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[2012] ZAFSHC 118
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Mothapo Consulting Engineers (Pty) Ltd t/a Mothapo Projects v Nala Local Municipality (1053/2012) [2012] ZAFSHC 118 (21 June 2012)
FREE STATE HIGH
COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Case No. : 1053/2012
In the matter between:-
MOTHAPO CONSULTING
ENGINEERS (PTY) LTD
t/a MOTHAPO
PROJECTS
…........................................................
Applicant
and
NALA LOCAL
MUNICIPALITY
….............................................
Respondent
_______________________________________________________
HEARD ON:
26 APRIL 2012
_______________________________________________________
JUDGMENT BY:
DAFFUE, J
_______________________________________________________
DELIVERED:
21 JUNE 2012
_______________________________________________________
INTRODUCTION
[1] Applicant is Mothapo
Consulting Engineers (Pty) Ltd t/a Mothapo Projects, a company that
carries on business as a provider of
consulting, engineering and
project management services. Respondent is the Nala Local
Municipality with its principal office situated
in Bothaville, Free
State Province.
[2] Applicant seeks final
orders in terms whereof
2.1 it is declared that
its appointment to respondent’s panel of professional service
providers evidenced by respondent’s
letter of appointment dated
22 November 2011 and the Service Level Agreement (“SLA”)
concluded between the parties
pursuant thereto on 24 November 2011
are in existence and binding on them;
2.2 respondent shall
forthwith resume its performance of the agreements in accordance with
the terms thereof and shall permit applicant
to do likewise;
2.3 respondent be
interdicted from taking any further steps in relation to tender
notices and invitations to tender in relation
to certain defined
projects;
2.4 respondent be ordered
to pay the costs of the application.
[3] Respondent opposes
the application and the relief sought. It also filed a conditional
counter-application, relying on the same
facts set out in its
answering affidavit to the main application in terms whereof it seeks
a declaratory order that the SLA only
is invalid
ab initio
,
unlawful and unenforceable. The conditional counter-application
starts of as follows:
“
Kindly take
notice that the respondent intends making a conditional
counter-application to the above Honourable Court on the date
and
time of set down of the main application if it being found that the
respondent cancelled the contract between the parties as
referred to
in annexure ELM2 (the SLA) to the founding papers, without recourse
to a court of law, for an order in the following
terms...”
It needs to be recorded
that although respondent now only seeks a declaratory order that the
SLA is invalid
ab initio
unlawful and unenforceable, this
counter-application also contains a prayer 2 which reads as follows:
“
That respondent’s cancellation of the aforementioned
contract be ratified and confirmed.”
Mr. Zietsman, who
appeared on behalf of respondent with Mr. Mene, conceded in oral
argument that only a valid contract can be cancelled
in certain
circumstances.
In casu
it is respondent’s case that the
SLA is invalid
ab initio
and Mr. Zietsman accordingly
indicated that he would not be asking for the relief contained in
prayer 2.
THE INVITATION TO
TENDER AND THE CONTRACTS CONCLUDED
[4] Respondent invited
bidders to submit bids in respect of four separate tenders, the only
one relevant
in casu
being bid number 01/2011-1 which was
advertised as follows:
“
Bidders are
hereby invited from experienced and qualified service providers to
submit detailed proposals for the request for proposals
(RFP’s).
Bid number 01/2011-1
Appointment of consultants to a panel
of professional service providers for a period of three years.
(Technical and financial proposal).”
The closing date was 9
November 2011.
[5] Pursuant hereto and
on 22 November 2011 respondent appointed applicant in writing to its
panel of professional service providers
for a period of three years
which appointment was duly accepted. In order to ascertain the scope
of applicant’s appointment
the relevant parts of the letter are
quoted:
“
Your company
is hereby appointed for the planning, designs and implementation,
turnkey construction including construction management
and management
and implementation of the project management unit of the municipality
and supervision of the sub-consultants for
the Bothaville/Kgotsong
and Wesselsbron/Monyakeng municipal area as per the approved
Municipal Infrastructure Grant projects as
per the annexure “A”
of the Service Level Agreement for a period of three years from 23
November 2011 to 30 June 2014.
Project Management Unit
Your company has been appointed and
awarded the bid required services as a lead consultant for the
management of the municipality
Project Management Unit and for a
period starting from 23 November 2011 to 30 June 2014 for the
approved and funded projects as
per the Capital Budget.
Planning and design of the approved
and funded projects as per the Capital Budget.
Your company has been appointed and
awarded the bid required services for planning and design of the
approved and funded projects
as per the Capital Budget for the period
starting from 23 November 2011 to 30 June 2014.
Construction evaluation, appointment
and implementation, turnkey construction and construction
management.
Your company has been appointed and
awarded the bid for required services for construction of the turnkey
projects for approved
and funded projects as per the Capital Budget
for the period starting from 23 November 2011 to 30 June 2014.
Capital projects for the period
starting from 1 July 2011 to 30 June 2014 as per the Table A. This
projects as per Table A are
allocated to Mothapo Projects (Pty) Ltd
as per the required services.”
[6] On 24 November 2011
the parties entered into the SLA anticipated in the above letter of
appointment. Annexure “A to this
agreement sets out a
description of work to be undertaken under the heading “Project
and Construction Management Services
– PMU Management and
Consulting Services: Mothapo Consulting Engineers.” It is clear
from the document that project
and consulting management services
include the management of the construction process of works executed
under multiple direct contracts
from inception to completion, the
administration of the construction processes on behalf of the
employer from inception to completion
and project management, being
the management on behalf of the employer of the entire process
necessary for the procurement of the
design and the construction of
the project from briefing through to commissioning and occupation.
The basic services to be provided
by the project manager are set out
in detail in the document, whilst specific activities are also
included.
THE ISSUES
[7] Two constitutional
values need to be considered, namely
(a) the principle of
legality with reference to section 217 of the Constitution read with
other applicable legislation, regulations
and respondent’s
Supply Chain Management Policy (“SCMP”); and
(b)
Pacta servanda
sunt
, i.e it is in the public interest that parties should comply
with their contractual obligations.
It is applicant’s
case that the parties entered into the above contracts pursuant to a
valid tender process. Respondent is
of the view that the tender
process was not in accordance with the statutory requirements and its
own SCMP and that no valid and
legally enforceable agreements were
entered into between the parties. In its counter-application it does
not seek the review and
setting aside of the whole tender process and
applicant’s appointment evidenced by the letter of 22 November
2011. The validity
of the SLA only is attacked. Applicant for the
first time became aware of respondent’s stance when it
responded to the allegations
in the founding affidavit. In its
answering affidavit respondent relies on four factors in support of
its case, i.e.
The closing date for
submission of bids was less than 30 days as required by the
Municipal Supply Chain Management Regulations and
its SCMP. In this
case a period 19 days only was allowed whilst there was no urgency
or emergency or exceptional circumstances
to deviate from the
required period.
The tender committees
(the Bid Evaluation Committee and the Bid Adjudication Committee)
consisted of junior members contrary
to respondent’s SCMP.
Respondent’s
erstwhile Municipal Manager interfered with the recommendation of
the Bid Adjudication Committee by amending
its recommendations
unilaterally and including additional functions which did not form
part of the services required to be
performed initially.
Applicant’s prior
engagement with respondent and its erstwhile Municipal Manager in
particular insofar as applicant made
recommendations and gave
advice to respondent prior to the advertisement of the tender,
prohibited applicant from tendering
due to his intimate knowledge
of the contract to be awarded.
BACKGROUND TO THE
PRESENT DISPUTE
[8] During 2009
respondent was so dysfunctional due to alleged corruption, fraud,
maladministration and financial mismanagement
that the Free State
Provincial Government intervened in terms of section 139 of the
Constitution and appointed an administrator.
The municipality
stabilised and in September 2011 the administration order was set
aside. All powers and responsibility reverted
back to the Municipal
Manager at the time as accounting officer. In December 2011 KPMG, an
auditing firm who was appointed by the
administrator to do a forensic
investigation, released its report whereupon the Municipal Manager
and others were charged with
misconduct. The Municipal Manager was
eventually dismissed. With effect from 1 February 2012 the Free State
Provincial Government
intervened again and seconded the deponent to
respondent’s answering affidavit, Mr. Mokomela, to the
municipality as acting
Municipal Manager in terms of section 154 of
the Constitution. On 9 February 2012 a meeting was convened by
respondent which was
attended by representatives of applicant and the
two other consulting firms. Certain concerns were raised at the
meeting,
inter alia
about applicant’s perceived
“conflict of interest”. Hereafter a letter dated 21
February 2012 was addressed to
applicant containing the following
statement:
“
This
communiqué serves to inform you that the previous engagement
with regards to the abovementioned matter between yourself
and the
Nala Local Municipality has been nullified and is no longer in
effect.”
Apparently respondent
relied on its cancellation of the agreements between the parties and
not that the agreements and/or the tender
process was void
ab
initio.
Two letters to respondent from applicant and its
attorneys respectively did not attract any response. It was
inter
alia
communicated to respondent that its termination of the SLA
was unlawful and a repudiation which was not accepted.
[9] On 29 February 2012
respondent published tender invitations for the construction of new
roads. It is in respect of these tender
processes and projects that
applicant seeks an interdict to prevent respondent from appointing
contractors and/or to proceed with
the projects. Applicant’s
case is that it has been appointed to
inter alia
manage and
supervise in respect of these projects as part and parcel of its
services to be rendered. It is also its task to appoint
appropriate
contractors on behalf of respondent and this task is seen as one of
the most crucial functions of the applicant as
professional
consultant.
[10] The 29 February 2012
invitation for tender did not allow for a period of 30 days as was
the case with the 2011 invitation which
is the subject of dispute in
this instance.
[11] Finally it should be
mentioned that it is vaguely stated by respondent that the erstwhile
Municipal Manager had previous engagement
with applicant prior to the
advertisement of the disputed tender, probably during
September/October 2011. Apparently applicant
was tasked to intervene
and diagnose problems regarding respondent’s infrastructure and
to submit a report in that regard.
It is alleged that such report was
in fact received, but that it could not be traced for purposes of the
application. It is then
stated that applicant never declared the
relationship that it had with respondent’s Municipal Manager
when it tendered. Applicant
responded and confirmed that it was
engaged by respondent to assist with conducting an independent
business review and detailed
turnaround implementation plan. This was
in respect of various public works projects to be implemented in the
financial year ending
June 2012. It therefore denies that those
instructions and the work done can be seen as a relationship other
than a professional
and legitimate one. Consequently there was
nothing to declare.
LEGAL PRINCIPLES
[12] Section 217 of the
Constitution prescribes that when an organ of state in the National,
Provincial or Local Sphere of Government
contracts for goods or
services, it must do so in accordance with a system which is fair,
equitable, transparent, competitive and
cost-effective. This is
echoed in
section 83(3)
of the
Local Government: Municipal Systems
Act 32 of 2000
.
Section 112(1)
of the
Local Government: Municipal
Finance Management Act, 56 of 2003
stipulates that the SCMP of a
municipality must be fair, equitable, transparent, competitive and
cost-effective and comply with
a prescribed regulatory framework for
municipal supply chain management. In this regard regulations were
promulgated under GN R
868 in GG 27636 of 30 May 2005. Procurement
law is prescriptive and not permissive. See
SANYATHI CIVIL
ENGINEERING AND CONSTRUCTION (PTY) LTD v ETHEKWINI MUNICIPALITY AND
OTHERS
2012(1) BCLR 45 (KZP) paras 26 -36 and
TEB
PROPERTIES CC v MEC, DEPARTMENT OF HEALTH AND SOCIAL DEVELOPMENT,
NORTH WEST
[2012] 1 ALL SA 479
(SCA) para 31. Respondent has
adopted its own SCMP, a complete version of which was attached to the
answering affidavit.
[13] The contract
in
casu,
being in an amount in excess of R200 000,00, could only be
procured through a competitive bidding process. See also
MUNICIPAL
MANAGER: QAUKENI LOCAL MUNICIPALITY AND ANOTHER v FV GENERAL TRADING
CC
2010 (1) SA 356
(SCA) at para [13] p. 361D.
[14] In
QAUKENI
,
loc cit
, the SCA found as follows:
“
[16]
I therefore have no difficulty in concluding that a
procurement contract for municipal services concluded in breach
of
the provisions dealt with above which are designed to ensure a
transparent, cost-effective and competitive tendering process in
the
public interest, is invalid and will not be enforced.”
At p. 362G.
[15]
Pertaining to the procedure to be adopted by a public body confronted
with its own irregular administrative act, the SCA found
in
QAUKENI
,
loc cit
, at para [26] p. 365F:
“
But it is
unnecessary to reach any final conclusion in that regard (the review
of the administrative action under PAJA).
If
the second appellant's procurement of municipal services through its
contract with the respondent was unlawful, it is invalid,
and this is
a case in which the appellants were duty-bound not to submit to an
unlawful contract, but to oppose the respondent's
attempt to
enforce it. This it did by way of its opposition to the main
application and by seeking a declaration of unlawfulness
in the
counter-application. In doing so it raised the question of the
legality of the contract fairly and squarely, just as it
would have
done in a formal review. In these circumstances, substance must
triumph over form.
[16]
In
PREMIER, FREE STATE, AND OTHERS v
FIRECHEM FREE STATE (PTY) LTD
2000 (4) SA
413
(SCA) the SCA set aside the contract concluded in secret in
breach of provincial procurement procedures, holding that such a
contract
was “
entirely subversive of a credible
tender procedure
”
and that it would “
deprive
the public of the benefit of an open competitive process
”
.
See para [30] p. 429G-430A. Bolton, in his
The
Law of Government Procurement in South Africa
at
p. 182 states that “
Tenderers prepare their tenders
based on the specifications laid down in a call for tenders. As a
general rule, therefore, an organ
of state should not be allowed to
make changes to tender specifications after a call for tenders has
been advertised…..To
depart from tender specifications in any
event gives one tenderer an unfair advantage over the other
tenderers, who will have relied
on the standard practice in
submitting their own tenders, the amount of which will be based on
the actual tender specifications
.”
[17] In
EASTERN
CAPE PROVINCIAL GOVERNMENT AND OTHERS v CONTRACTPROPS 25 (PTY) LTD
2001 (4) SA 142
(SCA) at paras [8] and [9] Marais JA
discussed the mischief which our procurement legislation seeks to
prevent and stated as follows:
“
[9]
As
to the consequences of visiting such a transaction with invalidity,
they will not always be harsh and the potential countervailing
harshness of holding the province to a contract which burdens the
taxpayer to an extent which could have been avoided if the tender
board had not been ignored, cannot be disregarded…….
Such transactions are either all invalid or all valid. Their
validity
cannot depend upon whether or not harshness is discernible in
the particular case.
”
[18] In
FERNDALE
CROSSROADS SHARE BLOCK (PTY) LTD AND OTHERS v JOHANNESBURG
METROPOLITAN MUNICIPALITY AND OTHERS
2011
(1) SA 24
(SCA) at para [22] the court found that the effect of
non-compliance with the provisions of section 79(18)(b) and (c) of
the Local
Government Ordinance, i.e. failure to
inter
alia
publish a notice calling for objections
to the proposed lease before exercising the power to let, is that the
jurisdictional fact
necessary for the council’s exercise of its
power to let immovable property belonging to it, was absent. In terms
of section
79(18)(c) a council “
shall not exercise
the power (to let immovable property) ... unless (it) has considered
every objection
”
. The SCA found that in the
absence of the necessary jurisdictional fact the respondent could not
validly exercise the power with
the result that the lease element of
the agreement was
ab initio
invalid.
[19] Notwithstanding the
above exposition of the law, it is also accepted that “
(n)ot
every slip in the administration of tenders is necessarily to be
visited by judicial sanction
”
and
“
considerations of public interest, pragmatism and
practicality should inform the exercise of a judicial discretion
whether to set
aside an administrative act or not
.”
See
CHIEF EXECUTIVE OFFICER, SOUTH AFRICAN
SOCIAL SECURITY AGENCY, AND OTHERS v CASH PAYMASTER SERVICES (PTY)
LTD
2012 (1) SA 216
(SCA) at para [29] p.
225C with reference to
MOSEME ROAD
CONSTRUCTION CC AND OTHERS v KING CIVIL ENGINEERING CONTRACTORS (PTY)
LTD AND ANOTHER
2010 (4) SA 359
(SCA) at
para [21], p. 367C and
OUDEKRAAL ESTATES
(PTY) LTD v CITY OF CAPE TOWN AND OTHERS
2004
(6) SA 222
(SCA) at para [36]. See also
NOKENG
TSA TAEMANE LOCAL MUNICIPALITY v DINOKENG PROPERTY OWNERS ASSOCIATION
AND OTHERS
(518/09)
[2010] ZASCA 128
(30
September 2010) and the following
dictum
at
para [14]:
“…
the
mere failure to comply with one or other administrative provision
does not mean that the whole procedure is necessarily void.
It
depends in the first instance on whether the Act (
in
casu
the
Local Government Transition Act 209 of 1993
) contemplated that
the relevant failure should be visited with nullity and in the second
instance on its materiality.”
See also
METRO
PROJECTS CC v KLERKSDORP LOCAL MUNICIPALITY
2004(1)
SA 16 (SCA) at paras [13] - [15] where it was stated that “
fairness
must be decided on the circumstances of each case
”
,
and “
there are degrees of compliance with any
standard and that it is notoriously difficult to assess whether less
than perfect compliance
falls on one side or the other of the
validity divide
.
[20]
In
MEC FOR HEALTH, GAUTENG v 3P
CONSULTING (PTY) LTD
2012 (2) SA
542
(SCA) at para 25 it was found that the renewal of the SLA in that
case did not give rise to a new agreement as it merely extended
the
duration of the SLA for a period of three years. There being no new
SLA, it was not necessary to follow a competitive bidding
process for
the procurement of the required services. It is also to be noted that
the appointment letter in terms whereof the service
provider was
appointed consequent upon a procurement process provided that it was
subject to the signing of a service level agreement
as
in
casu.
[21]
In
ABSA BANK LTD v KERNSIG 17 (PTY) LTD
2011 (4)
SA 492
(SCA) the court found that section 38 of the Companies Act, 61
of 1973,
“
is
fact-based and that, without the necessary facts, a court cannot
make a finding on whether s 38 was contravened or not.”
It concluded as follows
“
[24] In this
matter it is plain that all the facts are not before court to enable
the court to determine whether or not s 38 has
been contravened.”
See paras [23] and [24]
p. 498J – 499E. The SCA also relied on the following dictum of
Trollip JA in
YANNAKOU v APOLLO CLUB
1974 (1) SA 614
(A) at 623G – H:
“
And if his
defence is illegality, which does not appear
ex
facie
the transaction sued on but arises from its surrounding
circumstances, such illegality and the circumstances founding it must
be pleaded.
It is true that
it is the duty of the court to take the point of illegality
mero
motu
, even if the defendant does not
plead or raise it; but it can and will only do so if the
illegality appears
ex facie
the transaction or from the evidence before it, and, in the latter
event, if it is also satisfied that all the necessary and relevant
facts are before it.”
[21] It is trite that it
is in the public interest that parties should comply with their
contractual obligations: p
acta servanda sunt.
As stated in
REDDY v SIEMENS
TELECOMMUNICATIONS (PTY) LTD
2007 (2) SA
486
(SCA) at para [15] this principle reflects not only the common
law, but constitutional values since “
contractual
autonomy is part of freedom informing the constitutional value of
dignity, and it is by entering into contracts that
an individual
takes part in economic life
.”
[22]
In
WIGHTMAN t/a JW CONSTRUCTION v HEADFOUR (PTY) LTD AND
ANOTHER
[2008] ZASCA 6
;
2008 (3) SA 371
(SCA) at para
[13]
p. 375G –
376B the court dealt with the manner in which applications for final
relief should be adjudicated in the following
manner:
“
[13]
A real, genuine and
bona
fide
dispute of fact can exist only where the court is satisfied that the
party who purports to raise the dispute has in his affidavit
seriously and unambiguously addressed the fact said to be disputed.
There will of course be instances where a bare denial meets
the
requirement because there is no other way open to the disputing party
and nothing more can therefore be expected of him. But
even that may
not be sufficient if the fact averred lies purely within the
knowledge of the averring party and no basis is laid
for disputing
the veracity or accuracy of the averment. When the facts
averred are such that the disputing party must necessarily
possess
knowledge of them and be able to provide an answer (or countervailing
evidence) if they be not true or accurate but, instead
of doing so,
rests his case on a bare or ambiguous denial the court will generally
have difficulty in finding that the test is
satisfied. I
say 'generally' because factual averments seldom stand apart
from a broader matrix of circumstances all of which
needs to be borne
in mind when arriving at a decision. A litigant may not necessarily
recognise or understand the nuances of a
bare or general denial as
against a real attempt to grapple with all relevant factual
allegations made by the other party. But
when he signs the answering
affidavit, he commits himself to its contents, inadequate as they may
be, and will only in exceptional
circumstances be permitted to
disavow them. There is thus a serious duty imposed upon a legal
adviser who settles an answering
affidavit to ascertain and engage
with facts which his client disputes and to reflect such disputes
fully and accurately in the
answering affidavit. If that does not
happen it should come as no surprise that the court takes a robust
view of the matter.”
See
also
MEC OF
HEALTH
loc
cit
at para 28.
THE FACTS AND THE
APPLICATION OF THE LEGAL PRINCIPLES THERETO
[24] Mr. Slon,
applicant’s counsel argued that the allegations contained in
the answering affidavit were so vague that it
was difficult to
establish what exactly respondent’s defence was. He initially
argued that it was a matter of trial by ambush
which ought not to be
permitted, but later on conceded that notwithstanding vagueness, it
was possible to establish the defence
that respondent intended to
rely upon. I must confess that I also had difficulties with the
answering affidavit. It is expected
of parties in motion procedure to
set out all relevant facts in their affidavits: the applicant must
set out a cause of action
and the respondent a plea. The same applies
to a counter-application. The evidence necessary to sustain the cause
of action or
the plea must be contained in the affidavits.
[25] There is no doubt
that a municipality that intends to conclude a service delivery
agreement with an external supplier at a
contract amount in excess of
R200 000,00 has to act openly and in accordance with a fair,
equitable, competitive and cost-effective
system and in terms of a
Supply Chain Management Policy designed to have that effect. The
failure to comply with these precepts
renders the contract invalid
and open to nullification by a court. It is also clear that a court
cannot make such a finding without
the necessary factual foundation
and on mere speculation or conjecture. In order to succeed with its
allegation of illegality respondent
must be successful in the factual
enquiry, i.e. that the tender process followed and contracts
concluded thereafter did not comply
with section 217 of the
Constitution, the other procurement legislation referred to above as
well as respondent’s SCMP.
[26]
The test to be applied in adjudicating
applications of this nature is set out in
WIGHTMAN
loc cit
and
also the well-known
PLASCON-EVANS
-judgment
[1984] ZASCA 51
; ,
1984 (3) SA 623
(AD) at 634-5. It may be accepted that insofar as
respondent raises illegality in order to succeed with its
counter-application,
the matter should be dealt with on the factual
averments of applicant (respondent in the counter-application)
together with the
admitted facts in respondent’s affidavit.
Respondent as the applicant in the counter-application had the right
to file a
further affidavit (replying affidavit) to applicant’s
replying affidavit, but failed to do so. I also accept that
allegations
made by a respondent may be so far-fetched or clearly
untenable that a court may be justified in rejecting them merely on
the papers.
However it is not necessary
in
casu
to come to a final conclusion
as to how the two conflicting versions should be adjudicated and on
whom the onus rests.
Respondent’s
version in its answering affidavit as a whole are so sketchy,
inconclusive and unsubstantiated that I am effectively
precluded from
making any finding on the strength thereof, let alone of finding in
favour of respondent. Bearing in mind the vague
and unsubstantiated
version put forward by respondent, the following comments are made
pertaining to what is either common cause
or should be accepted based
on the rules applicable to the adjudication of applications when
final relief is sought:
1. The closing date for
tenders was less than 30 days from the date of advertisement. This is
in itself insufficient to declare
the tender process or the contracts
entered into pursuant thereto null and void. The respondent’s
SCMP must be considered.
2. The Municipal Manager
at the time had the authority in terms of the SCMP to determine a
shorter period than 30 days in cases
of urgency, emergency or
exceptional circumstances. Respondent failed to rely on credible,
admissible and reliable evidence of
either the erstwhile Municipal
Manager or anyone else – in particular senior personnel such as
the Chief Financial Officer
or the Director: Corporate Services - to
prove that there was no justification for a shorter period
in
casu
. It is clear from the minutes of the meeting of 9 February
2012 relied upon by respondent that it spent much less than it was
entitled
to during the applicable financial year. This was also the
case in the previous year. Respondent’s request for a roll-over
of the unused funds to the next year was declined by the National
Government although negotiations were on-going to retrieve these
funds. Obviously respondent was hard pressed to utilise funds made
available to it for its infrastructure projects as swiftly as
possible. Invitations for tenders published on 29 February 2012 by
the order of the acting Municipal Manager (and deponent of the
answering affidavit) did not allow for the prescribed 30 days as
well. In fact, the period provided to prospective bidders was
a mere
16 days, even less than the previous year. The reasons advanced by
applicant in its reply as to why the usual period was
probably
truncated by the former Municipal Manager in October 2011 are not
only supported by the information contained in the aforesaid
minutes,
but are overwhelmingly in favour of urgency. It is apparent that
there was a general lack of planning within respondent
(it was under
administration for a long time), that co-ordination of projects were
not overseen and that only 10% of funds allocated
for the financial
year was spent at the time notwithstanding the fact that 50% of the
year had already elapsed. Respondent cannot
now be heard to say that
its erstwhile Municipal Manager should not have truncated the period
of 30 days, especially insofar as
it failed to reply to applicant’s
version as it was entitled to do. There is no indication that other
bidders or prospective
bidders were negatively affected by the short
period. If respondent was in possession of such written complainants
or information
in that regard, I would have expected its deponent to
inform the court accordingly.
3. There is no indication
that the Bid Evaluation and Bid Adjudication Committees were not
properly composed in accordance with
respondent’s SCMP and no
positive finding can be made in support of respondent’s case.
Respondent failed dismally to
inform the court in detail as to the
composition of these two committees, save to say that the identified
people were “among”
others on the committees. There is
also no evidence on record as to why it is alleged that the
prescribed competency levels as
provided for in
section 119
of the
Local Government: Municipal Finance Management Act have
not been met.
It is also not explained what is prescribed in this regard and how,
when, where and when were employees of respondent
tested for
compliance purposes and who qualified. Respondent relies on vague and
unsubstantiated allegations in this regard. A
confirmatory affidavit
by Mr. Moleko, an acting Technical Director, who was on respondent’s
version not supposed to be on
the Bid Adjudication Committee, is
attached to respondent’s papers. No reason is advanced for this
bald allegation. There
is no explanation why respondent failed to
rely on the evidence of its Chief Financial Officer or Director:
Corporate Services
at the time. The Chief Financial Officer did not
have to chair the Bid Adjudication Committee as alleged and any other
top senior
management official could have been designated by the
Municipal Manager. It is common cause that the Director: Corporate
Services,
obviously a senior manager, chaired that committee. This is
in line with
section 19.1
of the SCMP.
4. It is vaguely and
speculatively alleged by respondent that applicant was tasked to
intervene and diagnose the problems regarding
infrastructure
experienced by respondent and this being the case, there was “a
relationship with the then municipal manager
prior to the
advertisement of the tender which was never declared” and
therefore the Municipal Manager acted contrary to
legislation to
award the tender to applicant. These vague and unsubstantiated
allegations are not sufficient to find any irregularity.
Applicant
explains its involvement in reply and in my opinion indicates
persuasively that there was no relationship other than
a professional
and legitimate one and there was also nothing to declare.
5. Bids were invited by
respondent for the appointment of consultants to a panel of
professional service providers for a period
of three years. It is not
clear whether the invitation referred to qualified people that could
act as consultants only and/or whether
the bidders had to be
professional service providers in respect of other fields as well in
order to be appointed to the panel.
It was for respondent, who is
supposed to have intimate knowledge hereof and documentation to
support its case, to provide the
court with precise and detailed
evidence as to what was required. All bids had to be submitted on the
prescribed bid documentation
prepared by respondent. This is clear
from paragraph 3.7 of
section 24
of the SCMP. It would be an easy
task to attach these documents that must be in respondent’s
possession to its papers, but
instead, respondent elected to attach a
complete copy of its SCMP – a total of 94 pages - without even
referring in its affidavit
to the relevant clauses. Respondent again
relies on vague allegations to the effect that the Municipal Manager
rejected the report
of the Bid Adjudication Committee and “
wanted
to amend the report in order to advantage the applicant
.”
Immediately thereafter it is alleged as a fact that the Municipal
Manager “
amended the report by redirecting 80% of the
advertised services to the applicant
.” The
deponent carries on as follows: “
These inclusions
amounted to interference with the supply chain management system of
the respondent (contrary to section 118 of
the MFMA Act). The
inclusions also amounted to the new tender other than the one
recommended and thereby contradicting the services
that were put out
on tender
.” This is nonsensical and one must
try to read between the lines to find out exactly what respondent
wants to convey. In
any event respondent, for reasons known to it
only, elected not to attach the report or recommendation of the Bid
Adjudication
Committee which was allegedly amended completely. The
court is again left in the dark. Later on it is stated that the
amendment
of the tender in effect meant that the applicant would be
performing functions as a Project Management Unit as well as a
consultant
at the same time and that this could not be tolerated. It
is also alleged that the whole spectrum of services to be rendered
did
not form part of the tender. The allegations are vehemently
denied by applicant in its replying affidavit (which is also its
answer
to the counter-application), but respondent failed to respond
thereto in a replying affidavit in the counter-application.
6. Applicant has
performed work for respondent in terms of the letter of appointment
and SLA and an amount of R2 182 658,51 has
already been paid to it.
7. In terms of the tender
applicant was appointed as consultant together with two other
consultants, i.e. Urban Renewal (Pty) Ltd
and Thewo Consulting CC and
these three consultants were then appointed and engaged in different
capacities accordingly. The other
two consultants were appointed
pursuant to precisely the same process and the same tender
adjudication provisions and they are
still engaged by respondent in
the same projects in which applicant is entitled to be engaged.
Applicant was the lead consultant
under whose auspices the other two
consultants carried out their functions. In its founding affidavit
applicant reserved the right
to explain in detail the services to be
rendered by it in terms of the agreements, should it become necessary
by reason of what
may be alleged by respondent in opposing the
application. It should be recalled that the letter addressed to
applicant in terms
whereof the relationship was severed is not only
contradictory, but does not reflect any reasons for its decision.
Furthermore
respondent failed to respond at all to applicant’s
letters and in particular the letter of its attorneys.
8. Applicant’s
version in response to respondent’s vague averments is
crystal-clear. As already mentioned, respondent
failed to deny it as
it was entitled to do. According to applicant the purpose of the
tender was to appoint consultant(s) to respondent’s
panel of
consultants for a period in order for services such as project
management and other management services to be rendered
by such
consultant(s) as set out in a SLA at a pre-agreed rate and as and
when required. Like the SLA the scope of work entailed
therein was
not itself sent out on tender. The work to be performed in terms of
the SLA was precisely the kind of work anticipated
and which
applicant had to show it was capable of conducting at the prices
tendered. During the tender process the applicant had
to show that it
had the skill, expertise and financial ability to do the work to be
entrusted to it from time to time, but most
importantly, the rates
and costs at which it was prepared to work had to be specified. The
applicant’s case is thus that
no “amendment” of the
tender services occurred
[27] Despite setting out
a series of legislation and policy provisions alleged to govern
respondent’s conduct, it does not
state in terms of precisely
what legislative or other provision it claims to be entitled to the
relief claimed. Although the relief
claimed by applicant is opposed,
respondent does not apply in the counter-application for the review
and setting aside of the whole
tender process and applicant’s
appointment in terms of the letter of 22 November 2011 as being null
and void
ab initio
. I accept for purposes hereof that this is
respondent’s intention although it is nowhere stated what it
intends to do if
successful, i.e. whether it intends to start a new
tender process or whether it merely seeks to cut out applicant from
being employed
as either consultant or project manager.
[28] Respondent relies
almost entirely on its own alleged non-compliance with legislation
and its policy, but fails to provide the
court with supporting
documents and the firsthand evidence of witnesses such its erstwhile
Municipal Manager, its Chief Financial
Officer and/or its Director:
Corporate Services. In stead it prefers to rely on the hearsay
evidence of its acting Municipal Manager
confirmed to a certain
extent by Mr. Moleko. It is insufficient if the case law referred to
above and
WIGHTMAN
loc cit
in particular is
considered.
[29] I have considered
Mr. Zietsman’s arguments carefully. His legal arguments are
unfortunately related to a factual matrix
which is unsound and
unacceptable for the reasons set out herein. He,
inter alia
,
relies heavily on the erstwhile Municipal Manager’s duties as
accounting officer in the event of a so-called deviation and
the fact
that no records or documents could be found to prove that deviation
was justifiable. However, the reliance on the SCMP
to substantiate
his argument is incorrect insofar as the official procurement process
was not dispensed with
in casu
. In any event there is no
evidence that a council meeting was held in the mean time and no
minutes of any council meetings were
attached. Insofar as notes to
the annual financial statements are concerned, those statements
probably still have to be drawn once
the financial year has ended. We
have not been informed fully in this regard. Mr. Zietsman is
incorrect to argue that the appointment
of the Bid Evaluation and Bid
Adjudication Committees by the erstwhile Municipal Manager was
ultra
vires
insofar as there is no evidence whatsoever as to the number
and identity of the people that were in fact appointed to these two
committees, the qualifications of all of them and their training and
expertise pertaining to the required competency levels. As
mentioned
there is no evidence as to either the prescribed competency levels or
the actual competency levels of these members.
Mr. Zietsman also
argued that the erstwhile Municipal Manager amended the
recommendations of the Bid Adjudication Committee and
included
functions that did not form part of the services required to be
performed. On his version these additional services did
not form part
of the tender that was advertised and that this amounted to an unfair
tender process which was not competitive and
open to the public. The
problem with this argument, as with all other arguments, is that
there is no factual foundation for his
submission for the reasons
stated above.
[30] There is no room for
a finding that the applicant’s appointment and the subsequent
SLA were done in secret and in breach
of any of respondent’s
procurement procedures. Furthermore, respondent has not played open
cards and did not place tenable,
reliable and credible evidence
before the court to find in its favour that there was a material or
even minor breach of its SCMP
or any other procurement legislation.
Applicant’s appointment to respondent’s panel of
consultants and the subsequent
letter of appointment read with the
SLA appear to be exactly the type of procurement that one often
experiences where local governments
solicit bids from service
providers such as attorneys. In order to be successful these firms of
attorneys have to show that they
comply with all relevant prescripts
and what their fee structures would be in respect of work to be
allocated to them in future.
Such panels may consist of several firms
of attorneys and the local government officials are then entitled to
instruct any firm
on the panel to do legal work anticipated in the
tender without having to go through a further procurement procedure.
[31] Even if it is
accepted in favour of respondent that the period of 30 days should
not have been truncated or that inexperienced
personnel also sat on
the committees, this appears to be minor failures to comply with the
relevant administrative provisions and
this should not cause the
whole tender procedure, applicant’s appointment and subsequent
SLA to be void. The matter
in casu
is certainly
distinguishable from
PREMIER, FREE STATE
,
loc cit
,
FERNDALE CROSSROADS
,
loc cit
,
MUNICIPAL
MANAGER: QAUKENI LOCAL MUNICIPALITY
,
loc cit
and
CONTRACTPROPS 25
,
loc cit
. See again the
judgment of Harms DP in
MOSEME ROAD CONSTRUCTION
,
loc
ci,
para 21.
[32] Consequently, the
main application must succeed and the counter-application be
dismissed. Costs should follow the event.
ORDER
[33] Therefore the
following orders do issue:
Main application:
1. It is declared that
applicant’s appointment to respondent’s panel of
professional service providers evidenced by
respondent’s letter
of appointment dated 22 November 2011 and the Service Level Agreement
concluded between the parties on
24 November 2011 are in existence
and are binding on the parties.
2. Respondent shall
forthwith resume its performance of the agreements in accordance with
the terms thereof and shall similarly
permit the applicant to do so.
3. Respondent is hereby
interdicted and restrained from taking any further steps in relation
to the tender notices and invitations
to tender, or in relation to
all and any advancement or furtherance of the tendering processes or
of the projects themselves, in
respect of the following projects:
3.1 Kgotsong: Paved roads
Ph 4 (1.5 km);
3.2 Monyakeng: Paved
roads Ph 4 (2.1 km);
3.3 Kgotsong: Paved Roads
Ph 4(c) (1.5 km);
3.4 Monyakeng: 1.5 km New
Cemetery Road
and in respect of any
other project/s appearing in the schedule, a copy whereof is annexed
as annexure “ELM5” to applicant’s
founding
affidavit, until such time as respondent will fully have complied
with the order set out in paragraph 2 above.
Respondent is ordered to
pay the costs of this application.
Counter-application:
The counter-application
is dismissed with costs.
_____________
J.P. DAFFUE, J
On behalf of applicant:
Adv. B.M. Slon
Instructed by:
McIntyre & Van der
Post
BLOEMFONTEIN
On behalf respondent:
Adv. P. Zietsman SC
With him:
Adv. B.S. Mene
Instructed by:
Bokwa Attorneys
BLOEMFONTEIN
/sp