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[2010] ZAFSHC 51
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Haw and Inglis Civil Engineering (Pty) Ltd v MEC of Police Roads and Transport: Free State Provincial Government and Others (5972/2009) [2010] ZAFSHC 51 (28 May 2010)
FREE
STATE HIGH COURT, BLOEMFONTEIN
REPUBLIC
OF SOUTH AFRICA
Case No. : 5972/2009
In
the
matter between:
HAW
AND INGLIS CIVIL ENGINEERING (PTY) LTD
Applicant
and
THE
MEMBER OF THE EXECUTIVE COUNCIL:
P
OLICE,
ROADS AND TRANSPORT
FREE
STATE PROVINCIAL GOVERNMENT
AND
11 OTHERS
Respondents
_______________________________________________________
HEARD
ON:
29
APRIL 2010
_______________________________________________________
JUDGMENT
BY:
MOLEMELA,
J
_______________________________________________________
DELIVERED
ON:
28 MAY 2010
_______________________________________________________
INTRODUCTION:
[1]
This
is a review application brought in terms of rule 53 of the Uniform
Rules for the setting aside of an award of tender by the
Free State
Department of Police, Roads and Transport (first respondent) (“the
department”) herein represented by its
MEC. The applicant is
the unsuccessful tenderer. The successful tenderer, Tau Pele
Construction (Pty) Ltd is cited as a second
respondent. The other
unsuccessful tenderers have also been cited as co-respondents. Prior
to this review application, the applicant
initiated an urgent
application wherein it sought to interdict the implementation of the
tender. Pursuant to the applicant’s
institution of its urgent
application, all the parties agreed to an order interdicting the
implementation of the tender pending
the finalisation of the review
application. The review application is opposed only by the first
respondent.
THE LEGAL
FRAMEWORK:
[2] The
award
of government tenders is governed by section 217(1) of the
Constitution, Act 108 of 1996 (“the Constitution”),
which
provides that such awards must be made in accordance with a system
that is “fair, equitable, transparent, competitive
and
cost-effective”. Section 217(2) of the Constitution
acknowledges that a procurement system may provide for categories
of
preference and for the advancement of categories of persons. Section
217(3) of the Constitution provides that national legislation
must
prescribe the framework for the implementation of any preferential
policy. This is done by the Preferential Procurement Policy
Framework Act, 5 of 2000 (“the PPPFA”), which provides
that organs of state must determine their preferential procurement
policy based on a points system. In a nutshell, it provides that a
90/10 point system must apply to tenders valued above a certain
threshold, with ten points awarded for specific goals in respect of
preferential procurement. Section 2(1)(f) of the PPPFA provides
that
once the bids have been scored in terms of the PPPFA, the contract
“
must be awarded to the bidder
who scored the highest points, unless objective criteria in addition
to those contemplated in paragraphs
(d) and (e) justify the award to
another bidder”.
Regulation 9 of the PPPFA
Regulations states that an award can be made to a bidder other than
the highest scorer “on reasonable
and justifiable grounds”.
[3] The
Construction Industry Development Board Act, 38 of 2000 (“CIDB
Act”) provides for a national register of contractors.
In
terms of section 6(1) of the CIDB Act, contractors are categorised
“in
a manner that facilitates public sector procurement and promotes
contractor development”.
Contractors
in a particular category are, in terms of regulation 12 under this
Act, considered to be capable of undertaking a contract
in a
particular range of tender values. The CIDB grading ranges from 1 to
9. As at the 30
th
October 2009 (the closing date of the tender), an 8CE CIDB grading
signified a civil engineer contractor considered capable of
performing contracts of a value of up to R100 million. A 9CE CIDB
grading signified civil engineer contractors considered capable
of
performing contracts having an unlimited value. The 9CE CIDB grading
is in fact the highest grading that can be awarded to
a civil
engineer contractor.
[4] It
is now settled law that when an organ of State such as the Department
awards a tender, it performs an administrative action
as defined in
The Promotion of Administrative Justice Act, 3 of 2000 (“PAJA”)
and the decision must therefore be lawful,
reasonable and
procedurally fair. In terms of section 6(2)(b), 6(2)(e)(i) and
6(2)(f) of PAJA, the decision must not be contrary
to or unauthorised
by the empowering provision. An “empowering provision” is
defined in that Act as a law, rule of
common law, customary law, or
an agreement, instrument or other document in terms of which an
administrative action was purportedly
taken. In
casu
the empowering provision would therefore be the tender document as
well as the applicable statutes mentioned above.
[5] The
tender
data
document and the tender conditions applicable
inter
alia
specified the following:
the scoring system
applicable;
the obligations of the
tenderer;
the “undertakings”
(responsibilities) of the department;
the evaluation of the
tenders.
[6] The
tender document further stipulated that “the standard
conditions of tender as contained in annexure “F”
of the
CIDB Standard for Uniformity in Construction Procurement would
apply”. Annexure “F” provides as follows:
“F.1.6
Procurement
procedures
F.1.6.1: Unless
otherwise stated in the tender data, a contract will, subject to
F.3.13 be concluded with the tenderer who in terms
of F.3.11 is the
highest ranked or the tenderer scoring the highest number of tender
evaluation points, as relevant, based on the
tender submissions that
are received a
t
the closing time for tenders.
F.2
Tenderer’s
obligations
F.2.17
Clarification
of tender offer after submission
Provide
clarification of a tender offer in response to a request to do so
from the employer [department]
during
the evaluation of tender offers.”
(my underlining for emphasis)
F.3
The
Employer’s Undertakings
F.3.11
Evaluation
of tender offers
F.3.11.1 Appoint an evaluation panel
of not less than three persons. Reduce each responsive tender offer
to comparative offer and
evaluate them using the tender evaluation
methods and associated evaluation criteria and weighting that are
specified in the tender
data.”
F.3.11.9 A bidder must score a minimum
of 30 points for functionality/quality in order to be considered for
further evaluation and
adjudication.
[
7] The
advertised invitation for tenders stipulated that tenderers in
possession of a 9CE or 8CEPE CIDB grading were eligible to
have their
tenders evaluated. It further provided that
“
the contract
will be awarded according to the Preferential procurement
Regulations, 2001, pertaining to the
Preferential Procurement Policy
Framework Act
on
a
90/10 points evaluation”.
It further stipulated
that
“
preferences
are offered to tenderers for: price 45 points; functionality/quality
45 points; equity and specific goals 10 points”.
With
regards to functionality/quality, the invitation to tender simply
provided as follows:
“As
per Contract Document”.
The
relevant contract document (Form K of the tender document) in turn
provides as follows:
“
Points for
experience will be awarded
after
verification
of similar types of projects (
rehabilitation
of a road more than R130 million
)
are
completed
”
(my
underlining for emphasis)
[8]
The
same form (From K) of the tender document indicated the points that
would be allocated to a tender for previous completed projects
as
follows:
“(Projects
completed with (sic)
[within]
the past 5 years:
Three (3) or more similar projects
completed - 30 points
Two (2) similar projects completed -
15 points
One (1) similar project completed -
5 points”
[
9] With
regards to Equipment, Form T of the tender document, specified the
equipment regarded as critical for the project and further
stated
that the tenderers were required to list the relevant equipment that
they
“
own or lease
and will have available for this contract or will ac
quire
or hire for this contract if their tender is accepted.”
The
same form further stipulated
as follows:
“
Proof of ownership or proof of
access to critical equipment listed below must be attached to this
page. Failure to provide such
proof may disqualify the tenderer.”
[10]
According
to item F.3.11.9 of the tender data document, a bidder had to score a
minimum of 30 points for functionality/quality in
order to be
considered for further evaluation.
THE ESSENTIAL FACTS
[1
1] The
tenders were submitted to the Department’s Bid Evaluation
Committee (“BEC”) for evaluation. The BEC evaluated
the
tenders and made a recommendation to the Bid Adjudication Committee
(“BAC”), which in turn made recommendations
to the head
of the Department. The BEC concluded that the applicant’s
tender was responsive, in other words, it qualified
for evaluation.
After the evaluation, the BEC recommended that the tender be awarded
to the 2
nd
respondent.
[12
] The
tenders that were evaluated by the BEC were scored in accordance with
the scoring system set out in the invitation to tender.
In other
words the scoring system consisted of a number of elements which,
added together, made a sum total of a 100 points allocated
as
follows:
Price = 45
points
Functionality/Quality = 45
points and
Equity & Specific
goals = 10 points.
The
45 points for Functionality/Quality were in turn broken down into two
elements
viz
(1) 30
points for experience of the bidder, the benchmark being the number
of similar projects as referred to in Form K as mentioned
in
paragraph [9] above;
(2) 15
points for critical equipment which the bidder was required to have
available for the contract. As already mentioned in
paragraph [10]
above, the critical equipment was specified in Form T of the tender
document.
[13] According
to the record of the proceedings (which is not disputed by the 1
st
respondent) the BEC met only once to evaluate this particular tender.
On that same day it recommended to the BAC that the tender
be
allocated to the 2
nd
respondent. On that same day, the same committee (BEC) evaluated 3
other unrelated tenders, 2 of which were also allocated to
the 2
nd
respondent. Those tenders have also been challenged and the review
proceedings are pending. With regard to the tender that is
the issue
of these proceedings, the minutes of the BEC do not reflect that any
verification of projects was done as contemplated
in Form K referred
to in paragraph [7] above. It can therefore be accepted that the BEC
recommended the 2
nd
respondent as the successful bidder, without having verified its
listed completed projects as contemplated in Form K referred to
in
paragraph [7] above. In any event the chairperson of the BEC has not
disputed this.
[14]
SCORES
ALLOCATED FOR THE APPLICANT AND 2
ND
RESPONDENT, RESPECTIVELY
1
4.1
Price
The
applicant
’s
price of R300 million was the lowest of the bids, followed by a
tender of R328 570 .17 by another tenderer and a price
of R347
million tendered by the 2nd respondent. There is thus a difference
of R47 million between the applicant’s lowest
price and the 2
nd
respondent’s price. The applicant, being the lowest bidder,
scored the full 45 points for price, while the 2
nd
respondent scored 37,82 points. There is no dispute with regards to
this scoring.
14.2
Functionality/Quality
For
experience, both the applicant and the 2
nd
respondent were allocated 30 points. For plant and equipment, the
applicant was awarded 0 points, while the 2
nd
respondent was awarded 15 points. This scoring is the main bone of
contention in these proceedings. It is attacked on 2 grounds,
viz
(1) that
the applicant was wrongly
not
allocated any points when it should have been allocated the full 15
points; and
(2) that
the 2
nd
respondent was allocated 15 points when it actually deserved only 5
points on the ground that it had completed only one similar
project
in the past five years.
14.3
Equity
and Specific Goals
The
total points
allottable
for this item was 10 points which were broken down as follows:
“
100%
disfranchised (
sic
) 5
points
Woman 100% ownership 1 point
Youth 100%
ownership 1 point
Disabled 100%
ownership 1 point
Free State
Based 2 points”
The
applicant was allocated 3.23 points and the 2
nd
respondent was allocated 5.12 points. There is no dispute with
regards to this scoring.
14.4
Total
Points Scored
The
2
nd
respondent received the highest score of 87.94 points while the
applicant scored 78.23 points. The Department awarded the tender
to
the 2
nd
respondent on the basis that it (the 2
nd
respondent) had received the highest score.
[15]
THE
APPLICANT’S CASE
In its papers, the
applicant relied on the following grounds of review:
15.1
That
the department’s officials failed to open the tenders and
announce the details thereof in public in compliance with the
conditions of tender. The department’s officials instead
opened the tenders in a separate room from the one the tenderers
had
converged in and were already in possession of a list bearing the
names of the tenderers and their respective tender prices.
The
department therefore failed to follow the mandatory procedures
specified in the contract document as required by the principles
of
fairness, transparency and openness in respect of the opening of the
tenders and the announcement of the results. The applicant
averred
that on this basis alone the tender fell to be set aside on the basis
of non-compliance with the provisions of PAJA.
15.2
The applicant further contends that
(1) it
was therefore entitled to an allocation of 15 points for equipment,
as it had, together with its tender, submitted an affidavit
specifying that the company that owned the critical equipment needed
for the project, was its subsidiary. It had further attached
photographs of the relevant equipment, which incidentally bore the
applicant’s own logo. The applicant thus contended that
it had
provided proof of ownership of or access to equipment. The applicant
further alleged that its CIDB grading of 9 CE served
as proof that it
had unlimited equipment that was relevant for the tender;
(2) the
2
nd
respondent was not entitled to the 15 points that it was allocated
for functionality (experience) as it had not completed three
similar
projects before the closing date of the tender. It was contended
that the 2
nd
respondent had in fact misrepresented facts to the Department in its
tender documents, thus necessitating the cancellation of the
tender
as provided for in the standard conditions and Form T.
The two grounds mentioned
in the sub-paragraph above are the main thrust of the applicant’s
review application.
15.3 The
applicant further contended that the first respondent exhibited
conduct suggesting bias against it when adjudicating the
tender. In
this regard the applicant relied on the following:
(1) the opening of
tenders by the department’s officials behind closed doors;
(2) the
failure by the department to make use of its appointed expert
consulting engineers for purposes of evaluation of the contract;
(3) the
manner in which the department scored the 2
nd
respondent in comparison to the manner in which the applicant was
scored.
[16]
1
ST
RESPONDENT (DEPARTMENT)’S CASE
1
6.1 It
was contended on behalf of the department that in a review the
question to be considered, is not whether the decision is
capable of
being justified, but whether the decision-maker properly exercised
the powers entrusted to him or her, the focus being
the process in
which the decision-maker came to the challenged conclusion,
16
.2 It
was further contended that when awarding the tender to the second
respondent and not to the applicant, the 1
st
respondent (department) had properly exercised its powers entrusted
to it, having followed a fair, lawful and transparent process
and
came to a decision that was rationally connected to the fair
procedure that was followed, especially considering the material
on
which such decision was based.
1
6.3 The
department contended further that the applicant’s challenge to
the manner in which the tenders were opened was a challenge
to the
form rather than the substance of a fair and transparent process
itself. The department conceded that the tenders were
not opened in
the room where the tenderers had converged, but rather in an
adjoining room. It cited non-availability of space as
one of the
reasons why tenders were dealt with in that fashion and went on to
add that it was decided to rather reduce the information
pertaining
to the name of the tenderer and the price to writing and to provide a
list to tenderers to avoid any confusion that
may ensue from
tenderers not having the names of the tenderers properly.
1
6.4 The
department contended that the documents provided by the applicant as
proof of ownership of equipment were not acceptable
as the BEC had
decided that the only acceptable proof would in terms of the Road
Traffic Act, be registration certificates or purchase
document or
letter of commitment from lessor to lessee. It was contended that
the department was under no obligation to ask for
further documents
from tenderers after closing date of tender. It was further
contended that asking for further information could
actually taint
the tender process.
1
6.5 With
regards to the applicant’s allegations of lack of verification
of second respondent’s listed previous projects,
(supported by
affidavits from third parties) it was contended that such information
could not have been considered by the BEC as
it was not at the BEC’s
disposal at the time of the evaluation. It was argued that the
information in front of the BEC as
at that time reflected three
qualifying projects that the BEC rightly took into account.
[17] It
needs to be pointed out that during the hearing of the application
the applicant’s counsel submitted that the applicant
was not
persisting with its contention that the award of the tender could be
set aside on the ground of failure to open tenders
in the presence of
the tenderers. In view of that submission I therefore need not
address myself to this particular ground of review.
In coming to
this conclusion I have taken into account that all the other
unsuccessful tenderers were served with this application
and thus had
an opportunity of opposing, but chose not do so. I have also
considered first respondent’s stance, i.e. that
there was
substantial compliance with the relevant provisions and that the
applicant’s challenge on this aspect was a challenge
against
the form rather than the substance of a fair and transparent process
which had not prejudiced any tenderer. Without necessarily
pronouncing myself on this submission, I am of the view that in the
context of this application, nothing really turns on this issue
and I
need therefore not address myself pertinently to it.
[18
]
ANALYSIS
OF THE FACTS AND APPLICATION OF THE LAW
T
he
applicable legal prescripts to the tender at issue have already been
mentioned. The answering affidavit filed on behalf of the
Department
was deposed to by the chairperson of the BEC. In his affidavit, the
chairperson of the BEC seems to be conceding that
there was vagueness
with regards to the exact proof of ownership of critical equipment
that was required. In his affidavit he stated
that
“
I accept
that form T of the conditions’ of tender does not stipulate in
precise terms, the form of proof of ownership of critical
requirement
(
sic
)
[equipment], which would have been sufficient for the purposes of
compliance with the requirements of the tender. I nevertheless
point
out that the relevant part of Form T leaves it up to the bidder to
provide the necessary information which would constitute
proof. The
fact that it is not prescriptive gives the bidder an opportunity to
present the necessary information which amounts
to proof of ownership
in the way the bidder chooses”.
[19] It
is inexplicable why, if the tenderers were indeed given a wide
latitude as averred, the applicant’s affidavit to which
photographs bearing the applicant’s logo were attached, was not
accepted as proof that the applicant owned or had access
to the
required critical equipment.
It
is clear from the content of the answering affidavit that the BEC was
either not aware of some of the requirements specified
in the tender
or did not understand them.
[20] As
stated before, the CIDB Act and its regulations, as well as its
standard conditions were applicable to this tender. The
CIDB grading
prescribed was an 8 CE PE (signifying a civil engineering contractor
who is regarded as “potentially emerging”,
graded at
level 8) or 9 CE (a civil engineer contractor graded at level 9). It
would seem that the BEC did not know what this
contractor grading
signified. The significance of this grading has been explained in the
applicant’s papers and stands unchallenged.
As stated before,
this grading is done in accordance with regulations made in terms of
a statute (CIDB Act) and they are thus
easily ascertainable. In my
view, if it is accepted that 9CE CIDB grading signifies that the
contractor awarded such a grading
can tender for an unlimited amount,
it can also be accepted that such contractor possesses the relevant
equipment and experience
for any project. After all, an allocated
CIDB grading is not a once-off affair, it is reviewed periodically
and may be reduced
if the contractor concerned is no longer
considered to be satisfying all the requirements for that grading.
While I am not suggesting
that the CIDB grading should have been the
only consideration to determine a contractor’s functionality, I
accept that if
the BEC had taken this aspect into account, there
would not have been any ambiguity in interpreting the affidavit that
the applicant
submitted as proof of ownership.
[21]
Given
that no specific form of proof was specified in the invitation to
tender, the concession made by the chairperson as quoted
in paragraph
18 above was, in my view correctly made. T
he
Department did not specify beforehand the type of documentary proof
it would require. This requirement was stipulated by the
BEC only
during the tender-evaluation stage.
I
therefore disagree with the BEC’s conclusion that the applicant
failed to attach proof of ownership or of access to critical
equipment.
I
find that the proof of ownership of equipment supplied by the
applicant was adequate, under the circumstances.
[22]
The
Department’s stance is that there was a “discrepancy”
as to the ownership of the critical equipment in question
as it
appeared to be owned by a third party. In my view, if the
Department’s contention that the documents attached by the
applicant as proof of ownership showed that the equipment was owned
by a third party as opposed to the applicant is to be accepted,
then,
considering that the applicant in its affidavit averred that the
equipment was owned by its wholly owned subsidiary, this
document
ought to have sufficed as proof that the applicant had access to such
equipment. As set out before, form T of the tender
document allowed
for the critical equipment criterion to be satisfied by
either
proof of ownership or proof of
access
to the equipment.
The
applicant should therefore have been granted the full 30 points for
critical equipment.
[23] In
any event, even if the proof furnished by the applicant were to be
found to be inadequate, then on the basis of the same
concession of
the BEC chairperson as mentioned in paragraph 18 above, I would find
that the BEC ought to have granted the applicant
an opportunity of
furnishing it with the required documents. After all, the applicant
did, in its tender document, undertake to
make registration documents
available should same be required. Considering that the tendering
conditions allow the department to
seek clarification on certain
aspects even at the evaluation stage of the tender as set out in
F.2.17 in paragraph [6] above, the
least that the BEC could have done
would have been to seek clarity from the applicant.
[24] The
chairperson of the BEC, however, demonstrated his ignorance of these
prescripts by stating that he would be tainting the
tendering process
by contacting the applicant. This is clearly not the case. There
would have been nothing wrong in the BEC contacting
all the tenderers
who, according to the scoring sheet, failed to attach proof of
critical equipment owned in the form prescribed
or desired by the
BEC. I am fortified in this view by the case of
GVK
SIYAZAMA BUILDING CONTRACTORS (PTY) LTD v MINISTER OF PUBLIC WORKS &
OTHERS
[2007] JOL 20439
(D) where the following was stated:
“
[68] In
my judgment, section 217 of the Constitution requires that the
material terms and conditions of a public tender, objectively
considered, should be such as to enable the person to whom it is
addressed, namely a prospective bidder, to know with reasonable
and
sufficient certainty what is required of him or her in order to
submit a valid and acceptable tender. In my judgment, this
is a
necessary threshold to a fair, equitable, transparent, competitive
and cost-effective tender process.” ...
“
[75] ….If
documents had to be submitted to support the fact that a bidder was
capable of being registered as a potentially
emerging enterprise,
then the
invitation should at least have stated what those documents were
.”
“
[78] In my
judgment, having not stipulated any formal requirements that a bidder
had to comply with in order to show that it was
a potentially
emerging enterprise, it was incumbent upon the first respondent to
make enquiries, either of the CIDB or the applicant
in order to
determine whether the applicant was ‘capable’ of being
registered as a ‘potentially emerging enterprise’
in
addition to having a contractor grading of 7GB. Having not
stipulated any formal requirements in this regard, it was hardly
fair
of the first respondent to reject the applicant’s tender out of
hand because the applicant did not submit any documentation
reflecting that it was capable of being registered as a potentially
emerging enterprise. I would have thought that the tender
documentation considered as a whole would have alerted the first
respondent to the likelihood that the applicant was indeed capable
of
being registered as a potentially emerging enterprise and have put
the first respondent on its enquiry.
[79] The
actions of Mr Dube and his Administration Committee ... in rejecting
the applicant’s tender as non-responsive because
a 7GB
certificate was submitted, without making enquiries as to whether the
applicant was capable of being registered as a potentially
emerging
enterprise, was procedurally unfair and had the unacceptable result
that a potentially meritorious contractor was excluded
from the
evaluation process.”
(my
underlining for emphasis.)
[25] The
court concluded in the afore-mentioned case that because the
decision-maker had failed to ‘prescribe the required
formalities’, it had erred as a matter of law in rejecting the
bid of GVK Siyazama when it failed to provide the proof the
decision-maker required.
I
further agree with the applicant’s contention that in
casu
,
if the Department was not satisfied with the proof provided, and
intended insisting on registration certificates, then by parity
of
reasoning and in terms of the
GVK
SIYAZAMA
judgment it was obliged to request the registration certificates from
the applicant.
[26] Furthermore,
regulation 14(c) under the PPPFA states that:
“
A bidder must, in the
stipulated manner, declare that documentary proof regarding any
tendering issue will, when required, be submitted
to the satisfaction
of the relevant organ of state.”
This
regulation
obviously
recognises that documentary proof may be called for after the tender
closure, where appropriate. In the case of
METRO
PROJECTS CC AND ANOTHER v KLERKSDORP LOCAL MUNICIPALITY & OTHERS
2004 (1) SA 16
(SCA) it was held that fairness in a tender process
will, under the appropriate circumstances, mean asking
“
a bidder to explain an
ambiguity in its tender; it may be fair to allow a bidder to correct
an obvious mistake; it may particularly
in a complex tender, be fair
to ask for clarification or details required for its proper
evaluation.”
[2
7] The
record of the proceedings, in particular the scoring sheet, shows
that apart from the applicant, four other tenderers were
penalised
for not providing these registration documents, thus
o
nly
five tenderers did not satisfy the Department’s requirements in
as far as its preferred method of proof was concerned.
It would thus
not have been too cumbersome a task for the Department to ask them to
submit the preferred proof. Given the nature
of the remedy I
consider appropriate to grant, it is critical to mention that even if
all
five
tenderers had been requested to furnish these documents and if all of
them had satisfied this requirement, then each one of
them would have
qualified for the maximum score of 15 points. If 15 points had then
been allocated to all these five tenderers
(including the applicant),
then the applicant would still have been the highest scorer in all
the tenders that were evaluated by
the BEC. On this ground, the BEC
would have been obliged to recommend that the tender be allocated to
the applicant, seeing that
the minutes of the BEC and the BAC did not
suggest that there be a departure with the norm, i.e. that the tender
be awarded to
the tenderer with the highest points.
[
28] I
am thus satisfied that failure to award the applicant the full 15
points for critical equipment or at least to request it
to furnish
the registration documents under circumstances as mentioned above was
procedurally unfair and not in compliance with
the applicable tender
procedures as set out in the conditions, the regulations of PPPFA and
PAJA and ultimately the Constitution.
This non-compliance
constitutes a serious irregularity that warrants the setting aside of
the tender award.
[
29] The
scoring of the second respondent in respect of equipment is also
contested by the applicant on the ground that the second
respondent
was granted points even for experience that it did not have. As
pointed out before, Form K of the tender documents
clearly stipulates
how prior experience ought to be scored. This form provides that for
three similar projects completed within
the past five years 30 points
should be allocated. For two similar projects completed the score to
be allocated would be 15 points
and for one similar project completed
5 points would be allocated. The same form also stipulated that a
similar type project was
one for rehabilitation of a road more than
R130-m. Importantly, it also provided that
“
points for
experience will be awarded
after
verification of similar types of projects”.
(my
underlining for emphasis)
[30] Mr.
Mokoena, on behalf of the Department, argued that the lawfulness, or
otherwise, of the Department’s decision must
be determined on
the basis of information that was placed before the BEC and not the
information that became afterwards. I will
demonstrate that even
this approach does not come to the second respondent and the
Department’s assistance in any way. The
record of proceedings
shows that the second respondent included in its schedule of
completed projects projects that had not been
completed by the
closing date of the tender or that were not of a similar nature in
that they did not exceed R130-m. The second
respondent included
among its tender documents a document entitled “Work completed”
where it reflected projects whose
completion dates were beyond the
closing date of the tender and which could, for this reason, should
not have been taken into account
by the BEC. What is baffling is
that one particular project had conflicting completion dates in that
in the schedule it reflected
a completion date of 29 October 2009 and
in the document entitled “Completed work” the same
project reflected the date
“31 October 2010” as the
completion date. Both these documents served before the BEC
committee which, for some inexplicable
reason, did not notice this
obvious discrepancy. The BEC committee chairperson was, in his
affidavit very evasive on the projects
that it scored the second
respondent on. He even suggested that the BEC “did not place
much weight to that project”
in the evaluation of the second
respondent’s experience. When one considers the documents that
were in possession of the
BEC at the time of evaluation of the
tender, it is quite clear that the following tenders did not qualify
for consideration:
(1) Rehabilitation
of the road between Reitz and Petrus Steyn (
could
not have been considered because the completion date of 15 November
2009 was beyond the closing date of the tender).
(2) Rehabilitation of
road P28/4 from Lichtenburg to Mafikeng (conflicting closing dates,
one being beyond the closing date of the
tender). These conflicting
dates are reflected on the documents on page 100 and 105 of the
Record of Proceedings that served before
the BEC.
(3) Rehabilitation of the
road between Parys and the N1 (tender amount below the minimum
threshold of R130-m).
[31]
This
means that the BEC could, on the face of the documents it received
from the second respondent, have considered only two projects
as
qualifying projects. Yet the BEC went on to allocate maximum points
allowable for three projects, i.e. 30 points instead of
15 points.
As the second respondent could, on the face of the documents that
served before the BEC, only score less than the prescribed
30 points
threshold (see clause F3.11.9 in para 11.3 above), this means that
the second respondent’s tender ought not to
have been
considered for any further evaluation and adjudication. If this had
happened, the applicant would still have been the
highest scorer even
if the 15 points that it was denied in respect of critical equipment
was no taken into account.
[32] The
fact that the 2
nd
respondent was allocated points even for projects that it had not yet
completed serves as proof that the BEC did not verify the
2
nd
respondent’s projects. This is contrary to the peremptory
provisions of the tender conditions as specified in Form K.
[33] With
the benefit of the affidavits filed by various deponents who played a
key role in the projects concerned, contents of
which have not been
disputed by the Department, it is now evident that the second
respondent misrepresented facts with regards
to the second project
(Reitz – Petrus Steyn Road) third project (Lichtenburg –
Mafikeng Road) and the fifth project
(the Delmas – Ogies Road)
by furnishing erroneous completion dates. One project’s date
of completion was a full year
after the tender closure date and one
project had still not been completed by the 29
th
January 2010 even though the completion date thereof was reflected in
the tender documents as 30 September 2009.
[34
] With
the benefit of the same affidavits mentioned in the afore-going
paragraph, it is clear that the actual score which the second
respondent deserved on experience was five points only, i.e. in
respect of only one project that qualified as “a similar
project”. Obviously this score of five points is also below
the minimum threshold of 30 points and thus the second respondent’s
tender should not have been evaluated any further. Even if this
tender was not disqualified for failing to meet the minimum threshold
of 30 points in respect of functionality the second respondent’s
total score would have been 62.94 points, which is a lower
score than
the applicant’s total score of 78.23. Thus the applicant would
still have been the highest scorer. The effect
hereof is that the
second respondent was not entitled to be awarded the tender and that
there is no rational connection between
the decision made by the
Department with regards to the score and the reason for the decision.
The tender therefore falls to be
reviewed and set aside.
[35]
With
regards to the applicant’s contention that the first respondent
exhibited conduct suggesting bias against it when adjudicating
the
tender,
I
do not agree that the conduct relied on by the applicant in this
regard, as alluded to in paragraph 17.3 above, suffices to indicate
bias. In my view, such conduct is rather indicative of incompetence
on the part of the BEC.
This
is indeed regrettable when one considers that the BEC, for some
inexplicable reason, decided not to seek any guidance from
the firm
of consulting engineers appointed by the Department in connection
with this tender whereas one of this company’s
mandates was to
assist in the evaluation of the tender documents. The BEC indeed
denied itself of the benefit of the objective
oversight of experts.
[36] The
chairperson of the BEC contended that involving the appointed firm of
consulting engineers in this way would amount to
the BEC abdicating
its functions to third parties and would defeat the nature of
decision making processes. Far from it, considering
that the contract
concluded between the Department and the consulting engineers clearly
stipulates that the company concerned would,
after the evaluations,
only make a recommendation to the Department. Its decision would
clearly not be binding on the Department.
I
remain unpersuaded of any bias on the part of the Department despite
the fact that the it
insisted
on attempting to justify the second respondent’s unsupportable
claims on functionality despite the fact that the
second respondent
chose not to pursue its opposition of the matter.
APPLICABLE REMEDY:
[3
7] The
next question is whether the matter should be referred back to the
Department for re-evaluation or whether the Department
be directed to
award the tender to the applicant and to enter into a contract with
it. Mr Mokoena contended that if I found that
the Department’s
decision was reviewable, then I must refer the matter back to the
Department and should not substitute it.
He submitted that
recognition of separation of powers dictated that the matter be
referred back to the department for re-evaluation.
As authority for
his submission he referred me to the case of
BATO
STAR FISHING (PTY) LTD V MINISTER OF ENVIRONMENTAL AFFAIRS AND
OTHERS, 2004(4) SA 490 (CC)
specifically at paragraph 46 where the court stated as follows:
“
The use of
the word “deference” may give rise to a misunderstanding
as to the true functions of a review Court. This
can be avoided if it
is realised that the need for Courts to treat decision-makers with
appropriate deference or respect flows
not from judicial courtesy or
etiquette but from the fundamental principle of the separation of
powers itself.” I agree with
the aforesaid remarks. I must
point out that in the same judgment, the learned judge agreed with
the following remarks expressed
by another judge: “judicial
deference does not imply judicial timidity or an unreadiness to
perform the judicial function”.
[38] Section
8(1)(c)(ii) of PAJA provides that under appropriate circumstances a
court may set aside an administrative action and,
in
exceptional
cases, substitute or vary the administrative action or correct a
defect resulting from the administrative action. In my view,
the
rationale for stipulating that the court substitute its decision for
that of an administrative functionary in exceptional circumstances
is
on the basis of the principle of separation of powers and also on the
basis that the administrative functionary is generally
best equipped
by reason of its experience and knowledge of the particular field.
[39] There
is no
numerus
clausus
of what constitutes exceptional circumstances and as such, every case
should be decided on its own facts. Thus, 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. See
GAUTENG
GAMBLING BOARD v SILVERSTAR DEVELOPMENT LTD AND OTHERS
2005 (4) SA 67
(SCA) at 75 E – F where the court remarked as
follows:
“
... 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.”
[40
] In
JOHANNESBURG
CITY COUNCIL v ADMINISTRATOR, TRANSVAAL, AND ANOTHER
1969 (2) SA 72
(T) at 76 E – G the court stated as follows:
“
2. The
Court will depart from the ordinary course in these circumstances:
(i) Where the end
result is in any event a foregone conclusion and it would merely be a
waste of time to order
the tribunal or functionary to reconsider the
matter. This applies more particularly where much time has already
unjustifiably
been lost by an applicant to whom time is in the
circumstances valuable, and the further delay which would be caused
by reference
back is significant in the context.
(ii) Where the
tribunal or functionary has exhibited bias or incompetence to such a
degree that it would be unfair
to require the applicant to submit to
the same jurisdiction again.”
[41] In
AIROADEXPRESS
(PTY) LTD v CHAIRMAN, LOCAL ROAD TRANSPORTATION BOARD, DURBAN, AND
OTHERS
[1986] ZASCA 6
;
1986
(2) SA 663
(AD), in a passage at 680 E – G, Van Heerden JA said
the following:
“
But,
even if such a decision is set aside, it does not follow that a Court
will direct a local board to exercise its functions in
a manner
determined by the Court, e.g. by issuing a permit. On the contrary,
since the issue of a permit is in the discretion of
the board and not
of the Court, the ordinary course is to remit the matter to the board
for reconsideration. In special cases the
Court may, however, order
the board to issue a permit. This Court has held that ‘it is a
matter of fairness to both sides’:
Livestock
and Meat Industries Control Board v Garda
1961
(1) SA 342
(A)
at 349.
But in the absence of exceptional circumstances such as bias or gross
incompetence on the part of the board, or a long delay
occasioned by
an arbitrary decision, a court will not order the issue of a permit
unless the only proper decision of the board
on remittal would be to
grant the application. Cf
Garda's
case
supra
at 349;
Johannesburg
City Council v Administrator, Transvaal, and Another
1969
(2) SA 72
(T)
at
76;
Vries v Du Plessis NO
1967
(4) SA 469 (SWA)
at 482.”
Although
this was a minority judgment, this dicta has been quoted with
approval in several judgments. See
COIN
SECURITY GROUP (PTY) LTD v SMIT NO AND OTHERS
[1992] ZASCA 55
;
1992 (3) SA 333
(AD) at 347 H – J.
[42
]
In
casu
,
the method of allocation of points is prescribed in the tender
document and one arrives at the total score on the basis of a very
simple mathematical calculation. The end-result in as far as the
score that will be allocated to the applicant is concerned is
truly a
foregone conclusion, as
the
only proper decision of the Department on remittal would be to award
the tender to the applicant.
Moreover,
the 1
st
respondent has conceded that it is urgent that the rehabilitation of
this road be undertaken without delay due to the “dilapidated
and unrehabilitated roads” that have resulted in accidents and
fatalities. Remitting the matter back to the department would
therefore be an unnecessary waste of valuable time. See
INTERTRADE
TWO (PTY) LTD v MEC FOR ROADS AND PUBLIC WORKS, EASTERN CAPE, AND
ANOTHER
2007 (6) SA 442
(CK) para 42;
GRINAKER
v TENDER BOARD
[2002] 3 ALL SA 338
;
RHI
JOINT VENTURE v MINISTER OF ROADS & PUBLIC WORKS, EASTERN CAPE &
OTHERS
[2003] JOL 10790
CK.
[43
] It
is indeed so that a court will not substitute its own decision if it
does not have proper and adequate information to enable
it to do so.
As stated before, the scoring process is prescribed and very simple.
I am also satisfied that the applicant’s
undisputed 9CE CIDB
grading suffices as verification of the undisputed averments made by
the applicant pertaining to its functionality.
Another situation in
which a court would be reluctant to substitute its own decision is
where implementation of the contract has
already commenced. That is
simply not the case here.
[44] In
my view the circumstances of this case, as elucidated above, lead me
to conclude that it is in the interest of justice for
this court to
substitute the unlawful award with the correct one. The department’s
contention that the mere fact that the
applicant may on re-evaluation
attain the highest score does not mean that the award should be
awarded to it, is without merit.
It is clear from the various pieces
of legislation referred to above, as well as the tender prescripts,
that there must be justifiable
and objective grounds why the norm of
awarding the tender to the highest scorer must be departed from. The
department did not
make any attempt to mention what these justifiable
and objective grounds are. I must hasten to point out that in terms
of the invitation
to tender, a score has already been allocated for
equity, which means that each company’s Black Economic
Empowerment status
was taken into account and scored accordingly (see
para 14.3 above). I therefore accept that there are no justifiable
and objective
grounds that warrant deviation from the norm and that
the tender therefore ought to be awarded to the applicant as the
highest
scorer.
[45]
The
costs of the application should be borne, jointly and severally, by
the parties that opposed the relief claimed for the duration
of the
opposition. The second respondent initially opposed the application
but withdrew its opposition on the 15th February 2010.
ORDER
[4
6] I
therefore make the following order:
46.1 The
first respondent’s decision to award the tender to the second
respondent is reviewed and set aside.
46.2 The
applicant is declared the successful tenderer in respect of the
tender.
46.3 The
first respondent is directed to forthwith enter into a contract with
the applicant as the successful tenderer.
46.4 The
first respondent, jointly and severally with the second respondent is
ordered to pay the costs of this application up to
the 15
th
February 2010. The first respondent is ordered to pay the costs of
this application beyond the 15
th
February 2010.
_________________
M.B. MOLEMELA, J
On
behal
f
of applicant: Adv. G.M. Budlender SC
Instructed by:
Webber Wentzel
Cape Town
c/o Rossouws
Attorneys
BLOEMFONTEIN
On
behalf of first respondent: Adv. P.L. Mokoena
Instructed by:
State
Attorney
BLOEMFONTEIN
/sp