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[2012] ZAGPPHC 185
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Allpay Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer of the South African Social Security Agency and Others (7447/2012) [2012] ZAGPPHC 185 (28 August 2012)
NOT REPORTABLE
IN THE HIGH COURT OF SOUTH AFRICA
(NORTH GAUTENG HIGH COURT, PRETORIA)
CASE NO: 7447/2012
DATE:28/08/2012
In the matter between:
ALLPAY CONSOLIDATED
INVESTMENT
.........................
1st
Applicant
HOLDINGS (PTY) LTD
ALLPAY FREE STATE
(PTY) LTD
…...................................
2nd
Applicant
ALLPAY WESTERN CAPE
(PTY) LTD
...............................
3rd
Applicant
ALLPAY GAUTENG
(PTY) LTD
............................................
4th
Applicant
ALLPAY EASTERN CAPE
(PTY) LTD
.................................
5th
Applicant
ALLPAY KWAZULU
NATAL (PTY) LTD
..............................
6th
Applicant
ALLPAY MPUMALANGA
(PTY) LTD
..................................
7th
Applicant
ALLPAY LIMPOPO
(PTY) LTD
...........................................
8th
Applicant
ALLPAY NORTH WEST
(PTY) LTD
...................................
9th
Applicant
ALLPAY NORTHERN
CAPE (PTY) LTD
...........................
10th
Applicant
MICAWBER 851 (PTY)
LTD
................................................
11th
Applicant
MICAWBER 852 (PTY)
LTD
...............................................
12th
Applicant
MICAWBER 853 (PTY)
LTD
...............................................
13th
Applicant
MICAWBER 854 (PTY)
LTD
................................................
14th
Applicant
VS
THE CHIEF EXECUTIVE
OFFICER OF THE
....................
1st
Respondent
SOUTH AFRICAN SOCIAL SECURITY AGENCY
THE SOUTH AFRICAN
SOCIAL SECURITY
.....................
2nd
Respondent
AGENCY
CASH PAYMASTER
SERVICES (PTY) LTD
....................
3rd
Respondent
EZIDLUBHEDU
INVESTMENT
............................................
4th
Respondent
HOLDINGS (PTY) LTD
FLASH SAVINGS AND
CREDIT COOPERATIVE
.............
5th
Respondent
ENLIGHTENED
SECURITY FORCE (PTY) LTD
................
6th
Respondent
MOBA COMM (PTY)
LTD
......................................................
7th
respondent
EMPILWENI PAYOUT
SERVICES (PTY) LTD
...................
8th
Respondent
PENSION MANAGEMENT
(PTY) LTD
.................................
9th
Respondent
MASINGITA FINANCIAL
SERVICES (PTY) LTD
................
10th
Respondent
THE SOUTH AFRICAN
POST OFFICE
...............................1
1th
Respondent
ROMAN PROTECTION
SOLUTIONS CC
….......................
12th
Respondent
UBANK
LIMITED
.....................................................................
13th
Respondent
AFRICAN RENAISSANCE
INVESTMENT
..........................
14th
Respondent
MANAGEMENT (PTY) LTD
STANDARD BANK GROUP
LIMITED
.................................
15th
Respondent
NEW SOLUTIONS (PTY)
LTD
...............................................
16th
Respondent
ITHALA
LIMITED
.....................................................................
17th
Respondent
KTS TECHNOLOGY
SOLUTIONS CONSORTIUM
.............
18th
Respondent
CENTRE FOR CHILD
LAW
…..............................................
Amicus
Curiae
JUDGMENT
MATOJANE J
INTRODUCTION
[1]
The
applicants initially brought this application in two parts, namely,
Part A in which the applicants sought interim interdictory
relief to
inter alia
prevent SASSA from taking any steps to implement a tender and Part B
being a review of the tender award.
[2]
The
relief sought in Part A of the notice of motion was not proceeded
with and the applicants and the first to third respondents
agreed
that the review proceedings provided for in Part B of the notice of
motion be determined by this court on an expedited basis.
[3]
The
applicants seeks an order correcting or setting aside the decision of
the second respondent to appoint the third respondent
as a service
provider of the second respondent pursuant to a tender for the
provision of payment services for social grants in
the entire country
(“the tender”). In addition the applicants also seeks
the consequent setting aside of the service
level agreement entered
into between the second and third respondents.
[4]
SASSA
is established in terms of section 2(1) of the South African Social
Security Agency Act, 2004 (Act No 9 of 2004). It is an
organ of
state in terms of section 239(b)(ii) of the Constitution and a
national public entity within the meaning of the PFMA.
Its function
includes the administering of social assistance in terms of Chapter 3
of the Social Assistance Act, and performing
any function delegated
to it under the Act; and to collect, collate, maintain and administer
such information as is necessary for
the payment of social security.
See section 4 of the SASSA Act.
[5
] The
contract arising from the impugned tender is for a five-year period,
it’s worth approximately R10 billion, and involves
the
distribution of social grants worth nearly R500 billion.
[6
] The
tender concerns the provision of social grants to over 14.8 million
people who are the poorest of the poor and the most vulnerable
members of society, namely, older persons, war veterans, disabled
persons, child support grants, grant-in-aid, child support, foster
child grants and care dependency grants.
[7
] For
the sake of convenience, the applicants collectively are referred to
as “applicants”. First and second respondent
as “SASSA”,
third respondent as “CPS”, eighth respondent as
“Empilweni” and The Centre for
Child Law as “The
Centre”
[8
] Prior
to the tender being awarded to CPS, grants were distributed in the
nine Provinces of South Africa in the following way:
8.1
Applicants
distributed grants in the Free State, Western Cape, Gauteng and
Eastern Cape;
8
.2 Empilweni
distributed grants in Mpumalanga;
8.3 CPS
distributed grants in North-West, KwaZulu-Natal, and part of the
Eastern Cape, Limpopo and Northern Cape; and
8.4 in addition to
applicants, CPS, and Empilweni, SASSA also had payment agreements
with the South African Post Office, First
National Bank and Standard
Bank in the Eastern Cape; and beneficiaries who elected to be paid
at banks of their choice.
[9
] SASSA
identified weaknesses in the methodology of payment which resulted
in, among other deficiencies, duplicated payments, payments
to
persons who were not beneficiaries and other fraudulent conduct which
had an adverse impact on the budget allocated by Parliament
for
social grants for persons who qualified.
[10
] One
of the mischief’s SASSA attempted to address in the tender was
that beneficiaries receiving payment at designated pay
points could
not be verified prior to payment. Recipients receiving monies at
banks could not be authenticated as correct and
this resulted in
abuse. Legitimate recipients did not receive payment and fraudsters
received payment that they were not entitled
to, resulting in
substantial financial loss.
THE TENDER PROCESS
[11
] On
the 15 April 2011 SASSA published an invitation to bid (“RFP”)
calling upon bidders to present offers to provide
the services in any
one or more Provinces of the Republic of South Africa. A bid
clarification meeting was held on the 12 May
2011. The closing date
of the tender was as a result extended from 27 May 2011 to 10 June
2011. On the 20 May 2011 SASSA provided
written responses to certain
of the questions posed by bidders.
[12
] SASSA
issued a Bidders Notice No 1 on the 23 May 2011, to change the
closing date for the tender to 15 June 2011.
[13
] On
the 10 June 2011 SASSA issued a document entitled “final
clarification regarding frequently asked questions” referred
to
as Bidders Notice 2. Bidders Notice No 3 was issued on the 14 June
2011, extending the closing date to 27 June 2011.
[14
] By
closing date bids from 21 tenderers had been received by SASSA. The
tender process was comprehensive and endured over a period
of 9
months. Various special bid committees were established to oversee
the different stages of the bidding process in line with
SASSA’s
Supply Management Policy and Treasury Regulations. The committees
were constituted mainly of senior government employees
who are
employed in government departments unrelated to SASSA.
[15
] The
Request For Proposals (“RFP”) required the bid process to
be split into three stages. First, there would be an
administrative
evaluation (to ensure compliance with administrative requirements of
the RFP). Secondly, the bids would then be
evaluated on
functionality. The RFP stated that the bids would be evaluated
against the solution criteria to determine whether
or not these
comply with the specified solution requirements of the tender.
Lastly bidders who scored a minimum of 70 percent
would be considered
for further evaluation for financial and preference points.
[16
] The
written bids were considered by the BEC,
which consisted of four members, instead of five, none of whom was a
supply chain management practitioner as required by SASSA’s
Supply Chain Management Policy.
[17
] Applicants
and CPS met the minimum threshold of 70 percent and were invited to
make presentations on their proposals. Following
the presentation
meeting that was held on the 7 October 2011, applicants’
functionality score were lowered to an overall
score of 58 percent as
it did not provide for biometric verification for all payments
methods as required by Bidder’s Notice
2.
[18
] The
tender was awarded to CPS on the 17 January 2012 and the service
level agreement and contracts were signed on 3 February 2012.
[19
] The
process followed by the BEC and BAC was monitored by the Independent
Process Monitor who compiled an independent report.
[20
] Applicants
contend that the tender process was fundamentally flawed at almost
every level, from the terms of reference, to the
procedure, to the
ultimate evaluation and adjudication of the bids. Applicants advance
the following contentions:
20.1
That
the tender specifications were materially altered at the last minute.
This had the consequence that:
20.1.1
Bidders
did not know or were mislead about the applicable criteria; and
20
.1.2 the
process lacked transparency and was inherently unfair.
20.2 After the
last minute alteration of the specifications, SASSA conducted a form
of “hearing” at which applicants
and CPS were required to
make presentations. But the process was fatally irregular because:
20
.2.1 The
purpose of the hearing and the issues to be addressed were not
identified in advance;
20
.2.2 the
requirement to make a presentation was on less than 48 hours’
notice; and
20.2.3 applicants’
scores were thereafter altered to eliminate it from the bid but
without inviting applicants to address
SASSA on all of the topics
in respect of which its scores were reduced.
20.3 T
he
award of the tender to CPS is unsustainable,
inter
alia
,
because:
20.3.1 The bulk
of the undertaking (74 percent) was to be performed by CPS's
partners, yet no assessment of the capacity of those
partners to
perform the relevant undertaking was made before the tender was
awarded;
20.3.2 there was
thus no proper consideration and assessment of CPS’s bid as a
whole. In as much as the nature, skills
and abilities of entities
that were to perform a significant component of the tender were never
considered.
20
.4 The
tender process was beset by a series of fatal irregularities. More
particularly:
20.4.1 The BEC
was not properly constituted at material parts of the process;
20.4.2 the BAC
took a material decision without a member being present;
20.4.3 there was
a failure by a member of the BEC (who had unjustifiably lowered
applicant’s scores so as to eliminate it)
to disclose a
conflict of interest; and
20.4.4 CPS failed
to comply with a material requirement of the RFP, that each bidder
had to submit separate bids for each Province.
20.5
the
decision to appoint CPS was vitiated by bias, bad faith and ulterior
purpose. More particularly:
20.5.1 Despite
allegations of a serious nature being levelled against CPS, SASSA
failed to investigate those alleged acts of corruption.
Nor did
it take them into account; and
20.5.2 one of the
members of the BEC who was involved in lowering applicant’s
scores to the extent of disqualification,
had an undisclosed conflict
of interest.
APPLICABLE LEGAL PRINCIPLES
[21
] The
RFP explained that various pieces of legislation and their
regulations would apply to the adjudication of the bids. These
were:
21.1 The
Constitution;
21.2 The
Preferential Procurement Policy Framework Act 5 of 2000
;
21.3 The
Social Assistance Act 13 of 2004
; and
21.4
The
Public Finance Management Act 1 of 1999
.
Constitution of the Republic of South
Africa
[22
] Section
27(1)(c) of the Constitution of the Republic of South Africa, 1996
(Act No 108 of 1996) (“the Constitution”)
provides that
everyone has the right to have access to social security, including
the right to appropriate social assistance if
they are unable to
support themselves and dependents.
[23
] Section
27(2) of the Constitution provides that the State:
“Must
take reasonable legislative and other measures, within its available
resources to achieve the progressive realization
of each of these
rights.”
[24
] Section
217 of the Constitution sets out the basic procedural and substantive
requirements that must guide the State when it procures
goods and
services. The tender process, preceding the award of the tender must
be made in accordance with a system that is fair,
equitable,
transparent, competitive and cost effective.
[25
] Section
217(3) provides that national legislation must prescribe the
framework for the implementation of any preferential policy.
This is
done by the Preferential Procurement Policy Framework Act, 2000 (Act
No 5 of 2000).
[26
] Section
28(1)(c) of the Constitution provides that every child has a right to
basic nutrition, shelter, basic health care services
and social
services. Section 28(2) provides that a child’s best interest
is of paramount importance in every matter concerning
the child.
Preferential Procurement Policy
Framework Act
[27
] The
purpose of the Preferential Procurement Policy Framework Act, 2000
(Act No 5 of 2000) (“PPPF Act”) is to give
effect to
section 217(3) of the Constitution by providing a framework for the
implementation policy contemplated in section 217(2)
of the
Constitution and for matters connected therewith.
[28
] Section
1 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 documents.”
[29
] Section
2(1)(f) provides that organs of state must determine their
preferential procurement policy based on a points system unless
objective criteria justify the award to another tender.
[30
] Regulation
9 of the regulations promulgated under the PPPF Act provides that
“despite regulations 3(4), 4(4), 5(4), 6(4)
and 8(80), a
contract may, on reasonable and justifiable grounds be awarded to a
tender that did not score the highest number of
points.”
[31
] An
“acceptable tender” is defined in the PPPF Act as a
tender that, in all respect complies with the specifications
and
conditions of tender as set out in the tender documents. It was held
in
Chairperson: Standing Tender Committee &
Others v JFE Sapela Electronics (Pty) Ltd and Others
as follows:
“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 effective’.
In other
words, whether the 'tender in all respects complies with the
specifications and conditions of tender as set out in the
contract
documents’ must be judged against these values.”
Public Finance Management Act
[32
] SASSA
is listed under Schedule 3A of the Public Finance Management Act,
1999 (Act No 1 1999) (“PFMA”) as a National
Public
Entity.
[33
] Section
51(1) of the PFMA provides that an accounting authority for a public
entity must ensure that the public entity has and
maintains:
“(iii) an
appropriate procurement and provisioning system which is fair,
equitable, transparent, competitive and cost effective.”
[34
] Regulation
9.1.1 (Part 4) of the Treasury Regulations published under the PFMA
provides as follows:
“The
accounting officer of an institution must exercise all reasonable
care to prevent and detect unauthorized, irregular,
fruitless and
wasteful expenditure, and must for this purpose implement effective,
efficient and transparent processes of financial
and risk
management”.
South African Social Security Agency
Act
[35
] The
preamble of the South African Social Security Act, 2004 (Act No 9 of
2004) (“Social Security Act”) provides
inter
alia
that:
“the
effective provision of social security services requires uniform
norms and standards, standardized delivery mechanisms
and a national
policy for the efficient, economic and effective use of limited
resources available to the State for social security.”
“a national
social security economic policy is required to prevent the
proliferation of laws and policies relating to social
security from
prejudicing the beneficiaries of social security, prejudicing the
economic interest of the Republic or its provinces
or impending the
implementation of such national social security economic policy.”
THE GROUNDS OF REVIEW
Failure to answer questions
[36
] The
first ground of review relied upon by applicants is that the decision
to appoint CPS was procedurally unfair. Applicants
contend that
SASSA failed to answer certain fundamentally important questions
which were put to it by the applicants and others
at the briefing
session and in addition responded to several questions about the
scope of the tender by saying “bidder to
propose”, this
was argued, rendered the bidding process procedurally unfair and
falls to be reviewed and set aside in terms
of section 3(1) and
6(2)(c). It was further submitted that the response by SASSA to
questions relating to the proof of life issue
and other issues by
stating that “bidder to propose” contradicts the
requirement of the RFP as it invites a bidder
to qualify the RFP with
its own proposal.
[37
] It
is clear that the intent of the tender was to invite bidders to
submit proposals on how to provide the service. Bidders had
to
provide a solution that falls within the general intend of the RFP.
In my view, “bidders to propose” does not invite
bidders
to qualify the RFP but calls for a solution from bidders within the
stipulated criteria. The reading of the record and
the summary of
answers provided to the applicants’ questions show that all
questions submitted by the applicants were answered
except where they
were invited to propose solutions.
[38
] Applicants
contend that failure to answer certain questions were prejudicial to
their bid yet they were contend to submit their
bid and participate
in an unfair tender process without raising an objection nor
interdicting it. See
SA Metal Machinery Co
(PTY) v City of Cape Town
2011 (1) SA 348.
The conclusion is inescapable that applicants raise the issue of
procedural unfairness at this stage because they were unsuccessful.
Material change to the RFP
[39
] Applicants
submit that SASSA materially changed the requirements of the bid at
the very last minute, giving applicants only eight
working days to
make substantial changes to its tender. It is argued that the RFP
did not; all along require biometric verification
at the time of
payment. Applicants submit that Bidders Notice No 2 issued by SASSA
on the 10 June 2010 which required that biometric
verification be
performed when a beneficiary receives his grant, regardless of the
payment methodology elevated the need for biometric
testing to an
inflexible rule and made the RFP internally inconsistent and unclear
and accordingly prevented applicants from responding
meaningfully to
it.
[40
] Applicants
interpreted the tender documents to mean that finger-print
verification could be used where cash is dispensed with
at pay-points
but that where ATMs were employed this would not be required as
according to the applicants, the RFP stated that
the use of
biometrics were “preferable” as opposed to compulsory.
Applicants further submit that the requirements
are internally
inconsistent, as current technology does not permit of simultaneous
fingerprint verification upon withdrawals at
ATMs.
[41
] Section
A of the RFP sets out the background to and aim of the tender.
Clause 2.1 describes the intent as follows:
“The
bidders are required to submit a proposal for the provision of a
Payment Service for Social Grants. Payment Service
is defined as
the Registration of Social Grant Recipients and thereafter, the
payment of Social Grants to all registered Beneficiaries.”
[42
] Clause
2.4 describe the overall objective of the tender as a desire “to
shift from the current largely cash-based payment
model to more
electronic-based payment model relying on the existing infrastructure
available in the country and developing areas
where there is a lack
of access to payment facilities”.
[43
] The
key business principles and minimum requirements to be addressed by
the RFP include:
“3.1.4 reduce
fraud, corruption and leakage at the point of payment.”
[44
] The
RFP sought to eliminate the following problems in regard to
electronic payments,
inter alia
:
“4.4.3 the
lack of contact (emphasis added) with the beneficiary, depriving
SASSA of the opportunity of periodically conducting
the statutorily
required life certification (i.e. testing to determine whether
beneficiaries are still alive);
4.4.4 the
inability of SASSA to recoup social-grant payments from dormant
accounts (i.e. accounts where payments of grants have
been effected
but no withdrawals made for a period of three months; and
4.4
.5 the
failure of banks to verify beneficiary details and account numbers
before effecting grant payments into the account.
3.1.9
Ensure
proof of life of the beneficiaries as an integral part of the payment
process.”
[45
] It
is clear from the wording of clause 3.1.9 and 4.4.5 that the solution
sought by SASSA should incorporate proof of life verification
before
payment is made to a beneficiary, whether cash or electronic and
biometric verification for this purpose was preferable.
The solution
proposed by bidders had to “increase the commonality of payment
distribution platform, whether cash or electronic
and exploit the
possibility of utilising existing payment distribution channels and
avoiding costly commercial payment infrastructures”.
[4
6] Section
C of the RFP sets out the “scope of works” that clearly
shows that biometric authentication must be conducted
prior to each
payment irrespective of the payment method used. It provides:
“3.1.3 The
minimum acceptable requirement during bulk and on-going enrolments is
that all the ten fingerprints of beneficiaries
must be captured.
3.1.3. 1 The
Biometric Data captured during enrolment will be used for matching
and authenticating during payment process. The
proposed solution
must therefore allow or enable these business functions.
3.1.3.2 Biometric
Data processing must allow 1 to many matching during enrolment and
payment processing stages.
3.1.3.3 Biometric
device, Data storage and transfer must conform to the following
minimum specification:
- Scan at
500dpi;
- the Biometric
images must be sent compressed
in Aware WSQ
format;
- image size
must be 512 x 512, padded with
white spaces
if smaller; and
- only live
prints accepted (thermal recognition).
3.1.4 The
successful bidder/bidders must verify the identity of all
beneficiaries before enrolling or giving out any information.
3.1.5 The
enrolment Data will further be used to enable the life certification
process and will become implicit during payments.”
[4
7] Clause
3.1.3.3 sets out the minimum specification for the biometric device,
the images must be sent compressed and only live
prints would be
accepted, this would exclude voice recognition.
[48
] Clause
3.3 of the RPF deals with the payment solution, it states:
“3.3.1 Payment
Services of Social Grants must be secured, preferably, Biometric
based. The bidder’s proposal should
provide detail on the
measures that the bidder/s will put in place to ensure that the
right person is paid the correct amount.
3.3.3 All payments
will be effected upon authentic verification.”
[49
] SASSA
issued Bidders Notice 2 on 10 June 2011, five days before the initial
deadline for the bid, to provide for clarifications
on frequently or
repeatedly asked questions. Bidders Notice 2 is headed “Proof
of Life” and reads as follows:
“In
order to ensure that the right beneficiary receives the right amount
at the right time, Biometric verification must
be performed when a
beneficiary receives his grant regardless of the payment
methodology”
[50
] In
my view, Bidders Notice 2 has the same effect with the wording of
clauses 3.3.1. and 3.1.9 and does not introduce a new requirement,
the preferred biometric verification for proof of life purposes, was
always envisioned when payment of the grant is transferred
to the
nominated account of a beneficiary or when it is paid to him in cash
at a payment point. Applicants correctly state that
current
technology does not permit of simultaneous verification upon
withdrawals from ATMs, this shows that applicants misconstrued
the
terms of the RFP as biometric verification is not required at the
time of cash withdrawal at the ATM. In compliance with the
RFP, CPS
offered voice verification of the identity of the beneficiaries at
each payment, whereas applicants offered annual life
certification.
[51
] I
do not agree that Bidders Notice 2 had the effect of amending the
terms of the bid materially as contended by the applicants.
It is
significant that applicants raise the issue of the alleged procedural
irregularity in the tender process only because they
were
unsuccessful. It was open to the applicants to either interdict the
continuance of the tender process or to apply for a further
extension
to amend their tender submission if they were of the view that the
Bidders Notice introduced a new requirement to the
RFP. In my view,
this ground of review must fail.
Unfairness relating to the
presentation of the 7 October 2011
[52
] The
RFP also dealt with the issue of demonstrations and presentations, it
provided that “bidders who submitted a proposal
may be invited
to give an oral presentation which may include but is not limited to
an equipment/service demonstration of their
proposed solution to
SASSA”.
[53
] The
RFP further states that “demonstrations shall be restricted to
bidders that have obtained the minimum score of 70 percent
of the
technical/functional evaluation points during the technical
evaluation phase.” The document made it clear that SASSA
would
schedule a time and location for the presentations if it chose to
have them, but that it was optional whether SASSA would
conduct the
oral hearings or not. The presentations and demonstrations were an
opportunity to afford bidders a chance to clarify
or elaborate on
their proposals.
[54
] The
RFP document provided that “the final scores for those bidders
who obtained the minimum score for the technical evaluation
will be
evaluated after the presentation/demonstrations. If there is a
material difference in the presentation/demonstrations
to that which
the bidder specified in the bid documents, SASSA will request
clarification in writing from the bidder.” (Clause
7.1.4.5)
[5
5] Only
Applicants and CPS were called upon to make oral presentations on
less than 48 hours notice. No notification was given
by SASSA of the
issues to be addressed at the meeting. Two members of the BEC
lowered the applicants’ scores for certain
topics which were
not addressed at the meeting. The applicants’s interim score
was reduced from 70 percent to 58 percent
in every category
regardless of whether the relevant issue was discussed at the meeting
or not. Despite the fact that applicants
had a financial backing
from ABSA Bank Limited, which is a member of global Barclays group,
points were deducted from applicants
under the heading financial
security for unexplained reasons. Scores were also lowered under the
topics of Security Infrastructure
and Transition period despite the
fact that these topics were never addressed at the meeting and
applicants were never given opportunity
to make representations on
the relevant issues before the lowering of scores.
[5
6] SASSA
in its heads of argument and in court argued that no complaint was
raised by applicants about the shortness of the notice
at the time of
the hearing and applicants have acquiesced in the process by
participating in and must be taken to have waived their
right to
complain. It was further argued that the applicants and CPS were
subjected to the same treatment. These submissions
can be disposed
of quickly; waiver is a question of fact, depending on the
circumstances and can never be presumed unless it can
be shown that
applicants, with full knowledge of their rights, decided to abandon
them. See
Abdie and Another v Minister of
Home Affairs and others
2011 (3) SA 7
(SCA)
at par 32 and
Laws v Rutherford
1924 AD 261
at 263. Secondly, applicants could not have complained
earlier about the scores as the score sheets were produced later as
part
of the Rule 53 record. Lastly the fact that both parties were
treated equally unfairly does not detract form the fact that the
process has to be objectively fair.
[57
] The
duty to act fairly requires in the circumstances of a particular case
that an administrator bring to a person’s attention
the
critical issue on which the decision is likely to turn so that the
person may have an opportunity to deal with it. See
Joseph
and others v City of Johannesburg
2010 (3)
BCLR 212
(CC) at par 42,
Chairman: State
Tender Board v Supersonic Tours (Pty) Ltd
[2008] ZASCA 56
;
2008 (6) SA 220
(SCA) at para 15 and Baxter Administrative Law
(1994) 553.
[58
] Section
3(2)(b) of PAJA enumerates a set of minimum requirements that an
administrator “must” extend to any person
entitled to
procedural fairness under section 3(1). These requirements include
“adequate notice of the nature and purpose
of the proposed
administrative action” and “a reasonable opportunity to
make representations.” In my view, the
process followed by
SASSA in reducing the applicants score was irrational, unfair and
inconsistent with the requirements of section
217 of the
Constitution, PFMA and PAJA.
Bias on the part of Ms Nhlapo
[59
] The
applicants argued that the cumulative effect of the fact that Ms
Nhlapo, the Chairperson of the BEC, who lowered applicants
score on
issues not addressed at the meeting and the fact that she failed to
disclose her conflict of interest gave rise to a reasonable
apprehension of bias.
[60] Both Ms Nhlapo
and Mr Yako, previously served on the board of another company,
Reflective Learning Resources (“RLR”)
was not a tenderer
nor associated with any tenderer. SASSA submitted that the
relationship between Ms Nhlapo and Mr Yako does
not amount to a
business relationship as contended for by applicants as such
relationship is too remote both in substance and in
time. Mr Yako
confirmed under oath that he only met Ms Nhlapo once, had not further
contact with her and was not even aware that
she served on the BEC.
[61
] The
test for disqualifying bias was restated by the Constitutional Court
in
President of the Republic of South
Africa and others v South Africa Rugby Football Union and Others
[1999] ZACC 9
;
1999 (4) SA 147
(CC) as follows at par 48.
“The question is whether a
reasonable objective and informed person would on the correct facts
reasonably apprehend that
the judge has not or will not bring an
impartial mind to bear on the adjudication of the case, that is a
mind open to persuasion
by the evidence and submissions by counsel.”
[62
] It
follows in my view, that the essential question in determining
whether there is a reasonable apprehension of bias is whether
there
is a possibility (real and not remote) and not a probability that an
administrator might not bring an impartial mind to the
question to be
determined.
[63] Applicants
have failed to show a conflict of interest as Ms Nhlapo was not shown
to have any interest – pecuniary or
proprietary in any of the
tenderers. Ms Nhlapo and Mr Yako did not know each other before they
were appointed to the board of
“RLR” in Noveber 2007.
They attended one meeting and they never spoke to each other since
then. This meeting was
before August 2009, the tenders were
advertised in April 2011.
Composition of the BEC and BAC
[64]
In
terms of SASSA’s Supply Chain Management Circular No 10 of
2008. The BEC had to consist of 5 members one of whom must
be a
supply chain management practitioner. The BEC consisted of only 4
members. There is nothing in the circular to support
SASSA’s
contention that the Supply Chain Management Practitioner’s role
does not include the scoring of bids. It
is clearly a requirement
that one of the members must be a supply chain management
practitioner. Failure to have a SCM practitioner
as one of the BEC
members is fundermental as each members vote is significant and the
BEC is a specialist entity. It does not
only go to the fairness of
the process but also the expertise of adjudicators.
FAILURE TO ASSES
BEE PAR
TNERS
[65]
The
bulk of the undertaking 74 percent of the work is to be performed by
CPS's BEE partners, yet no assessment of the capacity of
those
partners to perform the relevant undertaking was made before the
tender was awarded.. This decision is unlawful, taken
for an
ulterior purpose. See section 6(2)(a)(ii) of PAJA.
BIDDING BY PROVINCE
[66
] In
terms of the RFP, each bidder had to submit a separate bid in respect
of each of the Provinces in respect of which it intended
to bid. CPS
submitted one technical proposal and one preferential proposal in
respect of the nine Provinces. The CPS’s technical
and
preferential proposal was the same for every Province. SASSA made
it clear at a briefing session that it was a formal requirement
of
the bid that each bidder must submit a separate bid for each
Province. By failing to submit the bids by Province, CPS prevented
the BEC from performing the comparative analysis of proposals per
Province. CPS has accordingly failed to comply with a mandatory
requirement of the RFP.
An administrative body has no
inherent power to condone non-compliance with a peremptory
requirement unless it has been afforded
a discretion to do so. See
Minister of Environmental affairs and Tourism and Others v Pepper Bay
Fishing (Pty) Ltd
2004 (1) SA 308
SCA at para 31.
[67
] The
decision to overlook CPS failure to comply with the RFP is not
rationally connected to the purpose of the tender as a whole,
namely,
to ensure proper comparative scrutiny of the bids across different
Provinces. Accordingly, the decision falls to be reviewed
in terms
of section 6(2)(f)(ii)(aa) of PAJA.
[6
8] For
all above irregularities taken cumulatively, the tender process does
not comply, in my view, in all respect with the specifications
and
conditions of tender as set out in the tender documents. It is
accordingly not an acceptable tender as defined. The procedurally
unfair conduct of SASSA is inconsistent with the constitution and is
invalid in terms of section 172 (1)(a) of the Constitution.
See
Bengwenyama Minerals (Pty) Limited and
Others v Genorah Resources (Pty) Limited and Others
2011 (4) SA 113.
Remedy
[69
] In
terms of 172(1)(b) and section 8 of PAJA the court is called upon to
fashion a remedy which is just and equitable in the circumstances.
The Supreme Court of Appeal held in Millennium Waste
Management (Pty) Ltd v Chairperson of the Tender Board: Limpopo
Province &
others that:
“
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.”
[70] The court stated that in
exercising the discretion in terms of section 8 of PAJA, the court
should strike a balance between
the administrative bodies interests,
the interest of the unsuccessful tenderer , the interest of the party
that was awarded the
tender and the adverse consequences for the
public at large in whose interest the administrative body purports to
act.
[71
] A
balance must be struck between legality and certainty.
Froneman J in Bengwenyama Minerals v Genorah Resources 2011(4) SA113
stated :
“The rule of law must never be
relinquished but the circumstances of each case must be examined in
order to determine whether
factual certainty requires some
amelioration of legality, and if so, to what extent. The approach
take will depend on the kind
of challenge presented – direct or
collateral; the interests involved, and the extent or materiality of
the breach of the
constitutional right to just administrative action
in each particular case”.
[72
]
“Ultimately
the purpose of a public remedy is to afford the prejudiced party
administrative justice, to advance efficient
and effective public
administration compelled by constitution precepts and at the broader
level to entrench the rule of law”
per Moseneke DCJ in
Steenkamp NO v Provincial Tender Board, Eastern Cape
2007 (3) SA 121
(CC). In the Millennium Waste Management case referred to above, the
court further found as follows:
“
... 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 and
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.”
[73
] The
Child Law Centre, which was admitted as a
amicus
curiae
highlight the material consequences
the setting aside of the contract will inevitably have on social
grants recipients. The Centre
has pointed out that as at 29 February
2012, 10 789 595 children were receiving child support grants, 524
378 were receiving foster
care grants and 114 007 were receiving care
dependency grants. It follows that over 10 million children will be
adversely affected
by any interruption in the payments of grants.
Therefore any order that the court grants must take into account that
the best
interest of children are of paramount importance in every
matter concerning them.
[74
] Applicants
propose in their heads of argument and in court that as part of the
courts just and equitable relief powers under section
172(1)(b) of
the Constitution as read with section 8 of PAJA, the entire tender be
remitted for reconsideration by SASSA and the
court must provide for
an interim position which might possibly include that in the interest
of “interim” finality
until such time as the tender is
reconsidered, that CPS be allowed to continue with the current
contract for a short period until
the tender has been considered.
[75
] The
proposal by the applicants raises a number of problems of their own.
It assumes that CPS will continue maintaining and upgrading
a system
which it has contracted to supply for five years temporarily in terms
of a contract which has been declared invalid. SASSA
must be obliged
to accept the performance of CPS for a temporary period and go
through a tender process afresh without been given
an opportunity to
show whether the proposal is practically achievable and what the
adverse consequences will be.
[76
] It
is not clear how long it will take for a new tender to be commenced
with as applicants argues that the present tender is fundamentally
flawed at every level and new bid specifications and terms of
references will have to be formulated. No evidence has been placed
before court as to the practicality and mechanics of there proposals.
According to CPS they now have ten million people in nine
provinces
in their system and have issued smartcards costing R190 million which
will go to waste if a new tenderer takes over.
[77] Applicants
rely
on SASSA’s version that the
process of migration from Allpay to CPS can be reversed provided that
it has a minimum of 60
days, this does not take into account that
CPS, prior to implementation of the award, paid approximately 50
percent of the social
grant beneficiaries in the country and it was
therefore geared towards a takeover of all beneficiaries nationally
in a relatively
short period of time. It is not clear whether
applicants nor Empilweni has the infrastructure to do so.
[78
] The
remedy proposed by applicants is not just and equitable in the
circumstances as it does not ensure that there will be no
interruption in the payments of grants. Practicality and certainty
in my view, does not require the setting aside of the agreement
that
SASSA has entered into with CPS.
[79
] In
the circumstances, applicants have succeeded in its challenge to
SASSA’s decision to award the tender to CPS. I agree
that this
matter is complex and of importance to both sides justifying the
costs of three counsel.
[80
] The
following order is made:
80.1 The tender
process is declared illegal and invalid.
80.2 The award of
the tender to the third respondent is not set aside.
80.3 The first,
second and third respondents are ordered to pay the costs which
costs includes the costs of hree counsel.
______________________
K E MATOJANE
JUDGE OF THE HIGH COURT