
APPLICANT
ASITHUTHUKENI
BUSINESS ENTERPRISE CC
.........................................
7
TH
APPLICANT
MAIPI TRADING
CC
.........................................................................................
8
th
APPLICANT
AND
HEAD OF
DEPARTMENT
MPUMALANGA
DEPARTMENT OF
EDUCATION
........................................
RESPONDENT
ORDER
Having heard
counsel, it is ordered that:
1. The decision by
the respondent not to award, and to re-advertise Bid: EDU/069/13/MP
[Appointment of the service provider/s to
manage, operate warehouses
and supply bulk foodstuffs, fresh vegetables and fruits to schools
participating in the National Nutrition
Programme with identified
CRDP areas for a period of (3) three years, with the option to extend
for another two (2) years] is reviewed
and set aside.
2. The respondent is
ordered to consider and adjudicate applicants 1 to 3 and 5 to 8’s
bids in terms of the evaluation methodology
prescribed in paragraph 9
of the bid document, within 15 (fifteen) days of the granting of this
order.
3. The respondent is
ordered to provide the applicants with a written report within 20
(twenty) days of the granting of this order,
on the outcome of the
evaluation process, with specific reference to:
(a) the valuation
criteria used for measuring functionality of the applicants’
respective bids;
(b) the weight which
was attached to each criterion;
(c) the applicable
values that were utilised when scoring each criterion;
(d) the score for
functionality obtained by each individual applicant;
(e) the points
scored by those applicants, who scored the minimum threshold of 70%
for functionality, in respect of price and equity
ownership.
4. The respondent is
ordered to pay the costs of application of applicants 1 to 3 and 5 to
7 and applicant 8 on a party and party
scale.
BY
ORDER OF THE COURT
REGISTRAR
1
See
Chao v Gomes (2010/16410)[2012] 2AGPJHC 103(21 May 2012)paras 14 to
15 and the judgments quoted therein.
2
See
Logbro Properties CC v Bedderson NO&Others
2003 (2) SA 460
(SCA)
para 5 at 465F-G.
3
See Bato Star Fishing (Pty) Ltd v Minister of Environmental
Affairs&Others
[2004] ZACC 15
;
2004 (4) SA 490
(CC) para 25.
4
See
Firestone South Africa (Pty) Ltd v Centicuro
1977 (4) SA 298
(A) at
340 D-H and Finishing Touch 163 (Pty) Ltd v BHP Billiton Energy Coal
South Africa Ltd (363/11)
[2012] ZASCA 49
(30 March 2012)
5
See
Logbro Properties CC v Bedderson NO
&
Others
2003 (2) SA 460
para 25 at 472/B-C/D.