About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Free State High Court, Bloemfontein
SAFLII
>>
Databases
>>
South Africa: Free State High Court, Bloemfontein
>>
2015
>>
[2015] ZAFSHC 241
|
|
Member of the executive Council Police Roads & Transport, Free State Provincial Department v Ritcom (Pty) Ltd (A159/2015) [2015] ZAFSHC 241 (3 December 2015)
FREE
STATE HIGH COURT, BLOEMFONTEIN
REPUBLIC
OF
SOUTH AFRICA
Case
No: A159/2015
In
the review between:
THE
MEMBER OF THE EXECUTIVE COUNCIL
POLICE
ROADS & TRANSPORT, FREE STATE
PROVINCIAL
DEPARTMENT
Applicant
and
RITCOM
(PTY) LTD
1
st
Respondent
MASS
MEASURING SYSTEM (PTY) LTD
2
nd
Respondent
TREK
SCALE COMPANY (PTY) LTD
3
rd
Respondent
CORAM:
JORDAAN
et
MOLOI, JJ
JUDGMENT
BY
:
JORDAAN, J
HEARD
ON:
19
NOVEMBER 2015
DELIVERED
ON
:
3 DECEMBER 2015
[1]
The applicant applies for the review and setting aside of the award
of a tender for the installation and supply of weighbridges
to the
department awarded by itself to the first respondent.
[2]
After the award of the tender and after it became clear that the
applicant refused to enter into a service level agreement to
give
effect to the award of the tender and intimated that it cancels the
award, the first respondent, in another application, brought
an
application to compel the applicant to give effect to the award of
the tender and to enter into the required service level agreement.
Thereafter the applicant brought an application to stay the
respondent’s application pending the present review application
which was filed in the meantime.
[3]
By agreement between the parties, all three applications were
consolidated and argued before us. It was common cause that
the
determination of the review application would in all probabilities
determine the fate of the other applications as well.
In view
of that I will deal with the present review application at the
outset.
FACTUAL
BACKGROUND
[4]
It appears that the first respondent at some or other stage and for
an unknown reason became aware or thought it fit to make
a proposal
to the department in regard to the installation and supply of
weighbridges for the department. For that purpose
representatives of the first respondent met with the MEC of the
applicant as well as a panel of several “committee members”
during which meeting they explained their proposal. They were
told that unsolicited bids cannot be entertained at this stage
and
that they should await an invitation for proposals. Eventually
the department (applicant) invited tenders for the installation
and
supply of five weighbridges at different venues in the Free State.
First respondent was among the entities that responded
to the
invitation and submitted tenders. Second and third respondents
were also part of the entities that submitted tenders.
[5]
After the close of tenders, the tenders were evaluated by the bid
evaluation committee (BEC) and after that by the bid adjudication
committee (BAC). Both recommended the award of the tender to
the first respondent.
[6]
Shortly after the recommendation by the BAC, the head of the
department, in writing, awarded the tender to the first respondent,
subject to entering into a service level agreement between the
parties. The award was for a contract price of R19,150
million.
The BAC, in the meantime, requested the BEC to
elucidate the vagueness as to the amounts involved in the tender of
the first respondent
in that, in some of the documents the tender
price was shown as R1,915 million whilst the report of the BEC
reflected the tender
amount to be R19,150 million. The letter
of appointment by the head of the department was made before any
response from the
BEC to the queries of the BAC.
[7]
Shortly after the first letter of appointment the head of the
department issued another letter of appointment to the first
respondent indicating that the amount of R19,150 million in the first
appointment letter was erroneously mentioned and that the
amount of
the appointment letter should, in fact, be R1,915 million. In a
further later letter the head of the department
purported to cancel
the award of the tender to first respondent on the basis that
budgetary constraints prevented the continuation
of the project.
That led to the application by the first respondent to compel the
department (applicant) to give effect to
the award of the tender and
enter into a service level agreement with the first respondent.
[8]
As foresaid, the first respondent’s application to compel was
opposed by the present applicant, in turn seeking an order
staying
the application by first respondent pending this review.
ALLEDGED
GROUNDS FOR REVIEW
[9]
In this application the applicant relies on various grounds for
review which boils down to an allegation that the BEC and BAC
did not
apply their minds correctly, made their recommendations on
insufficient ground and for insufficient and irrational reasons
and
further that the award of the tender and the tender process was as a
result of bias and miscalculations in favour of the first
respondent
and the whole process was not fair, equitable, transparent,
competitive and cost efficient.
SUPPLY
CHAIN MANAGEMENT POLICY OF APPLICANT
[10]
The applicant’s supply chain management policy requires the bid
specification committees to draft specifications in an
unbiased
manner to allow all potential suppliers to offer their goods or
services in a competitive environment. It requires
all
specifications to be approved by the accounting officer or his
delegate prior to the publication thereof in the invitation
for bids.
[11]
In regard to site meetings or information sessions the procurement
policy prescribes that site meetings and information sessions
shall
be aimed at enhancing the understanding, for potential service
providers, of specific requirements of the department as specified
in
the bid documentation. Proper minutes of such meetings have to
be compiled and would serve as the only formal record of
what
transpired at the meeting and it expressly forbids any verbal
communication to have any contractual standing.
BID
SPECIFICATIONS
[12]
In the request for proposals and in the bid documents the
specifications and requirements are set out in paragraphs 1.2 and
1.3
thereof. What was required is set out as follows:
“
Specifications:
The
design, construction, supply and commissioning of five (5) heavy duty
road weighbridge specified as follows:-
Deck/Platform size:
22m x 3m consisting of four
(4) platforms each measuring 3m; 6m; 7m;
6m; consecutively
Capacity
80 000kg
Point Loading:
Maximum of three axles @ 1375mm centres with a maximum of 10 ton per
double wheel axle
Division size:
0 – 14 ton = 20kg
Type of design:
Full Electronic Sixteen (16) load cell design – four (4) load
cells per deck
Profile:
300mm
Type of installation:
Above surface, low profile, fitted
with side rails
Instrumentation:
Model KI-100 digital indicator
: Personal Computer
: Laser Jet printer
:Standard Weighbridge Data Processing
Software package (Info Weigh) compatible to Windows
: Surge Protection System
Optional Extra: 1kVA UPS
Special
Paint Finish for harsh environments
Warranty:
A full warranty must be inclusive together with the calibration
cycles within the warranty period
FOUNDATIONS
Civil
design, bending schedule and fixing, form work and casting of
concrete to house the above mentioned weighbridge.
1.3
APPOINTMENT OF THE SERVICE PROVIDER
The service provider with the relevant
product & SLA in line with the law enforcement need will be
appointed for the procuring
of multi deck weighbridges.
The service provider must install the
multi-deck weighbridges, calibrate and maintain them
Training
of Traffic Officers must be conducted on the new multi deck
weighbridges.”
FIRST
RESPONDENT’S TENDER
[13]
The tender of first respondent can best be described in the words
used by the deponent on behalf of the respondent:
“
In
this regard it is apposite to point out that the first respondent
provided a one stop solution, covering not only the building
of state
of the art weighbridges but also the provision of all the software,
management of the weigh-in and also offered solutions
regarding the
offloading and ensuring proper road safety during the offloading and
rectification of incorrect loads taking place.
Provision was
made for satellite tracking as well as the proper procurement of
evidence for the purpose of enforcing the fines
to be imposed in
criminal court and/or any institution created for the enforcement of
traffic fines.”
[14]
First respondent’s stance is further described as follows:
“
From
experience in tendering for contracts it is clear that a party
inviting a tender may not have the entire process or solution
in
mind. Therefore, it is advisable that parties and especially
people like the first respondent with the specific skills
set include
in their proposal as a response to the invitation to tender,
proposals as to what would be a more successful solution
for the
problem that government or the public body is confronted with and as
in this case to limit capital expenditure from existing
funds and
providing for the income generated by the project itself to pay for
the full development of the project to its optimal
capabilities.”
[15]
First respondent describes its tender as an “alternative
option” to government than merely have a contractor supply
weighbridges without the successful party having the responsibility
to also successfully manage and ensure that the purpose for
which it
was build is brought to fruition.
[16]
First respondent continues to state that:
“
The
proposal made by the first respondent offered a solution that was not
even contemplated by all of the other parties and in my
humble
opinion forms part and parcel of the responsibility of potential
tenderers in order to provide a better solution than that
initially
anticipated by the authors of the bid document.”
[17]
First respondent is of the opinion that their bid opened up:
“
A
new way of thinking that might not only be to the benefit of the Free
State Province but hopefully to the larger South Africa
in ensuring
that overloading of trucks, which is a large contributor to road
accidents and the deterioration of already under pressure
South
African road network, to be properly addressed.”
[18]
First respondent describes it tender as having a “competitive
edge.” The deponent on behalf of the first
respondent
points out that it tendered for managing the whole project for a
period of 5 years but was awarded the tender for only
a period of 3
years. In that regard it alleges that it indicates the
rationality of the decisions because it cuts away a
large portion of
the profit of the first respondent (which it would have made had the
5 year period been granted).
[19]
In summary the first respondent tendered not only for the supply and
installation of the weighbridges or the calibration thereof
and
training of staff but for the whole project to be managed by the
first respondent after installation of the bridges.
The tender
foresaw that first respondent would manage the actual weighing of
loads at a price of R210 per weigh and specified a
minimum liability
towards first respondent of 50 weighs per weighbridge per day.
It becomes clear that first respondent’s
way of the proposed
dealing with the tender would entitle it to a vast amount of profit,
exceeding the tendered amount by far.
In this regard, after the
applicant refused to continue with the project, the first respondent
approached the Free State Government
with an offer of settlement
which recorded that the first respondent’s loss amounted to
somewhere in the vicinity of R180
million over the 3 year period.
First respondent calculated that amount by the expected numbers of
weighs per day per weighbridge
which according to them amounted to
about 200 weighs per day and multiplied by 5 weighbridges over the
period of the tender would
amount to approximately R180 million.
In the settlement offer they proposed being paid R17,55 million as
damages.
[20]
First respondent justifies the way in which it tendered for
management of the whole project in the following way:
“
26.1
The contents of the site visits and the disclosures that were made as
to what the purpose of the weighbridges
were, has not been included
in the record of decision.
26.2
The minutes of all meetings and the clarification meetings have not
been included.
27.1
From this it would have been clear that the department was looking
for more than just a
building weighbridge.
27.2
What the government wanted was a solution for the law enforcement of
overloading was proposed
in the tender document by the first
respondent and proved as such when tender was awarded to first
respondent.” (sic)
In
continues to state that:
“
A
request for proposal includes any expansion or development of the
tender as was done by the first respondent.”
[21]
It alleges that during the clarification meetings and the briefing
sessions the real requirements of the department were expanded
upon
and fitted with the proposals that were finally submitted by the
first responded.
[22]
On the strength of the BEC evaluation report that was submitted to
the BAC, the first respondent alleges that the second respondent
also
envisaged a one stop solution alleging that that is apparent from
paragraph 4.1.1 of the BEC’s report. First respondent
alleges that it appears from the said paragraph that the second
respondent also provided for prosecutions that were foreseen and
constituted a portion of their quote, but which was not measurable on
the basis that it was provided for in the tender.
WAS
THE SPECIFICATION EXTENDED?
[23]
It is significant that the first respondent does not explicitly state
what the alleged expansion consisted of. What it
states is that
it would have been clear from the minutes of the clarification
meetings that the department was “looking for
more than just a
building of weighbridges”. One would expect that, if the
specifications required were extended or
amended, specific
requirements would have been spelled out instead of a general
allegation that the department was looking for
more than just the
supply of weighbridges.
[24]
Secondly, it appears that no minutes were held of the aforesaid
clarification meetings which are compulsory according to the
procurement policy of the applicant. What is more, such minutes
would, in terms of the procurement policy, be the only admissible
evidence of what transpired.
[25]
Thirdly, the reliance on paragraph 4.1.1 of the BEC’s
evaluation report is totally misplaced. It states that Mass
Measuring System (second respondent) did not clearly specify a
loading charge. The fact is that the tender of the second
respondent did not specify any loading charge for the simple reason
that it did not tender for any participation in the weighing
of loads
or participation in the management of the weigh bridges once they
were installed. The reference in the BEC’s
evaluation
report to the amount of R47 600,00 per magisterial district
(which the BEC regarded as applicable to 66 magisterial
districts or
courts) were not tendered for by the second respondent on the basis
of taking part in the obtaining of evidence or
prosecution at all.
What was referred to in the said tender was described as optional
items for the supply and installation
of a section 56 prosecution
system and secondly the loading of charge codes for each magisterial
districts for the prosecution
module on the software. It
explicitly stated that the amount of R47 600,00 is only
applicable to such magisterial district
in which the weighbridge is
located. It is clear that only 5 five districts were involved.
The remark by the BEC that
the tender of second respondent contains
hidden costs is totally misplaced. The optional items referred
to above were quoted
for on a once off basis. On the contrary,
the hidden costs were indeed contained in the tender of the first
respondent as
clearly appears from its allege claim for damages in
the amount of R180 million.
If
first respondent wished to rely on an expansion of the project and
specifications, much more specific allegations and convincing
argument were required. I am not persuaded that the
specifications as required and set out in the bid documents were
extended
or amended in any way.
LEGAL
REQUIREMENTS
[26]
The legal principals applicable to matters of this kind has been
restated in the decision of
Allpay
Consolidated v Chief Executive Officer, SASSA
2014 (1) SA 604
(CC). As far as it is or may be applicable to
this matter the following can be stated:
“
If
a ground for review is established, then the decision under review
must be declared unlawful and set aside.”
(page
614 para [25])
[27]
Deviations from a fair process may in themselves be systems of
corruption or malfeasance (page 615, para [27]).
[28]
The system used to evaluate tenders must be, in compliance with
section 217 of the Constitution, fair, equitable, transparent,
competitive and cost effective. (page 616, para [31])
[29]
An “acceptable tender” is a tender which in all respects
complies with the specifications and conditions of tender
as set out
in the bid documents. (pase 617, para [34])
[30]
Tenders must be comparable: competitors must be treated equally
in that they all should be able to tender for the same
thing. (page
619, para [39])
DISCUSSION
[31]
As already alluded to, the tender of the first respondent went way
beyond the required specifications. It was therefore
not
comparable to the tenders of competitors at all and made it
impossible for competitors to be treated equally. First
respondent’s tender was not an acceptable tender because it did
not in all respects comply with the specifications and conditions
of
the requirements set out in the bid documents.
[32]
I have already pointed out that the BEC’s appraisal of the
second respondent’s tender was totally misconceived.
In
the evaluation of the financial proposal it is stated that the
proposals were “interpreted” as to the amounts set
out in
paragraph 5 of the report. It then specifies that the first
respondent’s bid amount amounted to R19,150 000,00
whilst that
of second respondent amounted to R8 644 288,66. The
BEC then commented that the committee noted that
the highest points
scored for price is 98 points making the first respondent the highest
in terms of the 90/10 principle.
The committee does not even
state what points were awarded to the second respondent whose bid
amount was clearly less than half
of that of the first respondent.
On that score, first respondent could never have scored the highest
points for the financial
proposal.
[33]
After the initial award of the tender to first respondent and in
reply to the enquiries of the BAC, the BEC submitted a further
report
on the 14 August. In that report it has suddenly split up first
respondent’s financial proposal into 3 years
resulting in a
first year amount of R5 240 000,00. The committee
then referred to the second year and third year’s
costs
according to the first respondent’s tender and concluded that
the financial proposal were again interpreted to reflect
first
respondent’s financial proposal to be an amount of
R5 973 600,00 and that of second respondent the amount
of
R8 644 288,66. In effect the BEC did not compare the
total bids of the two respondents but only the first year’s
bid
of the first respondent and the full amount of the second
respondent’s bid. The inference is irresistible that
that
was done in order to favour the first respondent and biased in favour
of first respondent.
[34]
The aforesaid way in which the BEC dealt with the comparison between
the two respondents was obviously not fair, equitable,
transparent or
competitive. The two respondents were obviously not treated
equally.
[35]
Taking into account the evidence as a whole, it is also almost an
irresistible inference that the unsolicited bid of the first
respondent even before proposals were invited led to the invitation
for proposals and secondly to a biased evaluation of proposals
in
favour of first respondent.
[36]
The process and the award of the tender to first respondent is
obviously contrary to various prescripts of the
Promotion of
Administrative Justice Act, no 3 of 2000
. There is at least a
reasonable suspicion of bias as meant in
section 6(2)(a)(iii)
of the
Act. The decision was taken by considering irrelevant
considerations and failing to consider relevant considerations
as
required and meant by
section 6(2)(e)(iii)
of the Act. It was
also obviously taken arbitrarily by purposely not comparing the full
tender amount of first respondent
with the full tender amount of
second respondent. The decision was obviously not rationally
connected to the information
before the BEC and BAC as meant in
section 6(f)(ii)(cc)
of the Act.
CONCLUSION
[37]
In view of the aforesaid I have no doubt that various grounds for
review were established. The award of the tender to
first
respondent has to be set aside. In my view it is not necessary
to set aside the recommendations of the committees that
preceded the
award of the tender since that is of no legal effect as far as any of
the respondents are concerned. It would
be sufficient to set
aside only the award of the tender. It is also evident from the
applicant’s papers that it does
not wish to continue with the
project at this stage and there is no reason to remit the matter to
the applicant for reconsideration.
[38]
The application for review was brought well out of time and at a late
stage for which purpose the applicant sought condonation.
That was
not contested by first respondent in argument before us. In
view of the obvious success on the merits, condonation
should be
granted.
[39]
As far as the application by first respondent to compel applicants to
enter into a service level agreement is concerned in
application
number 683/2015, it obviously had no merit in view of the findings
above and has to be dismissed with costs.
The application by
the applicant under case number 4160/2015 to stay the aforesaid
application was obviously well founded and although
no specific order
has to be made at this stage, the costs thereof have to be decided.
In view of the fact that the said application
was obviously well
founded, there is no reason not to award the costs of that
application to the applicant as well.
[40]
In relation to the different applications, they were from time to
time postponed by agreement and agreed that costs should
stand over.
In some instances costs orders were made against the party requesting
postponements which does not have to be
dealt with again and remains
unaffected by this order. Counsel for both parties were in
agreement that costs should follow
the result in all of the
applications and no specific argument was raised as to costs that
stood over. On behalf of the applicant
it was prayed that any
costs orders should include the costs occasioned by the employment of
two counsel. No objection was
raised against this request and I
am convinced that the employment of two counsel was justified.
[41]
Subject to my learned brother concurring, the following orders are
granted:
A.
In
the review application number A159/2015:
1.
Prayers
1 and 3 are granted, and the award of the bid to first respondent is
set aside.
2.
The
first respondent is ordered to pay the costs of the application,
including any reserved costs and including the costs occasioned
by
the employment of two counsel, where employed.
B.
In
application number 683/2015:
1.
The
application is dismissed with costs including all reserved costs and
the costs occasioned by the employment of two counsel,
where
employed.
C.
In
case 4170/2015:
1.
The
respondent is ordered to pay the costs of the application including
any reserved costs and including the costs occasioned by
the
employment of two counsel, where employed.
_______________
A.
F.
JORDAAN, J
I
concur.
_____________
K.
J. MOLOI, J
On
behalf of the applicant:
Adv. N. A.
Cassim SC
With
C. Georgiades
Instructed
by:
State
Attorney
BLOEMFONTEIN
On
behalf of the first respondent:
Adv. G. J. Scheepers
Instructed
by:
Bezuidenhouts
Inc.
BLOEMFONTEIN
/eb