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[2012] ZAKZPHC 74
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Indiza Airport Management (Pty) Ltd v Msunduzi Municipality (374/12) [2012] ZAKZPHC 74; [2013] 1 All SA 340 (KZP) (16 November 2012)
IN THE KWAZULU-NATAL HIGH COURT,
PIETERMARITZBURG
REPUBLIC OF SOUTH AFRICA
REPORTABLE
Case No: 374/12
In the matter between:
INDIZA AIRPORT MANAGEMENT
(PTY) LTD
................................................
Applicant
versus
MSUNDUZI MUNICIPALITY
.........................................................................
Respondent
JUDGMENT
SEEGOBIN J
[1] The applicant, INDIZA
AIRPORT MANAGEMENT (PTY) LTD, instituted review proceedings against
the respondent, the MSUNDUZI MUNICIPALITY,
in which it seeks an order
that the respondent’s decision not to award specialised
contract number SCM 11 of 10/11 (“the
2011 tender”) to
the applicant, to abandon the 2011 tender, and to proceed with SCM22
of 11/12 (“the 2012 tender”)
be reviewed and set aside,
and directing that the 2011 tender be re-instated and awarded to the
applicant. The applicant further
seeks an order that the costs of
this application be paid by the respondent.
[2] In view of the fact
that the applicant seeks final relief in motion proceedings, the
rules formulated in
Stellenbosch
Farmers’ Winery Ltd v Stellenvale Winery (Pty) Ltd,
1
Plascon-Evans Paints
Ltd v Van Riebeeck Paints (Pty) Ltd
2
and more recently
reaffirmed in the matter of
National
Director of Public Prosecutions v Zuma,
3
are to be followed. These
are that where an applicant in motion proceedings seeks final relief,
and there is no referral to oral
evidence, it is the facts as stated
by the respondent together with the admitted or undenied facts in the
applicant’s founding
affidavit which provide the factual basis
for the determination, unless the dispute is not real or genuine or
that the denials
in the respondent’s version are bald or
uncreditworthy, or that the respondent’s version raises such
obviously fictitious
disputes of fact, or is palpably implausible, or
far-fetched or so clearly untenable that the court is justified in
rejecting that
version on the basis that it obviously stands to be
rejected on the available evidence.
APPLICABLE LEGISATIVE
FRAMEWORK
[3] It is well
established that the award of government tenders is governed by
section 217(1)
4
of the Constitution of
the Republic of South Africa, 1996. The section requires that the
tender process, preceding the conclusion
of contracts for the supply
of goods and services must be ‘fair, equitable, transparent,
competitive and cost-effective
’
.
However, a procurement system may provide for categories of
preference and for the advancement of categories of persons (section
217(2)). National legislation must prescribe the framework for the
implementation of any preferential policy (section 217(3)).
This is
to be achieved by the Preferential Procurement Policy Framework Act 5
of 2000. This Act provides that organs of State must
determine their
preferential procurement policy based on a points system. The
importance of the points system is that contracts
must be awarded to
the tenderer who scores the highest points unless objective criteria
justify the award to another tenderer (section
2(1)(f)).
[4] In order to give
effect to government’s constitutional imperative as set out
above, the respondent has adopted its own
Supply Chain Management
Policy in terms of
section 111
of the
Local Government: Municipal
Finance Management Act, 2003
. This policy is to be read subject to
the
Municipal Supply Chain Management Regulations.
5
[5] Finally, as the
decision to award a tender constitutes administrative action, it
follows that the provisions of the Promotion
of Administrative
Justice Act
6
(PAJA) apply to the
process. It is against this broad legislative background that the
present matter must be considered.
[6] Before I do so,
however, I make the observation that government procurement has
become big business for many in this country.
While the aim is to
obtain goods and services in a transparent, efficient and
cost-effective manner, in view of the large amounts
of money involved
these awards often give rise to public concern. Additionally, as was
observed by Harms DP in
Moseme
Road Construction CC v King Civil Engineering,
7
these awards have become
a ‘fruitful source of litigation’.
COMMON CAUSE FACTS
[7] The following facts
are either common cause or no longer disputed: In December 2010, the
respondent put out to tender under
specialised contract SCM11 of
10/11 for the ‘Provision of Management Services for
Pietermaritzburg Airport’ (‘the
2011 tender’). Of
the original six (6) bids received, only two (2) bids qualified for
the second stage of evaluation. The
two (2) bids were those of the
applicant and Joint Venture which comprised Virtual Consulting
Engineers and Delta Facilities. Joint
Venture was declared to be the
preferred bidder. The applicant duly filed an objection and the
objection hearing was held on 16
February 2011. At the objection
hearing, the applicant’s objection was upheld, it being
conceded that Joint Venture’s
bid had been incorrectly scored
and that on a proper scoring the applicant should have been declared
the preferred bidder. The
Minute of the Objection Hearing
8
records ’that the
tender must go back to the Bid Evaluation Committee and Bid
Adjudication Committee for correcting’.
The chairperson of the
hearing further ’instructed that the committee must consider
all areas that was discussed in this
sitting’ and ‘that
the final decision will be made by the Municipal Manager’. The
Bid Evaluation Committee then
recommended that the tender be awarded
to the applicant. Instead, the respondent, through its acting
Municipal Manager at the time,
took a decision on 7 September 2011
not to award the tender to the applicant but to cancel it and
re-advertise a new tender for
the same services on 12 January 2012
under specialised contract SCM 22 of 11/12 (’the 2012 tender’).
The 2012 tender
documents were substantially the same as the 2011
documents. The applicant thereafter sought and was granted an interim
interdict
preventing the respondent from considering and awarding the
2012 tender pending the final determination of the review
application.
To date, however, the applicant continues to provide
such services to the respondent but does so on a month to month
contract basis.
ISSUES FOR
DETERMINATION
[8] Broadly speaking, the
issues for determination are the following: the first issue is
whether the respondent’s decision
taken on 7 September 2011 to
jettison the 2011 tender for the provision of airport management
services and to re-advertise for
the same services under the 2012
tender rather than awarding the 2011 tender to the applicant,
violated the applicant’s rights
to procedural fairness in terms
of PAJA. The second issue, as I see it, relates to the appropriate
remedy to be granted in the
event of the first issue being decided in
favour of the applicant.
APPLICANT’S CASE
[9] The applicant’s
founding and replying affidavits were deposed to by one Adriaan
Jacobus Cilliers (“Cilliers”)
an employee of the
applicant who was integrally involved in the bid process and was
present at the objection hearing held on 16
February 2012. In order
to contextualize the decision of the respondent to cancel the bid and
to re-advertise it, it is perhaps
necessary to have regard to the
background facts as they unfolded. As already mentioned, the
respondent’s tender was advertised
in various newspapers on 2
December 2010, 9 December 2010 and 12 December 2010. The applicant
and certain other bidders duly attended
a compulsory tender briefing
meeting on 15 December 2010 at the Pietermaritzburg Airport
boardroom. The applicant submitted its
bid in accordance with the
terms, procedures and timeframes set out in the tender notice. By
notice dated 18 January 2011 the respondent
notified the applicant
that the applicant’s tender was unsuccessful and that the
declared bidder was Joint Venture which
comprised two (2) entities
known as Virtual Consulting Engineers and Delta Facilities. The
applicant objected by way of a notice
dated 25 January 2011 to the
award of the tender to Joint Venture and paid a fee of R20 000
(twenty thousand Rand) within the prescribed
time frame in order that
an objection hearing be held. In response to the applicant’s
Notice of Objection the respondent
invited the applicant to attend a
meeting to discuss the objection notice. The applicant attended a
meeting on 3 February 2011,
however it is unclear precisely what was
discussed at this meeting as the minute provided by the respondent in
this regard is completely
illegible. What followed, however, was a
notice given by the respondent on 14 February 2011 that the objection
hearing was to be
held on 16 February 2011. Despite the short notice,
the applicant confirmed that it would attend the hearing on 16
February 2011.
The objection hearing was in fact held on that date
and was chaired by one Mr Petros June Madiba who was appointed by the
acting
Municipal Manager for that purpose.
[10] Cilliers records
that Mr Madiba had stated at the objection hearing that the tender
had been ‘incorrectly awarded’
to Joint Venture, that the
tender must be reconsidered and corrected with due consideration for
the matters that were discussed
during the objection hearing and if
the tender had been correctly scored, it would have been awarded to
the applicant. The applicant
complains that despite repeated requests
made by it, the minute of the meeting of 16 February 2011 was never
made available to
it up until delivery of the respondent’s
documents in March 2012. It would also appear that for some reason
unknown to the
applicant the respondent has chosen to black out the
words which appear on the second page of the said minute. This is the
minute
that was taken by the executive secretary who was tasked to
perform that function at the objection hearing.
[11] The applicant avers
that in spite of the fact that the proceedings at the objection
hearing were recorded, no transcripts of
such proceedings was made
available to it. In November 2011, Cilliers heard that the respondent
was about to re-advertise the tender
with lower expertise and
experience criteria. The applicant prepared papers for an urgent
application in which it sought to compel
the respondent to deliver
the minute of the objection hearing and to act in compliance with
such recommendations made by the Chairperson
at the time. In response
to the applicant’s threat, the respondent provided it with a
report dated 18 November 2011 which
was prepared by Mr Madiba.
Applicant contends that if one has regard to these two documents, it
is clear that the recommendations
contained therein are incorrect:
the former reflects that Mr Madiba had stated that the bid must go
back to the Bid Evaluation
Committee and thereafter to the Bid
Adjudication Committee whereas the latter only states that the bid
should go back to the Bid
Adjudication Committee. According to
Cilliers who was present at the objection hearing, these documents
are incorrect because neither
of them contain the most important
recommendation made by Mr Madiba and that is that the bid should be
awarded to the applicant.
[12] Upon receipt of Mr
Madiba’s report of 18 November 2011, the applicant’s
attorneys immediately called upon the respondent
to disclose whether
it had complied with the ruling made by Mr Madiba. The respondent
failed to address the enquiry but gave an
undertaking that it would
not re-advertise until 9 December 2011. In the meantime however, the
applicant prepared a further application
in order to interdict the
respondent from re-advertising the bid. The respondent was placed on
terms that the application would
be brought on the afternoon of 9
December 2011 if no favourable response was received by then. As it
turned out, the respondent,
through it attorneys, sent a letter,
albeit after the deadline, in which it recorded the following: that
the tender had been sent
to the Bid Evaluation Committee which had
recommended that the bid be awarded to the applicant; that the
Municipal Manager had
declined to follow the recommendation but
decided instead to re-advertise because of ’non-compliance with
various regulations
of the Municipality Chain Management Policy’
and also because of non-compliance with Regulation 21(d) relating to
transactions
having a value in excess of R10 million. An undertaking
was however given that the respondent would not re-advertise until 9
December
2011.
[13] In spite of a verbal
undertaking given by the respondent’s attorney to the
applicant’s attorney that there would
be no re-advertising
until late January 2012, the respondent in fact went ahead and
advertised a fresh tender for the same contract
on 12 January 2012
(the 2012 tender). Once again the respondent was placed on terms to
withdraw the said advertisement failing
which the applicant would
interdict it from doing so. As it turned out, the respondent failed
to withdraw the 2012 tender or provide
any further undertaking with
regard thereto. This resulted in an urgent application being launched
interdicting the respondent
from proceeding with the 2012 tender
pending finalisation of review proceedings.
[14] The applicant
contends that until it had sight of the respondent’s affidavit
opposing the interim relief in the above
application, it was unaware
that the respondent had sent a letter to the applicant dated 7
September 2011 indicating that the 2011
tender had been cancelled.
This letter was sent to the applicant’s P.O. Box address and
reads as follows:
‘
Please be
advised that the specialised contract SCM 11 of 10/11 –
proposal call for the management for the Pietermaritzburg
Airport
advertised in the Natal Witness, Echo and Sunday Times in December
2010 has been cancelled due to unforeseen circumstances.
Please note that the contract will be
re-advertised in due course.’
9
The letter was signed by
Mr T Maseko in his capacity as acting Municipal Manager.
[15] The applicant
accordingly contends that there can be no logical connection between
the documents that the acting Municipal
Manager is said to have
considered and his decision to cancel the 2011 Tender on 7 September
2011. The documents referred to by
the applicant are those that arise
from the events that followed the objection hearing on 16 February
2011 when the applicant’s
objection was upheld. The Minute of
the Objection Hearing dated 16 February 2011 records that the award
to Joint Venture cannot
stand on the basis that the scoring was
flawed. A Bid Evaluation Team meeting was held on 9 March 2011, the
minute
10
of which specifically
records that the team had looked at the documentation submitted by
Virtual Consulting Engineers and Delta
Facilities Management and
noted that they had only submitted one SARS tax clearance certificate
for Virtual Consulting Engineers.
In respect of Delta Facilities
Management there was no such certificate, only a VAT registration
form, which was deemed not to
meet the criteria as per paragraph 21
of the conditions of tender for Joint Ventures. They were therefore
disqualified from the
process. As far as the applicant was concerned,
the minute recorded that the points allocated to the applicant
totalled 57
/
70
or 81% which exceeded the 70% threshold for going through to stage 2
of the process. The meeting further noted that the price
of
applicant’s tender was R318 000 (three hundred and eighteen
thousand Rand) per month which was considered to be realistic.
HDI
(Historically Disadvantaged Individual) points were not allocated as
they were the sole compliant tender. The meeting accordingly
recommended that the contract be awarded to the applicant for a
period of three (3) years.
[16] On 11 March 2011 the
Economic Development and Growth Business Unit of the respondent
prepared a report for the Bid Evaluation
Committee.
11
Paragraph 1 records that
the purpose of the report was to recommend to the Bid Evaluation
Committee that the contract be awarded
to the applicant for a period
of three (3) years. Once again it was recorded that it was only the
applicant that scored over 70%
in stage 1 and was eligible to go
through to stage 2. Additionally, the price was deemed to be
realistic.
[17] On 23 March 2011 the
Bid Evaluation Committee of the respondent prepared a report for the
Bid Adjudication Committee.
12
The purpose of the report
was to recommend to the Bid Adjudication Committee that the contract
be awarded to the applicant at the
tendered rate of R318 000 (three
hundred and eighteen thousand Rand) per month for a period of three
(3) years commencing from
the date of award. The committee noted that
the applicant had complied with the terms and conditions of the
proposal and was considered
for stage 2 of the process in view of the
points that were scored. It was further noted that the applicant was
the current contract
holder and in addition, they currently managed
the Richards Bay and Virginia Airports hence having the requisite
experience and
knowledge of municipal airports.
[18] On 9 May 2011 the
Bid Evaluation Committee prepared a report for the acting Municipal
Manager in which it recommended that
the contract be awarded to the
applicant for a period of three (3) years.
13
[19] In spite of the
above recommendations that were made by the various committees, a Bid
Adjudication Committee meeting held on
12 May 2011 which was chaired
by the acting Municipal Manager, Mr Maseko, resolved that the issue
‘be STOOD DOWN to the next
meeting in order for the Executive:
Supply Chain Management (acting) to verify that the appointment of
the valuation team as appointed
by the Bid Adjudicator Committee to
re-evaluate the tenders received was undertaken in compliance with
the Supply Chain Management
Policy’.
14
Thereafter it seems that
the issue relating to the said tender did not feature in any of the
further meetings until the 26 May 2011
when at a meeting of the Bid
Adjudicating Committee the Minutes of the meeting of the 12 May 2011
were merely confirmed.
[20] Thereafter and for a
period of four (4) months from the end of May 2011 to 7 September
2011 (when the decision to cancel was
taken) no documentary evidence
exists pertaining to any discussion, verification, re-evaluation or
investigation regarding the
2011 tender.
[21] The applicant
contends that the first time it became aware of the full reasons why
the said tender was cancelled by the then
acting Municipal Manager
was when it received a document dated 7 September 2011 as part of the
documentation provided by the respondent
in terms of Rule 53. This
occurred in March 2012. This document cites various reasons for
cancellation and the need to re-advertise
on the basis that there was
non-compliance with legislation and a breech of confidentiality,
amongst others. I should point out
that this document, although dated
7 September 2011, is not the same as the letter dated 7 September
2011 which was sent to the
applicant’s postal address.
[22] In light of the
above, Ms
Lange
who appeared on behalf of the applicant,
submitted that the decision of the acting Municipal Manager taken on
7 September 2011
to cancel the 2011 bid, was fatally flawed as it was
not rationally connected to the information he had before him when he
made
the decision. She argued that if one had careful regard to the
events that preceded the taking of the decision as well as all the
reports that emanated from the meetings that were held by the various
committees of the respondent, it is clear that the decision
to cancel
the tender was arbitrary, unreasonable and smacked of
mala fides
.
This decision, so it was submitted, has resulted in grave financial
prejudice to the applicant in that although the applicant
performs
such services for the respondent, it does so at a vastly reduced
amount and on a monthly basis. Relying on the provisions
of section
8(1)(c)(11)(aa) of PAJA, Ms
Lange
submitted that this was an
appropriate matter for this court to find that exceptional
circumstances exist which entitle the court
to substitute its own
decision for that of the decision maker and to award the 2011 tender
to the applicant.
RESPONDENT’S
CASE
[23] The respondent’s
answering affidavit herein was deposed to by a Miss Dudu Ntombenhle
Ndlovu who describes herself as
the Acting Head: Supply Chain
Management of the respondent. The deponent has not provided any
information to indicate precisely
when she assumed this position or
how integrally involved she was in the process relating to this
tender. To her affidavit is attached
a confirmatory affidavit signed
by one Thokozani Maseko who is employed by the respondent as a
Process Manager: Water and Sanitation.
During 2011 he was the acting
Municipal Manager of the respondent. Mr Maseko merely confirms the
allegations contained in Ms Ndlovu’s
affidavit without so much
as explaining his specific role in the particular procurement process
or for that matter attempting to
explain precisely what factors
influenced his decision to cancel the 2011 tender on 7 September
2011.
[24] The case made out by
the respondent in the answering affidavit is the following: It avers
that at the meeting of the Bid Adjudication
Committee on 12 May 2011,
the matter stood down for verification of the evaluation team. After
the matter stood down, an investigation
was conducted to determine
‘whether the special committee led by Dr Dyer had been mandated
by the Municipal Manager’.
It was established that the
committee (it is not clear which committee is referred to), was not
mandated by the Municipal Manager
and he then requested the supply
chain to investigate the whole process. This investigation was headed
by Miss Ndlovu, the deponent
to the answering affidavit. A report was
thereafter prepared by her in which she listed the various ways in
which the legislation
was not complied with. This report was then
signed on 7 September 2011 by Mr Maseko, as well as by a Mr Sithole,
the administrator.
It is this report which essentially contained the
reasons for the decision to cancel the tender and to re-advertise it.
[25] The reasons advanced
by the respondent for cancelling the tender were the following: it
was reported to the Municipal Manager
that the Supply Chain Policy
had not been complied with in that regulation 27 of the Regulations
to the
Preferential Procurement Policy Framework Act, 2000
,
prescribed that the bid specifications must be approved by the
Accounting Officer and this was not done. A further reason advanced
was that since the tender amount had exceeded the sum of R10 million
inclusive of VAT, the final award could not be sub-delegated
by the
Accounting Officer. An additional reason was that
Section 29(6)
of
the respondent’s Supply Chain Policy authorises the Accounting
Officer, at any stage of the bidding process, to refer
any
recommendation made by the Bid Evaluation Committee or Bid
Adjudication Committee back to that committee for reconsideration.
The respondent averred that in terms of
regulation 10(4)(C)
an award
or bid could be cancelled if no acceptable bids were received.
[26] Against the backdrop
of the reasons provided by the respondent in its answering affidavit
as well as those contained in the
‘report’ of 7 September
2011 which constituted the decision to cancel the 2011 tender, Mr
Bezuidenhout
SC, on behalf of the
respondent, submitted that the acting Municipal Manager was justified
in cancelling the tender. This was due
mainly to the fact that the
bid specifications were not approved by the Municipal Manager before
the tender was advertised. He
further submitted that since no work
was performed in terms of the tender, there could be no prejudice to
the applicant. It was
contended that the decision to re-advertise the
tender due to deficiencies in the process will afford the respondent
an opportunity
to review its documentation and ensure that its house
is in order. It was further argued that even if it was found that the
decision
was flawed, there is nothing exceptional in the matter that
would allow the Court to award the tender to the applicant.
[27] The judicial review
of an administrative action is governed by the provisions of
section
6
15
anc" HREF="#sdfootnote15sym">
15
of PAJA. In order
to determine whether the respondents conduct violated the applicant’s
right to fair administrative action
in terms of PAJA, it is necessary
to examine the reasons that formed the basis of the decision as set
out in the report
16
that was placed before
the acting Municipal Manager by Ms Ndlovu and which he and the
administrator signed on 7 September 2011.
The full text of this
report which appears under the letterhead of the respondent reads as
follows:
‘
CANCELLATION
AND RE-ADVERTISEMENT OF SPECIALISED CONTRACT No.SCM 11 OF 10/11
MANAGEMENT CONTRACT OF PMB AIRPORT
The abovementioned
contract has been cancelled in terms of the Preferential Procurement
Regulation No. 10(4)(c) which states that,
“
an organ of the
state may, prior to the award of a bid, cancel a bid if… (c)
no acceptable bids are received.”
It was noted that the bid
specifications for this contract were not presented to the Bid
Specification Committee for compilation
and were also not presented
to the Municipal Manager for approval as per the MFMA SCM Regulations
27(1) and 27(2) respectively
before they were publicized, therefore
these specifications are considered to be invalid.
Furthermore MFMA
regulation 21(d), which states the following, was not complied with,
hence the tender documentation used was incomplete
and did not meet
the required bid documentation for a contract value exceeding R10m:
“
If the
value of the transaction is expected to exceed R10 million (VAT
included), require bidders to furnish-
If the bidder is required by law
to prepare annual financial statements for auditing, their audited
annual financial statements
–
(aa) for the past three years; or
(bb) since their establishment if
established during the past three years;
A certificate signed by the bidder
certifying that the bidder has no undisputed commitments for
municipal services towards a municipality
or other service provider
in respect of which payment is overdue for more than 30 days;
Particulars of any contracts
awarded to the bidder by an organ of state during the past five
years, including particulars of any
material non-compliance or
dispute concerning the execution of such contract;
A statement indicating whether any
portion of the goods or services are expected to be sourced from
outside the Republic, and,
if so, what portion and whether any
portion of payment of the municipality or municipal entity is
expected to be transferred
out of the Republic”.
Consequently all bids that were
received in response to the advert were not acceptable.
Furthermore there was misconduct by
certain members of the BEC and BAC where information of the bid
proceedings was disclosed to
the bidders informally (see the attached
communication), hence MFMA SCM Regulations 46(6)(a) and (b) were not
complied with:
(6) Confidentiality
(a) Any information that is the
property of the municipality or its providers should be protected at
all times. No information regarding
any
bid/contract/bidder/contractor may be revealed if such an
(b) Matters of confidential nature
in the possession of officials and other role players involved in SCM
should be kept confidential
unless legislation, the performance of
duty or the provisions of law requires otherwise. Such restrictions
also apply to officials
and other role players involved in SCM after
separation from service.
Also, as the Accounting Officer of the
Council, in response to the MFMA SCM Regulations 38(1)(a) and (b) I
have taken the decision
to cancel the bid.
“
Combating
of abuse of supply chain management system
The accounting officer must-
Take all reasonable steps to
prevent abuse of the supply chain management system;
Investigate any allegations
against an official or other role player of fraud, corruption,
favouritism, unfair or irregular practices
or failure to comply with
this Policy, and when justified –
Take appropriate steps against
such official or other role player; or
Report any alleged criminal
conduct to the South African Police Service”
.
Based on the above
non-compliance issues with the legislation, the specialised contract
No. SCM 11 of 10/11 PMB Management Contract
will be re-advertised.’
[28] The above reasons
can be dealt with as follows:
[28.1] The reason that
the bid was cancelled in terms of the Preferential Procurement
Regulation 10(4)(C) as no acceptable bids
were received.
[28.1.1] First, it should
be noted that Regulation 10(4)(C) of the 2001 regulations has now
been repealed and replaced with regulation
4(C) of 2011 which has the
same wording as the old regulation 10(4).
17
Preferential Procurement
Regulation 4, 2011 provides:
‘
(4) An organ
of state may, prior to the award of a tender, cancel a tender if –
due to changed circumstances, there
is no longer a need for the services, works or goods requested; or
funds are no longer available to
cover the total envisaged expenditure; or
no acceptable tenders are received
.’
[28.1.2] Second, it
should be noted that the
Preferential Procurement Policy Framework
Act defines
‘acceptable tender’ as ‘any tender
which, in all respects, complies with the specifications and
conditions of
tender as set out in the tender document’. In
Millennium
Waste Management v Chairperson, Tender Board,
18
Jafta JA recognised that
when Parliament enacted the Preferential Procurement act it was
complying with the obligation imposed by
s 217(3) of the Constitution
which required that legislation be passed in order to give effect to
the implementation of a procurement
policy referred to in s 217(2).
The learned Judge said the following in this regard:
‘
Therefore
the definition in the statue must be construed within the context of
the entire s 217 while striving for an interpretation
which promotes
“the spirit, purport and objects of the Bill of Rights”
as required by s 39(2) of the Constitution.
In
Chairperson:
Standing Tender Committee and Others v JFE Sapela Electronics (Pty)
Ltd and Others
Scott JA said (para 14):
“
The
definition of “‘acceptable tender” in the
Preferential Act must be construed against the background of the
system envisaged by section 217(1) of the Constitution, namely one
which is “fair, equitable, transparent, competitive and
cost-effective”. In other words, whether “the tender in
all respects complies with the specifications and conditions
set out
in the contract documents must be judged against these values.”’
[28.1.3] The respondent’s
contention that the applicant’s bid was not an acceptable one
is farcical if one considers
that of the six (6) bids received, the
applicant’s was the only one that was fully compliant. This was
more so after the
objection hearing when Joint Venture was
disqualified completely from the tender process. The various reports
19
from the respondent’s
own committee’s between February 2011 – May 2011
consistently and expressly rated the applicant’s
bid to be one
that was the most compliant. For the acting Municipal Manager to
cancel the bid on the basis that ‘no acceptable
tenders’
were received, indicates, in my view, that all the relevant documents
were either not placed before him or if they
were, he failed to
properly apply his mind to them.
[28.2] The reason that
the bid specifications were not presented to the bid specification
committee for compilation and not presented
to the Municipal Manager
for approval before publication
[28.2.1] There is no
dispute about the fact that the 2011 tender specification was issued
under the name of the respondent and was
advertised on its official
website and in various newspapers.
[28.2.2] It is a known
fact that tenderers expend huge amounts of money in preparing their
tender proposals and in making presentations,
if required to do so.
Tenderers are accordingly entitled to expect that all internal
processes have been complied with. For the
respondent to now claim,
as justification for cancelling the 2011 tender, that the said tender
was specified without being ‘presented
to the Bid Specification
Committee for compilation’, and that it was not approved by its
Municipal Manager before publication,
is at best, in my view,
disingenuous and at worst, dishonest.
[28.2.3] Bearing in mind
that the tender process had reached such an advanced stage and at one
point was in fact awarded to Joint
Venture, there is nothing in the
evidence to suggest, even remotely, that the tender was vitiated by
an irregularity from the outset.
If anything, the clear impression
created by the respondent, is that all the formalities were fully
complied with. In the circumstances,
this reason advanced by the
respondent as a basis for cancelling the 2011 tender, cannot be
sustained.
[28.3] The reason that
the cancellation was justified because the bid specification was
deficient in that it did not comply with
regulation 21
20
[28.3.1] The applicant
correctly points out both in its answering affidavit and in argument,
that if indeed this was a true reason
for cancellation of the 2011
tender then one would have expected the 2012 specifications to
contain these provisions. In fact,
the 2012 tender is worded in
identical terms as the 2011 tender.
[28.3.2] In my view, no
defect arises in the 2011 tender in that regulation 21(d) only
applies when the ‘value of the transaction
is expected to
exceed ten million rand’. The respondent would not have
entertained such an expectation with regard to the
2011 tender
because as the 2011 process revealed, three of the six bids received
were below R10 million and three were above. Having
experienced this
with the 2011, one would have expected that the respondent would
alter the terms of the 2012 bid in this regard
but it has not. I
accordingly do not consider this to be a material basis for
cancelling the 2011 tender.
[28.4] The reason that
the cancellation was justified because of a breach of confidentiality
[28.4.1] The report dated
7 September 2011 referred to above, alludes to certain ’attached
communication’. However,
no such communication has been
attached to the said report. If by this the respondent intends
placing reliance on an email,
21
dated 1 November 2010,
from one Hennie Erasmus, who was employed as the applicant’s
airport manager and who is now deceased,
addressed to one Rakesh
Singh, who is employed by the respondent, it seems that this was a
response to a request for suggestions
as to what should be included
in the tender documents. It was merely a list of suggested
specifications which were sent by the
late Erasmus to Singh in an
open and co-operative manner.
[28.4.2] It seems to me
that the respondent, through lack of experience in dealing with
tenders of this nature, was merely seeking
advice and guidance from
the late Erasmus on what could be included in the specifications. For
the respondent to now claim that
this amounted to a breach of
confidentiality on the part of some of its own members justifying its
cancellation of the tender is,
in my view, rather disingenuous, to
say the least. None of this was drawn to the attention of the
applicant or for that mater to
any of the other bidders during the
tender process.
[29] As I have
endeavoured to show above, the reasons advanced by the respondent for
cancelling the 2011 tender and its decision
to re-advertise it,
cannot be justified in light of all the information that was before
it at the time. The reasons put forward
by Ms Ndlovu in her report to
the acting Municipal Manager and to the administrator, Mr Sithole, at
the time, are, in my view,
without any substance whatsoever and are
not rationally connected to all the information that was at the
disposal of the respondent
when the decision was taken. It seems that
both the Municipal Manager and the administrator, merely appended
their signatures to
the report prepared by Ms Ndlovu without
themselves applying their minds fully to everything that transpired
during the tender
process. A fundamental difficulty that I have with
the reasons contained in this report, is that none of these issues
served before
any of the respondent’s committees at any stage.
None of the committees or the applicant were afforded an opportunity
of
addressing any of the concerns raised for the first time in this
report.
[30] Quite apart from the
matters dealt with above there is, in my view, a more fundamental
reason why the decision of the respondent
to cancel the 2011 tender
and to re-advertise it, cannot stand. This relates to a material
error of fact that occurred when the
scoring was initially done. Had
the applicant been properly scored in respect of its HDI status, the
applicant would have scored
the highest points, making it the
preferred bidder. This issue was pertinently dealt with by Mr Rakesh
Singh, who is employed in
the respondent’s Supply
Chain
Management. Mr Singh was present at and participated in the Objection
Hearing chaired by Mr Madiba on 16 February 2011. The
typed record of
the transcript of those proceedings reflects the following at pages
211-212 of the indexed papers:
‘
MR SINGH
Yes, Chair, I am actually thankful that these are pointed out –
these anomalies, and I can confirm it because I have the
very same
report in front of me and it is actually very concerning that a
report that is so poor can come to the Evaluation Committee.
I am
just hoping that they vetted it in a correct manner and awarded the
points.
But, I just want to state for the
record that bids are evaluated in two stages, as per the directive of
the Provincial …(indistinct)
where a threshold is set, in this
case a threshold is set at seventy percent. And, anybody who passes
that threshold moves to the
next stage, which is Stage 2 and at Stage
2 everything starts – everything is evened out and you
basically work on the ninety-ten
principle in this…(indistinct)
MR ASMAL
Sure.
MR SINGH
All right. But, in
going through the documents when the objection came in and after I
met Indiza, I was asked by the administrator’s
office to come
through and explain what is going on here because obviously our
municipal manager had reported the same to them.
But, just going
through the document here,
I picked up on our matrix to the Bid
Adjudication Committee that we had not awarded points to Indiza for
HDI
. That then prompted me to go back to the tender document,
which I did, and noticed that they had indeed filled out
…(indistinct)
of the document …(intervention)
[my emphasis]
MR MADIBA
…(indistinct)
MR SINGH
Okay. Then it led me
to say it is ninety percent owned by these three individuals, two of
them qualify for HDI and the one would
not. Obviously I had to break
down ninety percent …(indistinct) percentages. I then went
through to the BEE verification
certificate, which we do not really
use.
MR ASMAL
Sure.
MR SINGH
But it has given me a
clear indication of the BEE …(indistinct) which we should
have, and I am saying it was an error on
the Supply Chain Management
that it should have been awarded points. Now, I work out the points
at 1.6 if I take the percentages,
and if I work out ninety percent of
the shareholders it works out to about 1.4 … (indistinct)
points,
which Chairperson, to me, should have been added to this
schedule and if I had added that – had that been done then the
results
would have been different. Now, I am submitting this
information and I have got to be truthful and upfront here – we
have,
as a Supply Chain Unit – my office has made a big, big
mistake here. I have highlighted this to the administrator and I
would
like you to take this into consideration when you make your
decision
.’
[my emphasis]
[31] Following upon this
issue, it seems that Mr Madiba was of the view that it was a simple
matter for Bid Adjudication Committee
to effect the necessary
correction. This is evident from what he goes on to state at page 213
of the papers:
‘
MR MADIBA
Thank you very much. I think we have come to the end of our objection
hearing. Thanks for allowing me to chair the sitting.
What
I would propose as a way forward in trying to resolve this matter and
what I will put forward before the office of the municipal
manager
will be that this matter should be referred back to the Bid
Adjudication Committee for corrections
.’
[my emphasis]
[32] It further seems
that Mr Madiba was clearly of the view that the respondent’s
committees acted incorrectly when they
took the decision to award the
tender. In this regard, he says the following at page 214 of the
papers:
‘
MR MADIBA
To me, I have reasons to believe that when they took the decisions
pertaining to all the – the award of this tender,
they
have misdirected themselves
.’
[my emphasis]
[33] Following upon Mr
Singh’s disclosures at the Objection Hearing and Mr Madiba’s
finding that the committee’s
had misdirected themselves,
particularly with regard to how the applicant had been scored, the
subsequent meetings of the various
committees held between March 2011
– May 2011 all recommended that the tender be awarded to the
applicant. Had the true facts
as presented at Objection Hearing been
placed before the acting municipal manager when he took the decision,
he would not have
concluded that the applicant’s tender was not
an ‘acceptable tender’ justifying a cancellation thereof.
He would
have found that the applicant’s was the only fully
compliant tender and he would have awarded the tender to it. His
decision,
in my view, was clearly misplaced and based upon the taking
of irrelevant considerations and the ignoring of highly relevant and
material considerations.
22
[34] Additionally, I
consider that the decision to cancel the 2011 tender and to
re-advertise it in the face of compelling evidence
that it should
have been awarded to the applicant, offends the doctrine of legality
and accordingly falls to be set aside. In
Chairman,
State Tender Board v Digital Voice Processing (Pty) Ltd; Chairman,
State Tender Board v Sneller Digital (Pty) Ltd &
Others
23
the following was said at
paragraphs 34 and 35:
‘
[34]
It
is now well established in South Africa (and in some other common-law
jurisdictions) that a material error of fact is a ground
of review.
This is so even though it is not one of the grounds specifically
listed in s 6(2) of the PAJA. It has been held that
it falls within
the ground specified in s 6(2)
(e)
(iii)
— the taking into account of irrelevant considerations and the
ignoring of relevant considerations — but it may
just as easily
be accommodated in s 6(2)
(i)
,
the catch-all provision that allows for the development of new
grounds of review. This section provides that administrative action
may be reviewed and set aside on the basis of it being “otherwise
unconstitutional or unlawful”.
‘
[35] In
Pepcor Retirement Fund and
Another v Financial Services Board and
Another
[2003 (6) SA 38
(SCA) paragraph 47] Cloete JA held:
”
In my view,
a material mistake of fact should be a basis upon which a Court can
review an administrative decision. If legislation
has empowered a
functionary to make a decision, in the public interest, the decision
should be made on the material facts which
should have been available
for the decision properly to be made. And if a decision has been made
in ignorance of facts material
to the decision and which therefore
should have been before the functionary, the decision should (subject
to what is said in para
[10] above) be reviewable at the suit of,
inter
alios
,
the functionary who made it — even although the functionary may
have been guilty of negligence and even where a person who
is not
guilty of fraudulent conduct has benefited by the decision. The
doctrine of legality which was the basis of the decisions
in
Fedsure
,
Sarfu
and
Pharmaceutical
Manufacturers
requires that the power conferred on a functionary to make decisions
in the public interest, should be exercised properly, ie on
the basis
of the true facts; it should not be confined to cases where the
common-law would categorise the decision as
ultra
vires
.”’
[35]
It follows from all that I have stated that the decision by the
respondent to cancel the 2011 tender and to re-advertise it
in the
circumstances in which this was done, was procedurally unfair,
24
arbitrary
25
and
materially influenced by an error of fact.
26
The
decision was irrational
27
and
not remotely connected to all the information that existed at the
time. What is even more surprising is that the decision to
cancel and
re-advertise was taken even before the findings of Mr Madiba were
made known. It will be recalled that his report was
signed on 18
November 2011 whereas the decision to cancel was already taken on 7
September 2011. To add insult to injury, the respondent
failed to
inform the applicant timeously of the full reasons for the
cancellation. It seems that it was content to play a guessing
game
thereby forcing the applicant to seek a protection and enforcement of
its rights through litigation. It seems highly probable,
in my view,
that the reasons that appear in the report of 7 September 2011, never
existed at the time the decision was taken. It
seems that these
reasons were an afterthought, crafted to challenge the review
application. Had the reasons existed at the time,
they could have
been included in the letter of 7 September 2011 which merely records
that the tender was cancelled due to ‘unforeseen
circumstances’.
[36] In my view, an organ
of State charged with a public function and utilising public funds,
is required to act in a responsible,
fair and transparent manner at
all times. The respondent has clearly failed to do so in this
instance. For all these reasons the
decision to cancel the 2011
tender and to re-advertise it is reviewed and set aside.
[37] Having found in
favour of the applicant on the first issue, the second issue to be
decided is what appropriate remedy should
be granted in the
circumstances. Is this an appropriate case entitling me to make the
decision for the respondent and award the
2011 tender to the
applicant or should the matter be remitted to the respondent for
reconsideration in light of the findings contained
herein? The
remedies that a court or tribunal may grant in proceedings for
judicial review are set out in section 8 of PAJA.
28
Courts have thus retained
a wide discretion when deciding whether to remit decisions that have
been set aside or to substitute,
vary or correct the defect. However,
the sole statutory limitation is that the court can only substitute,
vary or correct the defect
upon a determination that a case is
’
exceptional’
(s8(1)(c)(ii)(aa) of
PAJA). In
Gauteng
Gambling Board v Silverstar Development Ltd and Others
,
29
Heher JA stated the
position as follows:
‘
The power of
a court on review to substitute or vary administrative action or
correct a defect arising from such action depended
upon a
determination that a case is ”exceptional” as intended in
s 8(1)
(c)
(ii)
(aa)
of the
Promotion of Administrative Justice Act 3 of 2000
. Since the
normal rule of common law is that an administrative organ on which a
power is conferred is the appropriate entity to
exercise that power,
a case is
exceptional
when, upon a proper consideration of all the relevant facts, a court
is persuaded that a decision to exercise a power
should not be left
to the designated functionary. How that conclusion is to be reached
is not statutorily ordained and will depend
on established principles
informed by the constitutional imperative that administrative action
must be lawful, reasonable and procedurally
fair. Hefer AP said in
Commissioner,
Competition Commission v General Council of the Bar of South Africa
and Others
2002
(6) SA 606
(SCA):
“
[14] (T)he
remark in
Johannesburg
City Council v Administrator, Transvaal, and Another
1969
(2) SA 72
(T) at 76D-E that “the Court is slow to assume a
discretion which has by statute been entrusted to another tribunal or
functionary”
does not tell the whole story. For, in order to
give full effect to the right which everyone has to lawful,
reasonable and procedurally
fair administrative action,
considerations of fairness also enter the picture. There will
accordingly be no remittal to the administrative
authority in cases
where such a step will operate procedurally unfairly to both parties.
As Holmes AJA observed in
Livestock
and Meat Industries Control Board v Garda
1961
(1) SA 342
(A) at 349G
“…
the
Court has a discretion, to be exercised judicially upon a
consideration of the facts of each case, and … although the
matter will be sent back if there is no reason for not doing so, in
essence it is a question of fairness to both sides”.
[See also
Erf One Six Seven
Orchards CC v Greater Johannesburg Metropolitan Council (Johannesburg
Administration) and Another
[1998] ZASCA 91
;
1999 (1) SA 104
(SCA) at 109F-G.]
“
[15] I do
not accept a submission for the respondents to the effect that the
Court
a
quo
was in as good a position as the Commission to grant or refuse
exemption and that, for this reason alone, the matter was rightly
not
remitted. Admittedly Baxter
Administrative
Law
at 682-4 lists a case where the Court is in as good a position to
make the decision as the administrator among those in which it
will
be justified in correcting the decision by substituting its own.
However, the author also says at 684:
“
The mere
fact that a court considers itself as qualified to take the decision
as the administrator does not of itself justify usurping
that
administrator’s powers …; sometimes, however, fairness
to the applicant may demand that the Court should take
such a view.”
This, in my view, states the position
accurately. All that can be said is that considerations of fairness
may in a given case require
the court to make the decision itself
provided it is able to do so.”
‘
[29] An
administrative functionary that is vested by statute with the power
to consider and approve or reject an application is
generally best
equipped by the variety of its composition, by its experience, and by
its access to sources of relevant information
and expertise to make
the right decision. The Court typically has none of these advantages
and is required to recognise its own
limitations. See
Minister
of Environmental Affairs and Tourism and Others v Phambili Fisheries
(Pty) Ltd; Minister of Environmental Affairs and Tourism
and Others v
Bato Star Fishing (Pty)
Ltd
2003
(6) SA 407
(SCA)
:
at paras [47]-[50], and
Bato
Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Others
2004
(4) SA 490 (CC)
[2004] ZACC 15
;
(2004
(7) BCLR 687)
at paras [46]-[49]. That is why remittal is almost
always the prudent and proper course.’
[38] In the
Silverstar
case
(above), the first
respondent had approached a Provincial Division for an order
reviewing the appellant Board’s decision under
section 31 of
the Gauteng Gambling Act 4 of 1995 to refuse it a casino licence. The
court
a
quo
upheld
the first respondent’s contentions, set aside the refusal by
the appellant and directed the Board to grant the licence.
The court
a quo
refused leave to appeal
to the SCA but it was granted by the SCA itself. The Board later
abandoned its challenge to the setting
aside of its decision. The
dispute between the parties was then confined to whether the court
a
quo
had
been correct in assuming the decision-making function. It appeared
that the appellant had always been set against granting the
first
respondent a licence, and had favoured another prospective licensee
over the first respondent on several grounds. The other
prospective
licensee’s plan were, however, scuppered when it failed to
obtain environmental approval for its project, with
the result that
the first respondent was, at the time of the application before the
court
a
quo
,
the only remaining applicant for a casino licence for the area in
question.
[39] Based on
considerations of fairness and after having looked at all the facts
before it, the SCA agreed with the court
a
quo
that
the matter was an extraordinary one and that the court
a
quo
had
not erred when it decided against a remittal to the Board. The SCA
reasoned that the court
a
quo
was
not merely in as good a position as the Board to reach a decision but
was faced with the inevitability of a particular outcome
if the Board
were once again to be called upon fairly to decide the matter.
[40] The applicant has
strongly urged that just as in the
Silverstar
case, in the present
matter, exceptional circumstances exist which justify the court
substituting its own decision for that of the
respondent in terms of
section 8(1)(a)(ii)(aa) of PAJA. On behalf of the respondent it was
argued that ’due to the deficiencies
in the process and to
ensure that procedural and substantive irregularities are avoided and
that there is transparency’
30
the decision to
re-advertise was correct. It was further submitted that the decision
to re-advertise due to the deficiencies will
afford the respondent an
opportunity ‘to review its documentation and ensure that its
house is in order’.
31
Apart from these
submissions and the spurious nature of the reasons contained in the
report of 7 September 2011, the respondent
has not put up any
countervailing or additional objections to the applicant’s 2011
tender.
[41] While a functionary
in the position of the respondent as decision-maker often enjoys
greater advantages, as compared to a court,
the particular facts of
the present matter adequately demonstrate that there would be no
point in remitting the matter back to
the respondent for
reconsideration. For the reasons that follow I consider that this
court is in as good a position as the respondent
to take the decision
for it:
[41.1] Throughout the
tender process, the applicant was the most compliant tenderer and its
tender was the only one that could truly
be regarded as an
’acceptable tender’ within the provisions of the
Preferential Procurement Policy Framework Act and
its Regulations.
[41.2] The applicant had
scored the highest total number of points
32
and had it not been for
the apparent errors committed during the initial evaluation and
adjudication processes as alluded to by
Mr Singh at the Objection
Hearing, in all probability the tender would have been awarded to it
in preference to Joint Venture.
Had a material error of fact not
occurred during the scoring process we would not be faced with this
problem now.
[41.3] After the
objection hearing in February 2011 and between the period March 2011
– May 2011, the evidence reveals that
every committee that
dealt with this matter, recommended that the tender be awarded to the
applicant. By 9 May 2012 Joint Venture
had been completely
disqualified from the process, once again leaving the applicant as
the most compliant tenderer or with the
most compliant tender.
[41.4] In addition to all
the relevant documents that served before the respondent, this court
has had the benefit of the
Record of the objection hearing
supplied by the respondent, from which the errors in the scoring are
clearly evident. With no other
tenderers contending for this tender,
it follows logically that once Joint Venture ought not to have been
awarded the tender in
the first place, then the tender ought to have
been awarded to the applicant.
[41.5] An overriding
consideration is that the applicant continues to provide management
services to the respondent’s airport,
albeit that it does so on
a month to month basis and at a drastically reduced price. That the
applicant has the necessary experience,
skill and expertise to
provide such services is evident from the fact that it provides
similar services at the Richards Bay and
Virginia Airports.
[42] Taking all the
matters that I have enumerated above into consideration, the court
would be faced with the inevitability of
a particular outcome if the
respondent was once again called upon to decide the matter fairly.
[43] I further consider
that nothing is to be gained by a remittal is also relevant to the
issue of fairness.
33
There can, in my view,
not be any prejudice to any other tenderer (as no contract has yet
been concluded) or to the public at this
stage. If anything, it would
be in the public’s interest to bring finality to this issue for
the sake of effective service
delivery and to avoid a wasteful and
fruitless expenditure. On the papers before me a lack of fairness to
the respondent or the
reasonable possibility of prejudice to the
public were not cited as probable consequences of non-remittal.
34
CONCLUSION
[44] I accordingly
conclude that this is an exceptional case in which the requirements
of fairness, justice and equity, as well
as considerations of
pragmatism and practicality, strongly militate against a remittal to
the respondent.
ORDER
[45] For the reasons set
out herein, I grant the following order:
1. The decision taken by
the respondent on 7 September 2011 not to award SPECIALISED CONTRACT
No. SCM11 of 10/11 to the applicant,
to cancel the said tender and to
re-advertise it, is reviewed and set aside.
2. The respondent is
directed, within one (1) month from date of this judgment, to award
the 2011 tender to the applicant and to
conclude a contract with the
applicant either on the same terms and conditions contained in the
2011 tender or on such terms and
conditions as the parties may agree
upon.
3. The respondent is
directed to pay the applicant’s costs including all reserved
costs, if any.
Date of Hearing : 19
October 2012
Date of Delivery : 16
November 2012
Counsel for Applicant :
Adv. N Lange
Instructed by : Mdlulwa
Nkuhlu Attorneys
c/o Ngcobo Poyo &
Diedricks Inc.
Counsel for Respondent :
Adv. PC Bezuidenhout SC
Instructed by : Keshav &
Associates
1
1957
(4) SA 234(C)
at 235 E-G.
2
1984
(3) SA623(A) at 634 H – 635C.
3
[2009] ZASCA 1
;
2009
(2) SA 277
(SCA) para 26.
4
Section
217
provides: “’(1) When an organ of State in the
national, provisional or local sphere of government, or any other
institution
identified in national legislation, contracts for goods
or services, it must do so in accordance with a system which is
fair,
equitable, transparent, competitive and cost-effective. (2)
Subsection (1) does not prevent the organs of state or institutions
referred to in that subsection from implementing a procurement
policy providing for – (a) categories of preference in the
allocation of contracts; and (b) the protection or advancement of
persons, or categories of persons, disadvantaged by unfair
discrimination. (3) National legislation must prescribe a framework
within which the policy referred to in subsection (2) must
be
implemented.’
5
Published
by Government Notice 868 of 2005.
6
Act
3 of 2000.
7
2010
(3) ALL SA 549
(SCA). It is worth noting the comments made by the
learned Judge in paragraph 1 at page 551 where he said the
following: ‘These
awards often give rise to public concern –
and they are a fruitful source of litigation. Courts (including this
court)
are swamped with unsuccessful tenderers that seek to have the
award of contracts set aside and for the contracts to be awarded
to
them. The grounds on which these applications are based are many.
Sometimes the award has been tainted with fraud or corruption,
but
more often it is the result of negligence or incompetence or the
failure to comply with one of the myriad rules and regulations
that
apply to tenders. Sometimes the successful tenderer is to be blamed
for the problem, but then there are cases where he is
innocent. Many
cases are bedeviled by delay, whether in launching the application
(and also because the facts were not readily
available or easily
ascertainable) or because of delays and suspensions inherent in the
appeal procedure. If the applicant succeeds
the contract may have to
be stopped in its tracks with possibly devastating consequences for
government or the successful tenderer,
or both. Conversely, if the
works are allowed to be completed, the tenderer that should have
been awarded the tender would unjustly
be deprived of the benefits
of the contract. There are also cases where the final judgment
issues only after completion of the
contract. It is not necessary to
adumbrate further. Tendering has become a risky business and courts
are often placed in an invidious
position in exercising their
administrative law discretion – a discretion that may be
academic in a particular case, leaving
a wronged tenderer without
any effective remedy.’
8
This
minute appears at pages 70-74 of the Indexed papers. This Minute was
taken by the Executive secretary at the hearing.
9
This
letter appears as ‘sup 17’ at page 141 of the indexed
pages.
10
Pages
76-80 of the indexed papers.
11
Pages
81 – 83 of the indexed papers.
12
Pages
84 – 93 of the indexed papers.
13
Pages
94 – 101 of the indexed papers.
14
Pages
106 of the indexed papers.
15
The
section provides as follows: ‘ Section 6 Judicial review of
administrative action
Any person may
institute proceedings in a court or a tribunal for the judicial
review of an administrative action.
A court or tribunal has
the power to judicially review an administrative action if –
(a) the administrator
who took it-
was not authorized to
do so by the empowering provision;
acted under a
delegation of power which was not authorized by the empowering
provision; or
was biased or
reasonably suspected of bias;
a mandatory and
material procedure or condition prescribed by an empowering
provision was not complied with;
the action was
procedurally unfair;
the action was
materially influenced by an error or law;
the action was taken –
for a reason not
authorized by the empowering provision;
for an ulterior
purpose or motive;
because irrelevant
considerations were taken into account or relevant considerations
were not considered;
because of the
unauthorised or unwarranted dictates of another person or body;
in bad faith; or
arbitrarily or
capriciously;
the action itself-
contravenes a law or
is not authorized by the empowering provision; or
is not rationally
connected to-
the purpose for which
it was taken;
the purpose of the
empowering provision;
the information
before the administrator; or
the reasons given for
it by the administrator;
the action concerned
consists of a failure to take a decision;
the exercise of the
power or the performance of the function authorized by the
empowering provision, in pursuance of which the
administrative
action was purportedly taken, is so unreasonable that no reasonable
person could have so exercised the power
or performed the function;
or
the action is other
wise unconstitutional or unlawful.
If any person relies on
the ground of review referred to in subsection (2)(g), he or she
may in respect of a failure to take
a decision, where –
(a) (i) an administrator
has a duty to take a decision;
(ii) there is no law
that prescribes a period within which the administrator is required
to take that decision; and
the administrator has
failed to take that decision, institute proceedings in a court
proceedings in a court or tribunal for
judicial review of the
failure to take the decision on the ground that there has been
unreasonable delay in taking the decision;
or
(i) an administrator
has a duty to take a decision;
a law prescribes a
period within which the administrator is required to take that
decision; and
the administrator has
failed to take that decision before the expiration of that
period,
institute proceedings in
a court or tribunal for judicial review of the failure to take the
decision notwithstanding the expiration
of that period.’
16
Both,
in the respondent’s answering affidavit and in argument, this
was referred to as a report that was prepared by Ms
Ndlovu.
17
Published
under GN R502 in GG34250 of 8 June 2011 (with effect from 7 December
2011).
18
2008
(2) SA 481
(SCA) at page 488 paragraph 18.
19
These
are the reports dated 9/03/2011, 11/03/2011, 23/03/2011 and
9/05/2011 already referred to.
20
Regulation
21(d) of the Municipal Finance Management Regulations (MFMA) read as
follows:
‘
(d)
if the value of the transaction is expected to exceed R10 million
(VAT included), require bidders to furnish –
(i) if the bidder is
required by law to prepare annual financial statements for auditing,
their audited annual financial statements
-
(aa) for the past three
years; or
(bb) since their
establishment if established during the past three years;
(ii) a certificate
signed by the bidder certifying that the bidder has no undisputed
commitments for municipal services towards
a municipality or other
service provider in respect of which payment is overdue for more
than 30 days;
(iii) particulars of any
contracts awarded to the bidder by an organ of state during the past
five years, including particulars
of any material non-compliance or
dispute concerning the execution of such contract;
(iv) a statement
indicating whether any portion of the goods or services are expected
to be sourced from outside the Republic,
and, if so, what portion
and whether any portion of payment from the municipality or
municipal entity is expected to be transferred
out of the Republic;
and
(e) stipulate that
disputes must be settled by means of mutual consultation, mediation
(with or without legal representation),
or, when unsuccessful, in a
South African court of law.’
21
Annexed
as “sup 24” to the applicant’s founding affidavit.
22
Section
6(2)(e)(lll) of PAJA.
23
[2012]
2 All SA 111
(SCA).
24
Section
6(2)(c) of PAJA.
25
Section
6(2)(e)(vi) of PAJA.
26
Section
6(2)(d) of PAJA.
27
Section
6(2)(f)(ii) of PAJA.
28
Section
8 of PAJA reads as follows: ‘Section 8 Remedies in proceedings
for judicial review
The court or
tribunal, in proceeding s for judicial review in terms of
section 6( 1), may grant any order that is just
and equitable,
including orders –
directing the
administrator –
(i) to give reasons; or
(ii) to act in the
manner the court or tribunal requires;
prohibiting the
administrator from acting in a particular manner;
setting aside the
administrative action and –
(i) remitting the matter
for reconsideration by the administrator, with or without
directions; or
(ii) in exceptional
cases –
substituting or varying
the administrative action or correcting a defect resulting from the
administrative action; or
directing the
administrator or any other party to the proceedings to pay
compensation;
declaring the
rights of the parties in respect of any matter to which the
administrative action relates;
granting a
temporary interdict or other temporary relief; or
as to costs.
The court or
tribunal, in proceedings for judicial review in terms of section
6 (3), may grant any order that is just
and equitable, including
orders –
directing the
taking of the decision;
declaring the
rights of the parties in relation to the taking of the
decision;
directing any of
the parties to do, or to refrain from doing, any act or thing
the doing, or the refraining from the
doing, of which the court
or tribunal considers necessary to do justice between the
parties; or
(d) as to costs’
29
2005(4)
SA 67 (SCA) paras [28] and [29].
30
Respondent’s
heads of argument and relying on the decision in
Sanyathi
Civil Engineering v eThekwini Municipality & Others : Group Five
Construction (Pty) Ltd v eThekwini &
Others
(2012) 1 All SA 200
(KZP)
para 9.
31
GVK
Siyazama Building Contractors v Minister of Public Works &
Others
2007(4) All SA 992 (D) para
9.1; also:
Moseme Road Construction CC
& Others v King Civil Engineering Contractors (Pty) Ltd &
Another
[2010] 3 All SA 549
(SCA) at
paras 15 – 23.
32
Regulation
5 provides that subject to Regulation 7, the contract
must
be awarded to the tender who scores the highest
total number of points.
33
See
the
Silverstar
case
above para [40]; also: Section 8(2) of PAJA.
34
See
the
Silverstar
case
para [40].