About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: North Gauteng High Court, Pretoria
SAFLII
>>
Databases
>>
South Africa: North Gauteng High Court, Pretoria
>>
2013
>>
[2013] ZAGPPHC 319
|
|
Nambithi Technologies (Pty) Ltd v City of Tshwane Metropolitan Municipality and Others (1353/13) [2013] ZAGPPHC 319 (1 November 2013)
REPORTABLE
IN
THE NORTH GAUTENG HIGH COURT.
PRETORIA
(REPUBLIC OF SOUTH AFRICA
CASE
NO: 1353/13
DATE:01/11/2013
In
the matter between:
NAMBITHI
TECHNOLOGIES (PTY)
LTD
..........................................................................
Appellant
And
THE
CITY OF TSHWANE
METROPOLITAN
.........................................................
First
respondent
MUNICIPALITY
THE
CITY MANAGER OF THE CITY OF
TSHWANE
.........................................
Second
Respond
METROPOLITAN
MUNICIPALITY
DUMISANIJ
OTUMILE
N.O
…................................................................................
Third
respondent
THE
EXECUTIVE DIRECTOR: SUPPLY CHAIN
MANAGEMENT
OF THE CITY OF
TSHWANE
................................................
Fourth
Respondent
METROPOLITAN
MUNICIPALITY
EOH
LIMITED
...........................................................................................................
Fifth
Respondent
THE
CHAIRPERSON OF THE BID EVALUATION
COMMITTEE
OF THE CITY OF
TSHWANE
........................................................
Sixth
Respondent
MATROPOLITAN
MUNICIPALITY
THE
CHAIRPERSON OF THE BID ADJUDICATION
COMMITTEE
OF THE CITY OF
TSHWANE
....................................................
Seventh
Respondent
METROPOLITAN
MUNICIPALITY
JUDGMENT
KGANYAGO
AJ:
[1]
The applicant has brought an application seeking the following
orders:
1.1
Reviewing and setting aside the decision of the first, alternatively
second, alternatively third, alternatively forth to appoint
the fifth
respondent in respect of on and off site SAP support services;
1.2
Reviewing and setting aside the decision of the first, alternatively
second, alternatively third, alternatively fourth respondent
to
cancel tender CB204/2012 for the provision of on and off site SAP
support services to the first respondent for a three year
period with
effect from 1st January 2013,
1.3
That the City of Tshwane must give written notice within five days of
this order to all the shortlisted tenderers in respect
of CB204/2012,
that it will proceed with the adjudication of tender CB204/2012.That
the said notice must inform the tenderers that
they are only allowed
to adjust their tariffs upwards (to make provision for inflation) or
withdraw their tender should they wish
to do so and to give notice to
the City of Tshwane of their decision within five days of receiving
such notice. The City of Tshwane
must then proceed to adjudicate the
tender within two weeks after the expiry of the five day period;
1.4
That the decision of the first alternatively, second, alternatively
third, alternatively fourth respondent to issue tender CB103/2013
be
reviewed and set aside.
[2]
The applicant was appointed by the City of Tshwane on the 15th July
2009 to provide SAP support services to the City with effect
from
16th July 2009 for a period of three years ending 16th July 2012. The
parties signed a service level agreement (“SLA”)
on the
15th July 2009, following the conclusion of the process undertaken by
the City to appoint a successful bidder under the
advertised tender
CB162/2008.
[3]
When the three years period expired on the 16th July 2012, the City
has not yet finalized the process of appointing a service
provider.
The parties entered into a further agreement to extend the provision
of the SAP support services for a period of six
months ending
December 2012.The extension was on the same terms and conditions. The
purpose of extending the contract was to allow
the City to finalize
the process of appointing a service provider without there been any
interruptions in services to the members
of the public.
[4]
During October 2012 the second respondent advertised tender
CB204/2012 for onsite and offsite SAP support services. The closing
date for the tender was the 12th November 2012.The compulsory
information session for tender CB204/2012 was held on the 24th
October
2012.The appellant and the fifth respondent submitted their
tender for tender CB204/2012.
[5]
After the tender had closed, a preliminary report was drafted. What
was left was for the Bid Evaluation Committee and Bid Adjudication
Committee to complete their evaluation process and appoint a
successful tenderer.
[6]
On the 5th November 2012, the third respondent was appointed as Chief
Information Officer (“CIO”) by the City of
Tshwane.
[7]
On the 23rd November 2012, the Executive Acquisition Committee
(“EAC") of the City of Tshwane held a meeting. At
that
meeting it was recommended to the committee that the SAP support
services be offered to the applicant and Baraka Enterprise
Consulting
on extension until September 2013.However, the committee was
concerned
with
the lack of planning from the Department and it was resolved that the
Department should consider using other SAP entities used
by different
organs of state for support and maintenance, and appoint them in line
with regulation 32 of the MFMA. It was further
resolved that the
Department should fast track and finalize tender (CB204/2012) within
two weeks in order to avoid further complications.
The City Manager
Janson Ngobeni signed the approved resolution on the 30th November
2012.
[8]
On the 7th December 2012, the Bid Adjudication Committee (“BAC”)
held its meeting. At that meeting the BAC noted
a request by the CIO
wherein he requested the cancellation of tender CB204/2012 as he was
of the view that the tender was not in
line with the broader strategy
of the Municipality. He also cited the fact that the scope of work in
that tender does not address
the entire need of the City of Tshwane.
The BAC resolved that the tender be cancelled and recommended that it
be re-advertised
with changed specification that addresses the
current needs of the City of Tshwane.
[9]
On the 14th December 2012, the third respondent wrote an email to the
applicant reminding them that their SAP contract was ending
on the
31st December 2012.He was also notified them that their contract will
not be extended beyond that period. He further informed
them that the
tender will be re-advertised at a later stage.
[10]
On the 19th December 2012, the EAC held a meeting. At that meeting
the committee agreed to appoint the 5th respondent in terms
of
Regulation 32 through the City of Johannesburg tender for the
provisioning of SAP support services for a period of 6 months,
which
may be extended on a month to month basis, but not exceeding 12
months.
[11]
At that meeting of the 19th December 2012, the City Manager wanted
the difference between the 5th respondent and the applicant.
The CIO
replied as follows:
“
Look,
of course, it is a case of one contract expiring and bringing in
another service provider. But I think for me as a GCIO, it
affords me
the opportunity to start on a clean slate with a new company. EOH is
one of the five companies certified to work on
SAP and is one of the
five best companies in SA.”
[12]
On the 19th December 2012 the applicant and its staff were ordered to
vacate the City of Tshwane premises by the 20th December
2012.
[13]
The 5th respondent in an undated letter wrote to the third
respondent. In paragraph 5 of that letter the 5th respondent said
the
following: “EOH resources have been onsite for two days at the
City of Tshwane (Tuesday 18 December 2012 and 19 December
2012) as
per our agreement, for the purposes of hand over and transitioning
services from the current services providers Baraka
and Nambithi.”
[11]
The City of Tshwane proceeded to re-advertise the tender under tender
number CB107/2013.The applicant and the 5th respondent
have tendered
for that tender. After tender CB107/2013 was closed, the City of
Tshwane proceeded to open it with the sole purposes
of adjudicating
it.
[12]
On the 21st June 2013, the applicant obtained a court order wherein
the respondents were interdicted from opening and adjudicating
tender
CB107/2013 pending the review application which was initiated by the
applicant during May 2013.However, when that order
was obtained, the
respondent had already opened the tender.
[13]
The applicant contends that there was no legitimate change of
objective that warranted the respondents to cancel tender no
204/2012.The applicant is of the view that if the respondents wanted
to reduce the three years period, the tender was making provision
for
amendments, and that could have been negotiated with the successful
bidder since the tenderer was required to indicate the
price for each
year separately. The applicant submits that tender CB107/2013 has
not changed to the extent that it can be said
it differs
substantially from the cancelled tender.
[17]
The applicant is therefore of the view that the decision to cancel
tender CB204/2012 is not rationally connected to the factual
information that the BEC and BAC had cognizance of.
[18]
The applicant further contend that the process that was followed to
appoint the fifth respondent was neither fair, transparent,
cost
effective or ensured open and effective competition. The applicant
submits that the respondent’s policy states that
a competitive
bidding process must be followed before an appointment can be made.
The applicant is of the view that had tender
CB204/2012 been
adjudicated, the records show that the fifth respondent would have
been unsuccessful in securing tender CB204/2012
based on their
pricing.
[19]
The respondents contend that tender CB204/2012 was cancelled before
the conclusion of the evaluation and the adjudication
because the
City later realized the fact that the tender was not in line with the
broader strategy in that the scope of work did
not address the entire
needs of the city.
[20]
The respondents are of the view that the applicant did not suffer any
prejudice as a result of the cancellation of tender CB204/2012
and
the appointment of the fifth respondent. The respondents are of the
view that the applicant is still in a position to again
express its
interest to further supply services to the city through the new
tender CB107/2013 that carries with it revised specifications
that
meets the needs of the City.
[21]
The respondents submit that if the process of evaluating and
adjudicating tender CB204/2012 had proceeded to its finality,
the SAP
support services in terms of the tender would have commenced on 1st
January 2013.The City noted a vacuum in the supply
services which
would have the effect of incapacitating its ability to manage and
administer effectively. That is the reason why
they evoked the
provisions of Regulation 32 of the Municipal System Act by requesting
the City of Johannesburg to participate in
the provision of the SAP
support system.
[22]
The respondents submit that they acted within the law when the City
took the two decisions to cancel tender CB204/2012 and
appoint the
fifth respondent on short term basis whilst specifications for a new
tender process were being worked out and before
advertising the new
tender.
[23]
The general principles relating to the test for judicial review of
administrative action was laid in the case of Pharmaceutical
Manufacturers Association of South Africa and Another v The President
of the Republic of South Africa (CCT 31/99) [2000] ZCC1 At
paragraph
85 Chaskalson P said the following:
“
It
is a requirement of the rule of law that exercise of public power by
the executive and other functionaries should not be arbitrary.
Decisions must be rationally related to the purpose for which the
power was given, otherwise they are in effect arbitrary and
inconsistent with this requirement. It follows that in order to pass
constitutional scrutiny the exercise of public power by the
extensive
and other functionaries must, at least, comply with this requirement
[107]. If it does not, it falls short of the standards
demanded by
our Constitution for such action.”
[24]
Regulation 32(1)
of the
Municipal Supply Chain Management Regulations
reads
as follows:
“
(1)
A supply chain management policy may allow the accounting officer to
procure goods or services for the Municipality or municipal
entity
under a contract secured by another organ of the state, but only if:-
(a)
the contract has been secured by that other organ of the state by
means of a competitive bidding process applicable to that
organ of
state;
(b)
the municipality or entity has no reason to believe that such
contract was not validly procured;
(c)
there is demonstrable discounts or benefits for the municipality or
entity to do so; and
(d)
that other organ of state and the provider have consented to such
procurement in writing.”
[25]
It is not in dispute that the City of Johannesburg and the fifth
respondent has consented in writing to the fifth respondent
been
contracted to the City of Tshwane.
[26]
With regard to whether the services of the fifth respondent was
secured by the City of Johannesburg by means of a competitive
bidding
process, raises a lot of questions than answers. The draft minutes of
the meeting of the committee appointing fifth respondent
reads as
follows:
“
The
Committee raised the following concerns, comments and queries:
1.
That the proposal should not be awarded based on price but it should
be awarded based on rates quoted by the service provider.
2.
That the Bid Evaluation Committee should quantify the number of hours
they expect the service provider will offer during the
period.
3.
That the Committee is not comfortable making the award with EOH's
price ceiling, that the user department should make a proper
estimate
and provide an amount.
4.
That a contract is based on the estimate of hours over a period of
time.
The
chairperson proposed that the item be approved subject to the
contract price be reduced by 5% over a period or whichever comes
first.”
[27]
It seems as if the City Council of Johannesburg has afforded the
fifth respondent to augment its tender without giving the
other
competitors an opportunity to do so. The question is whether that was
fair or not. However, I am not called upon to review
the decision of
the City of Johannesburg to award its tender to the fifth respondent.
[28]
The applicant was not challenged in their contention that even with
2% discount that the fifth respondent has given to the
City of
Tshwane, the fifth respondent’s price was still higher compared
to what they (applicant) were charging the City of
Tshwane. That in
itself is an indication that there were no demonstrable discounts or
benefits for the City of Tshwane.
[29]
The EAC took a resolution to appoint the fifth respondent at a
meeting held on the 19th December 2012.However, as per the letter
from the fifth respondent to the third respondent; the fifth
respondent has been on site from the 18th December 2012 a day before
the meeting of the EAC. The question is how did they know that the
EAC will resolve to appoint them. The fifth respondent in that
letter
specifically state that he had been on site from the 18th December
2012 based on the agreement he had with the third respondent.
This
gives credence to the applicant’s suspicions that the EAC had
merely rubber stamped the recommendation of the third
respondent.
[30]
Therefore, under circumstances, in my view, the applicant was
justified in attacking the decision of the respondents to appoint
the
fifth respondent in terms of
Regulation 32.
[31] In the case of Chairperson
Standing, Tender Committee and Others v JFE Sapela Electronics (pty)
Ltd and Others
[2008] 2 SA 638
(SCA) at paragraph 28,
the
learned Judge said the following:
“
In
appropriate circumstances a court will decline, in the exercise of
its discretion, to set aside an invalid administration act.”
[32]
The appointment of the fifth respondent was for a period not
exceeding 12 months and we are now in the 10th month. If I set
aside
the appointment with the full period not yet having run its course,
such order will have serious and prejudicial results
to the members
of the public, more so that they are left with two months before it
expires. That will interrupt the services that
should be given to the
members of the public.
[33]
Therefore in my view, even though I find the decision to appoint the
fifth respondent warrant to be set aside, I am not inclined
to do so.
[34]
With regard to the cancellation of tender CB204/2012, Regulation
10(4) of the Preferential Procurement Regulations, 2001 reads
as
follows:
“
An
organ of state may, prior to the award of a tender, cancel a tender
if-
(a)
Due to changed circumstances, there is no longer need for goods or
services tendered for; or
(b)
Funds are no longer available to cover the total envisaged
expenditure; or
(c)
No acceptable tenders are received."
[35]
The fifth respondent in cancelling the tender, had relied on
regulation 10(4) (a).The changed circumstances which they are
referring is that tender CB204/2012 is
that
the tender was not in line with the broader strategy of the
Municipality. The changes which they want are that they no longer
require offsite SAP support service and that the three year term for
the tender should be reduced to two years.
[36]
All these queries were raised at the Bid Adjudication Committee
meeting of the 7th December 2012.At that meeting they took
a
resolution that tender CB204/2012 should be cancelled. By that time
tender CB204/2012 was already opened, and what was left was
to
adjudicate and appoint the successful tenderer. Seven days (30/11/12)
prior to the cancellation, the City manager Jason Ngobeni
has
approved and signed a resolution which required the relevant
committee to fast track and finalize tender CB204/2012 within
two
weeks in order to avoid further complications. Instead of complying
with the resolution, they took another resolution to cancel
the
tender.
[37]
Clause 5 of the tender CB204/2012 reads as follows:
“
SCOPE
OF WORK & REQUIREMENTS
The
scope of work for SAP support to COT is as follows:
1.
COT will determine and assess the on/off site resources allocation
based on the services required”
[38]
From the reading of this clause, the respondents were not compelled
to allocate resources for offsite support. They will allocate
as and
when required. Therefore in my view, this was not a good ground to
have the tender cancelled and rely on changed circumstances.
[39]
The applicant was not challenged when they stated in paragraph 27 of
the second supplementary affidavit that on the cancelled
tender
CB204/2012 the fifth respondent was much more expensive in price than
the applicant. This was also confirmed by Peter Erasmus
in his
confirmatory affidavit. The applicant was further not challenged in
paragraph 32 of the applicant’s second supplementary
affidavit
when they stated that in terms of the tender, the tenderer was
requested to indicate the price for each year separately.
The
applicants is therefore of the view that if the tenderer was required
to indicate the price for each year separately, the reduction
of the
tender period from three years was not a ground to cancel tender
CB204/2012.I agree with their view. They could have negotiated
with
the successful tender that the appointment will be for two years.
[40]
The applicant contends that tenderers in tender CB107/2013 have
adjusted their rates from the information they obtained from
the
cancelled tender CB204/2012 when it was opened. The applicant further
submits that the fifth respondent has also adjusted its
rates. The
respondents in answering the applicant does not dispute that
tenderers under tender CB107/2013 has adjusted their rates,
but state
that specifications have changed and differ from the cancelled
tender, and that resulted in rates changing.
[41]
I am not persuaded by the respondents’ submissions. The changes
under tender CB107/2013 are minimal. The tenderers who
were present
when tender CB204/2012 was cancelled, had the opportunity of seeing
the tender prices of other tenderers, and it was
going to be easy for
them to adjust the prices in the new tender CB107/2013.That in itself
will give them an unfair advantage over
the other tenderers. It would
seem the tender was cancelled in order to give other favoured
tenderers to adjust their tender prices
even though the price is not
the only factor to be taken into consideration in awarding a tender.
However, price still plays a
major role.
[42]
In the case of Metro Projects CC and Another v Klerksdorp Local
Municipality and Others (602/2002) [2003] 2ASCA 91 the learned
Conradie JA at paragraph 12 said the following:
“
There
is another reason that the tender procedure of a local authority must
be fair. Invitations to tender by organs of state and
the avoiding of
tenders where it is done in
the
exercise of public power is an administrative process (see Logbro
Properties CC v Bredderson No and Others
2003 (2) SA 640
(SCA) at
465-466C where the leading cases are collected).Section 3(2) (a) of
the
Promotion of Administrative Justice Act 3 of 2000
requires the
process to be lawful, procedurally fair and justifiable. But
primarily, in the case of a local authority, the process
must be fair
because
s10G
(5) (a) of the
Local Government Transition Act 1993
requires it."
[43]
Fairness must be decided in the circumstances of each case. In this
case on the 30/11/12, the City Manager signed and approved
a
resolution that requires the relevant department to fast track and
finalizes tender CB204/2012 within two weeks in order to avoid
further complications. Seven days later the tender is cancelled
citing flimsy reasons for the cancellation. On the 18th December
2012
the fifth respondent is on the site even before it was confirmed that
they are appointed. The new tender that was advertised
had minimal
changes which could have been dealt with the successful tenderer. In
my view, all these make the cancellation of tender
CB204/2012 to be
unfair.
[44]
Taking into consideration the totality of the evidence and argument
before me,
I
have come to the conclusion that there were no justifiable reasons to
cancel tender CB204/2012, and that it was unfairly cancelled.
The
applicant was justified in attacking the decision of the respondent
by way of review.
[45]
After tender CB204/2012 was cancelled, the respondents advertised
tender CB107/2013.After it was closed, it was opened, and
that is
when they were interdicted from adjudicating on it. Now the question
is whether I should set aside the resolution to cancel
tender
CB204/2012 or should I allow tender CB107/2013 to be adjudicated.
Both applicant and fifth respondent have tendered for
both tenders.
[46]
As I have already held in paragraph 41 above that the information
that other tenderers have gained from the cancelled tender
CB204/2012
have given them unfair advantage, it will be unfair to allow tender
CB107/2013 to be adjudicated. Setting aside the
resolution to cancel
tender CB204/2012 will not result in any prejudicial and serious
results since the tender has not yet been
adjudicated and awarded.
[47]
In the circumstances, I do not find any reasonable justification why
the resolution to cancel tender CB204/2012 should not
be set aside.
It is my findings that the applicant’s application hereby
succeeds.
[48]
The following order is made:
1.
The decision of the respondent to cancel tender CB204/2012 for the
provision of on and off support services to first respondent
of a
three year period with effect from 1st January 2013 is hereby
reviewed and set aside.
2.
The City of Tshwane must give written notice within ten days of this
order to all the short listed tenderers in respect of CB204/2012.The
said notice must inform the tenderers that they are only allowed to
adjust their tariffs upwards (to make provision for inflation)
or
withdraw their tender should they wish to do so and to give notice to
the City Of Tshwane of their decision within ten days
of receiving
such notice.
3.
The City of Tshwane must proceed to adjudicate tender CB204/2012
within two months after the expiry of the ten days period.
4.
The fifth respondent to be allowed to honour the contract until the
31/12/13 when it expires.
5.
The respondents jointly and severally are to pay the applicants costs
including the employment of the two counsel.
MF
KGANYAGO
ACTING
JUDGE OF THE HIGH COURT