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[2007] ZASCA 165
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Millennium Waste Management (Pty) Ltd. v Chairperson of the Tender Board: Limpopo Province and Others (31/2007) [2007] ZASCA 165; [2007] SCA 165 (RSA); [2008] 2 All SA 145; 2008 (2) SA 481; 2008 (5) BCLR 508; 2008 (2) SA 481 (SCA) (29 November 2007)
Links to summary
THE
SUPREME COURT OF APPEAL
OF
SOUTH AFRICA
Reportable
CASE NO 31/2007
In the
matter between
MILLENNIUM WASTE MANAGEMENT (PTY) LIMITED
................................ Appellant
and
THE CHAIRPERSON OF THE TENDER BOARD : LIMPOPO PROVINCE
................................ First Respondent
MEC : DEPARTMENT OF HEALTH AND SOCIAL DEVELOPMENT,
LIMPOPO PROVINCE ................................ Second Respondent
THERMOPOWER TECHNOLOGY PROCESSORS / BUHLE WASTE /
AFRIMEDICALS JV ................................ Third Respondent
Coram: Howie P, Nugent, Jafta, Maya JJA and Mhlantla AJA
Heard: 02 NOVEMBER 2007
Delivered:
29 NOVEMBER 2007
Summary:
The award of tenders constitutes administrative action and
consequently must comply with requirements of the
Promotion of
Administrative Justice Act 3 of 2000
and s 217 of the Constitution.
Neutral
citation: This judgment may be referred to as
Millennium
Waste Management v Chairperson Tender Board
[2007]
SCA 165 (RSA)
____________________________________________________________________
JUDGMENT
____________________________________________________________________
JAFTA JA
[1] This is an appeal against a decision of Prinsloo J
(sitting in the Pretoria High Court) in which he dismissed the
appellant’s
application for an order reviewing and setting
aside the decision to award a tender to a consortium called
Thermopower Technology
Processors/Buhle Waste/Afrimedicals JV (the
consortium). The tender was for the provision of services relating to
the removal, treatment
and disposal of healthcare waste material from
hospitals in the province of Limpopo (formerly called Northern
Province). The appeal
is with leave of this court.
[2] This case is about the fairness of the
process followed by the Department of Health and Social Development
which culminated in
the award of the impugned tender, underlying the
agreement for procurement of services by the department in question.
Such process
is governed by legislation which can be traced back to
the interim Constitution.
1
It required, among other things, that provincial
legislation establishing independent and impartial tender boards in
each province,
be passed.
2
[3] The legislature in Limpopo passed the
Northern Transvaal Tender Board Act
3
(the Act) in terms of which the impugned decision was
taken. This Act establishes a provincial tender board which is
granted the sole
power ‘to procure supplies and services for
the Province’ (s4).
4
However, the board is empowered to delegate ‘any
of its powers to any of its committees, any person (including any
member of
the board), any body of persons or the holder of any post
designated by the Board’ (s5).The Act also empowers the Member
of
the Executive Council for Finance and Expenditure (the MEC) to
make regulations governing the tender process (s9). On
14 February 1997
the MEC published such regulations.
Regulation 2 provides that procurement of goods and services shall be
done only through the board.
5
[4] The final Constitution lays down
minimum requirements for a valid tender process and contracts entered
into following an award
of tender to a successful tenderer (s217).
6
The section requires that the tender process, preceding
the conclusion of contracts for the supply of goods and services,
must be
‘fair, equitable, transparent, competitive and
cost-effective’. Finally, as the decision to award a tender
constitutes
administrative action, it follows that the provisions of
the
Promotion of Administrative Justice Act
7
(PAJA
) apply to the process. This is the legislative
background against which the present matter must be considered.
[5] The facts in this matter are largely not in dispute.
An invitation to tender was issued by the Department of Health and
Social
Development – the second respondent – following an
audit query by the Auditor-General. The query related to the
department’s
failure to properly dispose of medical waste in
compliance with a range of statutes relevant to that process. Having
acquired the
necessary funds, the department advertised an invitation
to interested parties to tender for the removal, treatment and
disposal
of medical waste. The deadline for lodging tenders was 11h00
on 24 February 2005. This invitation contained documents
setting
out, among others, the list of hospitals from which the
medical waste would be collected, specifications and conditions
applicable
to the tender process.
[6] Fourteen companies responded to the invitation and
timeously delivered their tenders at the appointed address. The
appellant was
one of them, as was the consortium. According to
Mr Mpho Mofokeng – the chairman of the departmental
tender committee
– the tenders received were subjected to
evaluation criteria which were ‘divided into two phases, namely
administrative
compliance and technical compliance’. Seven
tenders were disqualified at the first phase for failing to comply
with the administrative
requirements. These included the appellant’s
tender which was disqualified for failing to sign a form titled
‘declaration
of interest’.
[7] Six of the remaining tenders were
disqualified at the second phase for failing to comply with technical
requirements. The consortium’s
tender was the only one
remaining after disqualifications at the second phase. All these
disqualifications occurred in an
ad hoc
technical evaluation committee constituted by two
technical advisors who were also members of the tender committee
chaired by Mofokeng.
At the conclusion of the second phase the
technical committee recommended to the tender committee that the
consortium be awarded
the tender. After deliberation the tender
committee approved the recommendation but also resolved that business
premises of the fourteen
companies that had tendered be inspected,
even though thirteen of them were no longer in the running owing to
disqualifications.
[8] During the period 8 to 10 March 2005, members of the
tender committee conducted inspections at business premises of eleven
of
the fourteen companies that had tendered. The appellant’s
business facilities were inspected and so were facilities of the
consortium. At the appellant’s premises the inspection revealed
that the equipment used in treating medical waste did not possess
the
current technology and consequently it failed to render such waste
completely unrecognisable, as required by tender specifications.
The
washing facility was not automatised and the appellant’s
employees were exposed to accidents and disease because they were
not
supplied with the necessary protective clothing. This, in the view of
the committee, violated the
Occupational, Health and Safety Act 85 of
1993
and the regulations made under it.
[9] Following the inspections, the tender
committee held a meeting on 10 March 2005 at 18h10. In the
committee’s view
the consortium was the only tenderer that
complied fully with relevant legislation and had submitted a clear
proposal. It was resolved
that the technical committee must prepare a
report the contents of which I refer to more fully below. The tender
committee’s
recommendation that the consortium be awarded the
tender was communicated by Mofokeng to Dr Hlamalani Manzini –
the head of
the department – to whom the power to award tenders
was delegated. On the same date she awarded the tender to the
consortium
on specified conditions.
8
[10] The report of the technical evaluation committee
reveals (contrary to the tender committee’s view) that the
consortium
did not comply with technical requirements regarding the
treatment of anatomical waste and sharps. Sharps are defined (in the
report)
as objects such as hypodermic needles, scalpel blades and
other surgical accessories capable of cutting or penetrating human
skin.
The report raises concerns regarding its proposals and its
ability to handle both anatomical waste and sharps, including their
treatment.
Regarding transportation of waste material, the report
shows that it also failed to comply with legal requirements. This
necessitated
a meeting between the tender committee and the
consortium on 23 March 2005 where an explanation for defects in
its tender was
furnished. But at that stage the tender had already
been awarded.
[11] On 7 April 2005 the appellant addressed a
letter to Dr Manzini asking which tenderer was successful. She
replied by
a letter dated 25 April 2005, informing it that
its tender was disqualified for failing to sign the declaration of
interest
and that the consortium had won the tender. The declaration
referred to was duly completed and initialled on each of the two
pages.
It is necessary to set it out in full. In its completed form
it reads:
‘
DECLARATION
OF INTEREST
Any legal person, including persons
employed by the principal, or persons having a kinship with persons
employed by the principal,
including a blood relationship, may make
an offer or offers in terms of this invitation to tender. In view of
possible allegations
of favouritism, should the resulting tender, or
part thereof, be awarded to persons employed by the principal, or to
persons connected
with or related to them, it is required that the
tenderer or his/her authorized representative declare his/her
position in relation
to the evaluating/adjudicating authority and/or
take an oath declaring his/her interest, where–
- the tenderer is employed by the
principal; and/or
- the legal person on whose behalf the
tendering document is signed, has a relationship with persons/a
person who are/is involved
in the evaluation and or adjudication of
the tender(s), or where it is known that such a relationship exists
between the person or
persons for or on whose behalf the declarant
acts and persons who are involved with the evaluation and or
adjudication of the tender.
2. In order to give effect to the above,
the following questionnaire must be completed and submitted with the
tender.
Are you or any person connected
with the tenderer,
employed by the principal? No
2.1.2 If so, state particulars. N/A
Do you, or any person connected
with the tenderer, have
any relationship (family, friend, other)
with a person
employed by the principal and who may be
involved with
the evaluation and or adjudication of
this tender? No
2.2.1 If so, state particulars. N/A
Are you, or any person connected
with the
tender, aware of any relationship
(family, friend,
other) between the tenderer and any
person
employed by the principal who may be
involved
with the evaluation and or adjudication
of this
tender? No
If so state particulars. N/A
DECLARATION
I, the undersigned (Name)
R Gouws
certify that the information furnished in paragraphs 2.1 to 2.3.1
above is correct. I accept that the principal may act against me
in
terms of paragraph 23 of the general conditions of contract should
this declaration prove to be false.
………………………
.
23.2.05
Signature Date
Regional General Manger Millennium Waste
Management (Pty) Ltd.
Position Name of tenderer’
[12] On 25 May 2005 the appellant instituted
an urgent application in the court below for relief divided into two
parts.
First, it sought an interdict restraining the department from
concluding and implementing a contract with the consortium, pursuant
to the award of the tender. Such interdict was to be in force pending
the determination of the review sought in the second part of
the
relief. Unbeknown to the appellant the department and the consortium
had already entered into a service level agreement which
was
concluded on 29 April 2005. The implementation of this
agreement commenced on 2 May 2005. These facts probably
influenced the decision not to grant the interdict. The record does
not shed light on the issue. Despite the application having been
launched on an urgent basis, the review only came before Prinsloo J
for consideration on 2 June 2006. I return to this
point
later in the judgment. As indicated above the learned judge dismissed
the application with costs.
[13] There are two issues raised in this appeal. The
first issue is whether the disqualification of the appellant’s
tender violated
its right to procedural fairness. The second relates
to the appropriate remedy in the event of the first issue being
decided in the
appellant’s favour. I deal with the
disqualification issue first.
[14] Counsel for both the department and the tender
board argued in the court below and this court that the appellant’s
tender
was lawfully and properly disqualified. In developing this
argument, it was submitted that the terms of the tender documents
relating
to administrative compliance were couched in peremptory
language which expressly stated that non-compliance would result in
disqualification.
Proper signing of the tender documents is one of
the terms which if not complied with, it was argued, led to
disqualification. It
was not procedurally unfair for the tender
committee to disqualify the tender on the basis of the appellant’s
failure to sign,
continued the argument, because it was forewarned
that such a failure would lead to disqualification. Relying on the
definition of
‘acceptable tender’ in the Preferential
Procurement Policy Framework Act 5 of 2000 (the Preferential
Procurement Act),
counsel concluded by submitting that the
appellant’s tender did not constitute an acceptable tender due
to the failure to sign.
[15] The department’s argument was
upheld by the court below. The learned judge, relying on
Minister
of Environmental Affairs and Tourism v Pepper Bay Fishing
9
,
found that the tender committee lacked authority to condone the
appellant’s failure to comply with the peremptory requirements
of the tender.
[16] I cannot accept the department’s
argument. On the assumption that there was a valid delegation of
power from the tender
board to Dr Manzini and further to the tender
committee, the answer to the question of authority lies in regulation
5(c) which empowers
the tender board to accept tenders even if they
fail to comply with tender requirements.
10
In these circumstances reliance on the
Pepper
Bay Fishing
case was misplaced. In that case
the issue was whether the chief director to whom the power to grant
fishing licences was delegated,
had authority to condone procedural
defects in applications for fishing rights submitted to him. On the
enquiry relating to the chief
director’s powers Brand JA said
(para 31):
‘
As
a general principle an administrative authority has no inherent power
to condone failure to comply with a peremptory requirement.
It only
has such power if it has been afforded the discretion to do so….
The Chief Director derives all his (delegated) powers
and authority
from the enactment constituted by the general notice. If the general
notice therefore affords him no discretion, he
has none. The question
whether he had a discretion is therefore entirely dependent on a
proper construction of the general notice.’
With this I agree and wish to add that in the present
case the tender committee was afforded the necessary discretion by
reg 5(c).
Therefore it erred in thinking that it did not possess such
power.
[17] Moreover, our law permits condonation
of non-compliance with peremptory requirements in cases where
condonation is not incompatible
with public interest and if such
condonation is granted by the body in whose benefit the provision was
enacted (
SA Eagle Co Ltd v Bavuma
).
11
In this case condonation of the appellant’s
failure to sign would have served the public interest as it would
have facilitated
competition among the tenderers. By condoning the
failure the tender committee would have promoted the values of
fairness, competitiveness
and cost-effectiveness which are listed in
s 217. The appellant had tendered to provide the needed service at a
cost of R444 244,43
per month whereas the consortium had quoted
and was awarded the tender at the amount of R3 642 257,28
per month.
[18] I turn to the question whether the
appellant’s tender constitutes an acceptable tender as defined
in the Preferential Procurement
Act. It defines an acceptable tender
as ‘any tender which, in all respects, complies with the
specifications and conditions
of tender as set out in the tender
document’. When Parliament enacted the Preferential Procurement
Act it was complying with
the obligation imposed by s 217 (3) of the
Constitution which required that legislation be passed in order to
give effect to the
implementation of a procurement policy referred to
in s 217 (2). Therefore the definition in the statute must be
construed within
the context of the entire s 217 while striving for
an interpretation which promotes ‘the spirit, purport and
objects of the
Bill of Rights’ as required by s 39 (2) of the
Constitution.
12
In
Chairperson: Standing Tender
Committee and Others v JFE Sapela Electronics (Pty) Ltd and Others
13
Scott JA said (para 14):
‘
The
definition of “acceptable tender” in the Preferential Act
must be construed against the background of the system envisaged
by
section 217(1) of the Constitution, namely one which is “fair,
equitable, transparent, competitive and cost-effective”.
In
other words, whether “the tender in all respects complies with
the specifications and conditions set out in the contract
documents”
must be judged against these values.’
[19] In this context the definition of tender cannot be
given its wide literal meaning. It certainly cannot mean that a
tender must
comply with conditions which are immaterial, unreasonable
or unconstitutional. The defect relied on by the tender committee in
this
case is the appellant’s failure to sign a duly completed
form, in circumstances where it is clear that the failure was
occasioned
by an oversight. In determining whether this
non-compliance rendered the appellant’s tender unacceptable,
regard must also
be had to the purpose of the declaration of interest
in relation to the tender process in question.
[20] Counsel for the department submitted that the
purpose of the declaration of interest was to curb corruption. As the
failure to
sign may be intentional, so he argued, the possibility
existed that a person or persons inside the department had an
interest in
the tender of the appellant. A perfunctory perusal of the
appellant’s declaration shows that the failure to sign was
inadvertent.
Secondly, the tender committee does not say the
information furnished by the appellant to the effect that it had no
relationship
with the department’s employees (including those
linked to the evaluation and adjudication of tenders), was false. I
am unable
to appreciate how the signing of the form would have
safeguarded against corruption. It seems to me that what is of
paramount importance
is the nature of the information furnished and
not the signature. As is apparent from the declaration itself, Mr
Rhyno Gouws inserted
his name on it as the person who furnished the
necessary information. He was thus clearly identified. If the
appellant intended to
misrepresent facts, it is unlikely that Gouws
would have exposed himself in that fashion. I may add that he signed
the tender on
behalf of the tenderer on the very same date which the
declaration bears.
[21] Since the adjudication of tenders
constitutes administrative action, of necessity the process must be
conducted in a manner that
promotes the administrative justice rights
while satisfying the requirements of PAJA (
Du
Toit v Minister of Transport
).
14
Conditions such as the one relied on by the tender
committee should not be mechanically applied with no regard to a
tenderer’s
constitutional rights. By insisting on disqualifying
the appellant’s tender for an innocent omission, the tender
committee
acted unreasonably. Its decision in this regard was based
on the committee’s error in thinking that the omission amounted
to
a failure to comply with a condition envisaged in the Preferential
Procurement Act. Consequently, its decision was ‘materially
influenced by an error of law’ contemplated in s 6 (2)(d) of
PAJA, one of the grounds of review relied on by the appellant.
Therefore, the tender process followed by the department was
inconsistent with PAJA. In the light of this finding, it is not
necessary,
in my view, to consider other grounds raised by the
appellant. Suffice it to say that they were all based on PAJA and it
appears
that the appellant could have succeeded on more than one
ground.
[22] The question of relief remains for
consideration. While acknowledging that there was no culpable delay
on the part of the appellant
to institute review proceedings,
exercising its discretion the court below dismissed the application
with costs. In so doing the
court overlooked the provisions of s 8 of
PAJA which require that any order granted in matters such as this be
just and equitable.
15
This guideline involves a process of striking a balance
between the applicant’s interests on the one hand, and the
interests
of the respondents, on the other. It is impermissible for
the court to confine itself, as the court below did, to the interests
of
the one side only. Furthermore, the section lists a range of
remedies from which the court may choose a suitable one upon a
consideration
of all relevant facts. The dismissal of the application
by the court below does not constitute an appropriate and effective
relief
contemplated in s 38 of the Constitution. In view of the court
a quo’s
error
this court is entitled to interfere with the order granted.
[23] The difficulty that is presented by invalid
administrative acts, as pointed out by this court in
Oudekraal
Estates
,
16
is that they often have been acted upon by the time they
are brought under review. That difficulty is particularly acute when
a decision
is taken to accept a tender. A decision to accept a tender
is almost always acted upon immediately by the conclusion of a
contract
with the tenderer, and that is often immediately followed by
further contracts concluded by the tenderer in executing the
contract.
To set aside the decision to accept the tender, with the
effect that the contract is rendered void from the outset, can have
catastrophic
consequences for an innocent tenderer, and adverse
consequences for the public at large in whose interests the
administrative body
or official purported to act. Those interests
must be carefully weighed against those of the disappointed tenderer
if an order is
to be made that is just and equitable.
[24] In this case there are four identifiable interests
that need to be taken into account in exercising that discretion. In
doing
so it must be borne in mind that the unfairness here does not
lie in the process of inviting tenders. It lies only in the omission
of the appellant’s tender from the process of evaluation. It
was accepted in argument before us that the proper course that
will
need to be followed if the decision is set aside is not to invite
fresh tenders but rather for the tender board to properly
evaluate
both tenders and decide which tender, if either, to accept.
[25] The loss to the appellant from the unfair act was
no more than the loss of the opportunity to have its tender
considered. It
is by no means clear that its tender would have been
accepted or that it will be accepted upon a fresh evaluation. Even if
its tender
ought to have been accepted at the outset its loss relates
mainly to the profit it would have realised on the contract. We are
not
told what that profit might be; it might be modest or even
minimal. Against that must be weighed the potential loss that will be
caused if it’s tender is not accepted on reconsideration.
[26] There is no suggestion that the consortium was
complicit in some way in bringing about the exclusion of the tender –
had
that been shown it would have been appropriate to set the
decision aside for that reason alone – and it must be accepted
that
it is an innocent party.
[27] With effect from 1 May 2005 the consortium became
obliged to perform, and has performed, the service that it tendered,
under
a contract that was concluded on the terms of its tender with
some supplementary formal provisions. On the strength of that
contract
it purchased eleven vehicles and other equipment at a cost
of about R3.5 million and incurred other costs, and it hired 35
employees.
(It is alleged that they were employed on fixed term
contracts.) It also leased premises in Polokwane upon which to
construct a waste
treatment plant, which it was obliged to construct
within four months. Whether it has constructed the plant does not
appear from
the evidence but in view of its contractual obligation it
is likely that it has done so. The evidence does not disclose the
cost
of constructing the plant. The consortium’s return for
providing the service takes the form of a monthly fee over a period
of five years. No doubt the monthly fee has been structured to
recover its capital, running costs and a profit. We do not know
whether
or to what extent the capital costs will have been recovered
if the contract terminates midway through its term.
[28] From the point of view of the public serious
questions arise if the contract is now terminated. The service is for
the removal
and safe disposal of medical waste from all public
hospitals in Limpopo province (it seems there are 44). The removal
and disposal
of medical waste must be carried out without
interruption and the province does not have the capacity to step in
itself if the contract
is terminated. No doubt some or other interim
measures are capable of being taken but how and at what cost is
uncertain.
[29] There is one further interest to be brought to
account that changes the picture and that is the public purse. At
first sight
the price differential between the two tenders is
enormous: the consortium provides the service at a fee of R3 642 257
per month,
while the appellant tendered to do so at a monthly fee of
R444 244. We are not able to assess why the differential is so large.
It
might be that the consortium is profiteering obscenely or it might
be that the service offered by the appellant was materially different
and hugely under-priced for what is required. In answer to the
appellant’s charge that it is profiteering the consortium
pointed
out that an earlier call by the province for tenders elicited
only one response, and that its price is in line with estimates that
have been made for a comparable service in Gauteng. There are also at
least two elements of the respective tenders – the volume
of
material upon which they were priced and the facilities for waste
disposal that were proposed – that at first sight might
account
for a large portion of the differential. But if the appellant is
indeed able to provide the service at the price that it
has offered
then the completion of the contract by the consortium even at this
stage – 29 months has yet to expire –
will clearly be at
enormous unwarranted cost to the public purse that could be avoided
if the decision is set aside.
[30] Whether that cost to the public purse will ever
eventuate is at this stage a matter only for speculation. It is only
if the appellant’s
tender is now evaluated and found to be
acceptable, and the decision to accept the consortium’s tender
is not set aside, that
any loss will occur. But if the appellant’s
tender were not to be accepted, and the decision to appoint the
consortium has
meanwhile been set aside, nothing will have been
gained and there is the real prospect that loss and disruption might
occur. At best
for the province there is the prospect that the
consortium might be willing to resume the contract or to conclude a
fresh contract
on the same terms. But it will have no obligation to
do either and sound commercial reasons can be envisaged for why it
might decline
to do so. The province might even be driven to commence
the tender process all over again and end up contracting at a higher
price.
Meanwhile there is the potential for the interruption of the
collection and disposal of medical waste throughout the province.
[31] But all that is speculation at this stage. We
simply cannot predict what will occur if the tender is now set aside
and uncertainty
is thereby introduced. I do not think we should make
an order that creates uncertainty – with no promise of gain but
instead
the potential for loss and chaotic disruption – when
that can be avoided.
[32] The effects that I have described can be avoided by
an order that requires the tenders to be evaluated, and sets aside
the decision
to accept the consortium’s tender only if the
appellant’s tender is found to be accepted. An order to that
effect vindicates
the appellant’s rights to the full while it
prevents the potential for disruption to the service, and it avoids
unwarranted
loss to the public purse. It might end up that the
consortium suffers loss – that will occur only if appellant’s
tender
is accepted and even then commercial considerations that
minimise the loss might come into play – but that is inevitable
if
we are to accommodate the potential loss to the public purse. It
seems to me that such an order promises no loss to the public purse
and an uninterrupted service. And if it turns out that the consortium
has indeed been profiteering excessively and loses the contract
as a
result, then any loss that it might suffer does not weigh heavily
with me. The order envisaged here maintains a balance between
the
parties’ conflicting interests while taking into account the
public interest.
[33] The reconsideration of the tenders must, in my
view, be carried out by the tender board itself and not the
departmental tender
committee and the departmental head. Although the
Act permits the board to delegate any of its powers, including the
adjudication
of tenders, it is undesirable for it to delegate the
latter power to persons or bodies which are neither independent nor
impartial.
By conferring the sole power upon the board to procure
goods and services for the provincial government, both the Act and
the regulations
seek to promote the values of independence and
impartiality. The process followed by the tender committee in this
matter shows that
it did not only lack the skill necessary for
adjudicating tenders but also the understanding of the legislative
prescripts. Furthermore,
the chairman of the tender committee
incorrectly reported to the departmental head that the consortium’s
tender complied with
all requirements when this was not the case. On
realising the contradiction in the technical report, he invited its
representatives
to a meeting so that they could explain the defects.
This is proof of a process which is not ‘fair, equitable,
transparent,
competitive and cost-effective’. Section 217 of
the Constitution was not the only provision overlooked by the
departmental
tender committee.
[34] In conclusion there is one further matter that
needs to be mentioned. It appears that in some cases applicants for
review approach
the high court promptly for relief but their cases
are not expeditiously heard and as a result by the time the matter is
finally
determined, practical problems militating against the setting
aside of the challenged decision would have arisen. Consequently the
scope of granting an effective relief to vindicate the infringed
rights become drastically reduced. It may help if the high court,
to
the extent possible, gives priority to these matters.
[35] The following order is made:
1. The appeal is upheld with costs including costs of
two counsel. Such costs to be paid by the first and second
respondents jointly
and severally.
2. The order of the court below is set aside and the
following is substituted:
‘
(a) The exclusion of the
tender of the applicant (Millennium Waste Management), and the
consequent decision to accept the tender of
the third respondent (the
consortium), are declared to have been invalid.
(b) The tender board is directed to evaluate the tender
that was submitted by Millennium Waste Management and the tender
submitted
by the consortium relative to one another and to decide by
not later than 15 February 2008, or by such later date as may be
determined
by a court before that period expires, which tender ought
properly to have been accepted.
(c) Upon reaching such decision the tender board shall
immediately record the decision in writing in its official records
and communicate
the decision to the respective attorneys of
Millennium Waste Management and the consortium such that it is
received by not later
than 3 days after the decision has been made.
(d) If it is decided that the tender of Millennium Waste
Management ought to have been accepted but only upon conditions then
the
decision shall be deemed to have been made by the tender board
and recorded in its records for the purposes of paragraph (c) upon
receipt by the tender board or its nominated official of written
acceptance by Millennium Waste Management of those conditions.
(e ) If it is decided that the tender of Millennium
Waste Management ought to have been accepted – but only if it
is so decided
– then the following further orders shall issue
upon the last day of the month in which such decision is recorded in
the records
of the tender board as envisaged by paras (c) and (d):
(i) the decision that is the subject of this review is
set aside.
(ii) the consortium shall be entitled to claim all
moneys that would properly have been due to it but for this order on
that date
and to retain all moneys that were properly paid to it at
that date.
(iii) this order shall not prejudice any claim in law
that the consortium might have for losses it might have suffered in
consequence
of its tender being accepted and subsequently being set
aside.
(f) If it is decided that the tender of Millennium Waste
Management ought properly to have been rejected then the acceptance
of the
consortium’s tender will remain extant.
(g) If notwithstanding the terms of this order no
decision has been made by the tender board by the date referred to in
paragraph
(b) then an order shall issue on that date in the terms
contained in paras (i), (ii) and (iii) above.
(h) The first and second respondents, jointly and
severally, are ordered to pay the costs of the applicant, including
the costs of
two counsel.’
__________________
C N JAFTA
JUDGE OF APPEAL
CONCUR: )
HOWIE P
) NUGENT JA
) MAYA JA
) MHLANTLA
AJA
1
Act
200 of 1993.
2
Section
187 of the interim Constitution provides: ‘(1) The procurement
of goods and services for any level of government shall
be regulated
by an Act of Parliament and provincial laws, which shall make
provision for the appointment of independent and impartial
tender
boards to deal with such procurements. (2) The tendering system
referred to in subsection (1) shall be fair, public and
competitive,
and tender boards shall on request give reasons for their decisions
to interested parties. (3) No organ of state and
no member of any
organ of state or any other person shall improperly interfere with
the decisions and operations of the tender
boards. (4) All decisions
of any tender board shall be recorded.’
3
Act
2 of 1994 which came into operation on 1 October 1994.
4
Section
4 of the Act provides: ‘(a) on behalf of the Province,
conclude an agreement with a person within or outside the Republic
for the furnishing of supplies and services to the Province, or for
the hiring or letting of anything or the acquisition or granting
of
any right for or on behalf of the Province or for the disposal of
movable Provincial property; (b) with a view to concluding
an
agreement referred to in paragraph (a), in any manner it may deem
fit, invite offers and determine the manner in which and the
conditions subject to which such offers shall be made; (c) inspect
and test or cause to be inspected and tested supplies and services
which are offered or which are or have been furnished in terms of an
agreement concluded under this section, and anything offered
for
hire; (d) accept or reject any offer for the conclusion of an
agreement referred to in paragraph (a);….’
5
Regulation
2 reads: ‘
Subject to the provisions of any
Act of the Provincial Legislature, supplies and services for and on
behalf the acquisition or granting
of any right for and on behalf of
the Province and the disposal of movable provincial property shall
be procured, arranged or disposed
of only through the Board.’
6
Section
217 provides: ‘(1) When an organ of state in the national,
provincial or local sphere of government, or any other
institution
identified in national legislation, contracts for goods or services,
it must do so in accordance with a system which
is fair, equitable,
transparent, competitive and cost-effective. (2) Subsection (1) does
not prevent the organs of state or institutions
referred to in that
subsection from implementing a procurement policy providing for–
(a) categories of preference in the
allocation of contracts; and (b)
the protection or advancement of persons, or categories of persons,
disadvantaged by unfair discrimination.
(3) National legislation
must prescribe a framework within which the policy referred to in
subsection (2) must be implemented.’
7
Act
3 of 2000.
8
The
decision to award the tender was communicated to the consortium by
Dr Manzini in a letter dated 18 March 2005 which,
in part,
reads: ‘In a meeting of the 10
th
March 2005, the Department of Health and Social
Development approved that the bid be awarded to your company with
the attendant
conditions hereinafter….’ It may be noted
that on 10 March neither the tender committee’s written
recommendation
nor the technical committee’s report existed.
9
2004(1)
SA 308 (SCA).
10
Regulation
5 provides: ‘When, at the invitation of tenders, offers are
submitted for the purpose of concluding an agreement
referred to in
section 4 (1)(a) of the Act– (a) the Board is not obliged to
accept the lowest or any offer; (b) the Board
may, where an offer
relates to more than one item, accept such offer in respect of or
any specific item or items; (c) the Board
may accept any offer
notwithstanding the fact that the offer was not made in response to
any particular tender invitation, or does
not comply with the tender
invitation in respect of which the offer has been made.’
11
1985
(3) SA 42
(A) at 49G-H.
12
For
an elaborate discussion of s 39 (2) see
Bato
Star Fishing (Pty) Ltd v Minister of Environmental Affairs and
Others
[2004] ZACC 15
;
2004 (4) SA 490
(CC) paras
88-92 and authorities there collected.
13
[2005]
4 All SA 487
(SCA).
14
2006
(1) SA 297
(CC). Writing for the majority in that case Mokgoro J
said (para 26): ‘Although the [the National Roads Act 54 of
1971] has
for nearly two decades been applied in the expropriation
of property and has been regarded as the major source of
expropriation
law in South Africa, it is important to recognise and
appreciate that, since the inception of the Constitution, all
applicable
laws must comply with the Constitution and be applied in
conformity with its fundamental values. It is therefore now the
Constitution,
and not the Act, which provides the principles and
values and sets the standards to be applied whenever property, which
in turn
is now also constitutionally protected, is expropriated.
Every act of expropriation, including the compensation payable
following
expropriation must comply with the Constitution, including
its spirit, purport and objects generally and s 25 in particular.’
15
Section
8(1) 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) directing the
administrator– (i ) to give reasons; or (ii)
to act in the
manner the court or tribunal requires; (b) prohibiting the
administrator from acting in a particular manner; (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) directing the administrator or any
other party to the proceedings to pay
compensation; (d) declaring
the rights of the parties in respect of any matter to which the
administrative action relates; (e)
granting a temporary interdict or
other temporary relief; or (f) as to costs.’
16
Oudekraal
Estates (Pty) Ltd v City of Cape Town
2004 (6) SA 222
(SCA) para
46.