About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: North Gauteng High Court, Pretoria
SAFLII
>>
Databases
>>
South Africa: North Gauteng High Court, Pretoria
>>
2009
>>
[2009] ZAGPPHC 26
|
|
Maredi Telecom & Broadcasting (Pty) Limited v Ericsson South Africa (Pty) Limited and Others (597/09) [2009] ZAGPPHC 26 (17 April 2009)
IN THE HIGH COURT OF SOUTH
AFRICA
(NORTH GAUTENG HIGH COURT,
PRETORIA)
NOT
REPORTABLE
Date:
2009-04-17
Case Number:
597/09
In the matter between:
MAREDI TELECOM & BROADCASTING
(PTY)
LIMITED
Applicant
and
ERICSSON SOUTH
AFRICA (PTY) LIMITED
First
Respondent
TELSAF DATA
(PTY) LIMITED
Second
Respondent
TELKOM SA
LIMITED
Third
Respondent
JUDGMENT
SOUTHWOOD J
[1]
This
is an urgent application in which the applicant (‘Maredi’)
seeks interim relief interdicting the third respondent
(‘Telkom’)
from entering into a contract with the first respondent (‘Ericsson’)
and the second respondent
(‘Telsaf’), alternatively,
Ericsson, alternatively, Telsaf, pursuant to the tender by Ericsson
and Telsaf to Telkom
under tender number RFP085/07 (‘the
tender’) and interdicting Telkom from ordering from Ericsson
and Telsaf any goods
or services pursuant to the award by Telkom to
Ericsson and Telsaf of the tender pending the final determination of
Maredi’s
application to review and set aside the award of the
tender by Telkom to Ericsson and Telsaf and remitting the tender back
to Telkom
for it to reconsider the award.
[2] The award of
the tender by Telkom to Ericsson and Tels
af
was the culmination of a 16 month long process during which tenders
were invited, received and evaluated at four levels by
representatives
of Telkom. On 1 December 2008 Telkom notified
Ericsson and Telsaf that their tenders were successful and that they
were awarded
the tender in the ratio 40 % to 60 % respectively. On
the same date Telkom notified Maredi that it was not successful.
Maredi
immediately took legal advice and requested Telkom’s
reasons for awarding the tender. On being informed that it failed to
meet certain critical criteria Maredi prepared and served this urgent
application on Ericsson, Telsaf and Telkom. Only Ericsson
and Telkom
oppose the application. Telsaf has not given notice of intention to
oppose or filed an answering affidavit.
[3] The parties
have filed compendious affidavits which deal in great detail with the
tender process with particular reference to
the physical evaluation
of the products and the final decision to award the tender. Maredi’s
case in the founding affidavit
is that in awarding the tender Telkom
acted in breach of various provisions of the Promotion of
Administrative Justice Act, 3 of
2000 (‘PAJA’) (which, it
is common cause, applies to the award of tenders by Telkom).
Maredi
alleges that Telkom was biased in favour of Ericsson and says that
Telkom ignored its own procedures to ensure that the tender
was
awarded
inter
alia
to
Ericsson and deliberately misrepresented the results of the technical
testing that took place to ensure that the tender was not
awarded to
Maredi but
inter
alia
to
Ericsson. During the hearing, Maredi’s counsel informed the
court that Maredi would not persist in the allegations of
dishonesty
in the papers. It accordingly became common cause that Maredi will
have no right to claim damages from Telkom if Telkom
wrongfully
awarded the tender to Ericsson and Telsaf – see
Olitzki
Property Holdings v State Tender Board & Another
2001
(3) SA 1247
(SCA)
para 42;
Steenkamp
NO v Provincial Tender Board, Eastern Cape
2007
(3) SA 121
(CC)
paras
55 and 56;
Premier,
Western Cape v Fair Cape Property Developers (Pty) Ltd
2003
(6) SA 13
(SCA)
paras
40-49 and 50-59.
[4
] The
applicant seeks interim relief. The applicant must therefore
establish:
(1) a clear right
or, if not clear, that it has a
prima
facie
right;
(2) that there is
a well-grounded apprehension of irreparable harm if the interim
relief is not granted and the ultimate relief
(by way of the review
proceedings) is eventually granted;
(3) that the
balance of convenience favours the grant of an interim interdict;
and
(4) that the
applicant has no other satisfactory remedy. (
LF
Boshoff Invesments (Pty) Ltd v Cape Town Municipality; Cape Town
Municipality v LF Boshoff Investments (Pty) Ltd
1969
(2) SA 256
(C)
at
267B-E.)
When an
applicant cannot show a clear right, and more particularly where
there are disputes of fact relevant to a determination of the
issues,
the Court’s approach in determining whether the applicant’s
right is
prima
facie
established,
though open to some doubt, is to take the facts set out by the
applicant, together with any facts set out by the respondent
which
the applicant cannot dispute, and to consider whether, having regard
to the inherent probabilities, the applicant should
(not could) on
those facts, obtain final relief at the trial of the main action.
The facts set out in contradiction by the respondent
should then be
considered and if serious doubt is thrown upon the case of the
applicant it cannot succeed. (
Webster
v Mitchell
1948
(1) SA 1186
(W);
Gool
v Minister of Justice and Another
1955
(2) SA 682
(C)
at
688C-E;
LF
Boshoff Investments (Pty) Ltd v Cape Town Municipality (supra)
at
267E-G;
Beecham
Group Ltd v B-M Group (Pty) Ltd
1977
(1) SA 50
(T)
at
55B-E.)
In
Beecham
Group Ltd v B-M Group (Pty) Ltd (supra)
the
court said with regard to the various factors which must be
considered:
‘I consider
that both the question of the applicant’s prospects of success
in the action and the question whether he
would be adequately
compensated by an award of damages at the trial are factors which
should be taken into account as part of a
general discretion to be
exercised by the Court in considering whether to grant or refuse a
temporary interdict. Those two elements
should not be considered
separately or in isolation, but as part of the discretionary function
of the Court which includes a consideration
of the balance of
convenience and the respective prejudice which would be suffered by
each party as a result of the grant or the
refusal of a temporary
interdict.’
Where the
applicant’s right is clear and the other requisites of an
interdict are present no difficulty presents itself about
granting an
interim interdict. Where, however, the applicant’s prospects
of ultimate success are nil, obviously the Court
will refuse an
interdict (
Olympic
Passenger Services (Pty) Ltd v Ramlagan
1957
(2) SA 382
(D)
at
383C-D;
Beecham
Group Ltd v B-M Group (Pty) Ltd (supra)
at
54H-55B.
[5
] In
the absence of a claim for damages, if Maredi establishes a
prima
facie
right
(i.e. a
prima
facie
right
to an order setting aside Telkom’s award of the tender to
Ericsson and Telsaf) it will follow that there will be a
well-grounded apprehension of irreparable harm if the interim relief
is not granted and the ultimate relief is eventually granted.
There
is clearly no balance of convenience in favour of the applicant. In
fact the balance of convenience is overwhelmingly in
favour of the
respondents. The applicant can point to no prejudice to it other
than the possible loss of profit while Telkom has
dealt extensively
with the impact which interim relief will have on its business. It
will not be able to proceed with its expansion
and development plans
and this will result in losses of approximately R50 million per month
while the order is in force. It is
fair to accept that it will take
six to eight months to file the record and affidavits and obtain a
date for the hearing of the
main application. In addition to this
time there is the time it would take to have the matter decided on
appeal. Maredi’s
counsel did not contend otherwise. The real
issue is therefore whether Maredi established a sufficiently strong
right to justify
the court granting an interim interdict. Maredi
contends that it has established a clear right whereas the
respondents contend
the opposite. This questions turns primarily on
whether Maredi was properly excluded from consideration.
[6
] It
must be recorded that in reply Maredi’s counsel handed to the
court a written undertaking given by Maredi addressed to
Ericsson,
Telsaf and Telkom in which Maredi undertakes –
‘
RE: MAREDI
TELECOM & BROADCASTING (PTY) LIMITED/ERICSSON SOUTH AFRICA/TELSAF
DATA/TELKOM SA LIMITED CASE NO: 579/09
We undertake that in the event that
the interim interdict sought in case number 579/09 being granted to
us and in the event that
the review under the same case number
ultimately fails we shall reimburse Ericsson, Telsaf Data and Telkom
for any loss proved
to have been sustained as a consequence of the
granting of the interim interdict.’
This undertaking
which is dated 20 February 2009 was marked ‘A’ (p1373) by
the court. I agree with Telkom’s
counsel that this undertaking
does not affect the balance of convenience. It is given by a private
company, apparently the subsidiary
of the Japanese parent company,
and there is no indication that this company will be able to
reimburse any of the respondents for
the loss they suffer as a
consequence of the granting of the interim interdict.
[7] In its founding affidavit Maredi
alleges that the decision to award the tender to Telsaf and Ericsson
must be reviewed on the
following grounds (the references to the
sections are to sections in PAJA):
(1) The decision was procedurally
unfair (s 6(2)(c));
(2) The decision
was biased or reasonably suspected of bias (s 6(2)(a)(iii));
(3) The decision was taken for an
ulterior purpose (s 6(2)(e)(ii));
(4) The decision
was taken because the relevant considerations were not considered (s
6(2)(e)(iii)); and
(5) The decision
was taken arbitrarily or capriciously (s 6(2)(e)(vi)).
[8] In Maredi’s heads of
argument Maredi relies only on the following three grounds –
(1) The ultimate award of the tender
was premised on the fact that Maredi had confirmed that its tender
did not comply with the
requisite technical specifications –
this was wrong because ‘a dispute existed between the
applicant and representatives
of the third respondent as to whether
or not features that the applicant’s tender admittedly lacked
were features that
were required, on a correct construction of the
technical critical criteria.
Maredi contends that, for present
purposes, the relevant issue is not the correctness of the
applicant’s assertion that it
complied with the technical
critical criteria but the fact of the existence of a dispute as to
this issue. Maredi argues that
EXCO had sought an assurance that the
applicant admitted its non-compliance and the tender decision was
premised on an erroneous
belief that it had done so. Maredi argues
further that if EXCO had been aware of the existence of the dispute
as to the proper
interpretation of the technical critical criteria it
would have been called upon to determine whether the applicant was
correct
in its assertions in relation to this interpretation issue
but it never considered that issue because it had been misled as to
the applicant’s stance.
(2) The decision is vitiated by the
erroneous representation that Maredi did not meet the technical
critical criteria. EXCO relied
on paragraph 7.3.2 of the PRC
recommendation. In fact Maredi did comply;
(3) Improper favouritism and
procedural unfairness in the test extensions granted to Ericsson.
In summary the argument is that
the fact of and the manner in which
the date for the demonstration was extended indicates bias.
[11] As already
mentioned, in it answering affidavit Telkom describes in
considerable detail the tender procurement process. This
evidence
is important background and is not in dispute. It may be summarised
as follows:
(1) The following
committees are involved in the procurement process (where the
value of the tender is in excess of R40 million):
(i
) An
ad
hoc
Subject
Matter Expert Team (‘SME’);
(ii
)
A Cross Section Functional Team (‘CSFT’);
(iii
) The
Procurement Review Council (‘PRC’);
(iv
) The
Executive Committee (‘EXCO’).
(2)
A
service organisation (‘the sponsor’) requests the
procurement of a product or service. The Chief of Operations
bears
the ultimate responsibility in respect of the procurement of network
or IT related equipment. The Chief of Operations
is the sponsor of
the RPF085/07 tender.
(3)
The
SME is project specific. It compiles the evaluation criteria which
are to be applied to the tender. It utilises a prioritisation
matrix to weigh the evaluation criteria. This assists in the
selection of the most suitable vendor/s for Telkom. The SME first
prepares and presents to the CFST for its approval the project plan
for the relevant project. The plan contains the identities
of the
persons constituting the project team, the evaluation criteria and
weightings. The SME evaluates the bids received in
accordance with
the approved project plan. Based on the scores achieved by the
vendors against the relevant criteria the SME
prepares a
recommendation to the CFST on the short listing of vendors. The
CFST may approve the SME’s recommendation or
it may reject it.
(4)
The
CFST is a multi-disciplinary team whose primary purpose is the
procurement of products. It consists of representatives from
Telkom’s various divisions (service organisations). It is
responsible for all the preliminary steps which result in the
eventual procurement of products or services. The CFST must
consider whether the product required complies with Telkom’s
commercial goals and whether it advances Telkom’s needs and
interests. The CFST consists of executives (or their delegates)
from Procurement and other functional portfolios. It meets every
week. The CFST involved in the present case is the Network
CFST
because the product required fell under the Network Infrastructure
Provisioning Functional Portfolio. The CFST had a number
of
specific duties and functions. The members of the CFST when the
award of RPF085/07 was made were –
Name
Service
Organisation
Level
Christina
Naidoo Procurement Services: Senior
Strategic
Sourcing Manager
Andrew
Hadley Network Infrastructure Executive
Provisioning:
Technical
Strategy
and Integration
Steve Lewis Network
Infrastructure Executive
Provisioning:
Technical
Product
Development
Billy Fick Network
Infrastructure Executive
Provisioning:
Integrated
Network
Planning
Robert George Network Call
Operations: Executive
High
Level Support
Cathy Magodie Procurement
Services: Senior
Black
Economic Manager
Empowerment
Arnold
van Huyssteen Sales and Marketing Executive
(5) The
PRC is authorised to approve and issue all requests for bids,
proposals and information for the supply of goods/services to Telkom
in accordance with Telkom’s business strategy; consider and
approve the award of any tender/bid for the supply of goods/services
to Telkom up to but not exceeding R40 million; and consider and
recommend the award of any tender/bid for the supply of goods
or
services to Telkom in excess of R40 million. Members of the PRC are
appointed by the chiefs of the various Telkom divisions.
At the
time of the award the members of the PRC were:
Name
Level
Functional
Portfolio
Responsibility
of holder of the functional portfolio
Marius
Mostert
Group
Executive
Network
Infrastructure Provisioning
Responsible for network technology
strategy, planning, technical product
development
and all associated network infrastructure deployment
Zethembe
Khoza
Group
Executive
Call
Centre Operations
Responsible
for managing all contact points in which customers contact Telkom,
such as call centres, Telkom Direct shops,
commercial services and
credit management
Bashier
Sallie
Group
Executive
Information
Operations
Responsible
for Enterprise Wide IT activities including infrastructure,
architecture, application development, computer operations
and
support and internet services providers
Anton
Klopper
Group
Executive
Legal
Services
Responsible
for managing the provision of legal advice and assistance to
various business units within Telkom
Stafford
Augustine (Chairman)
Group
Executive
Procurement
Services
Responsible
for overall management of procurement services encompassing
strategic sourcing, management of outsourced entities,
corporate
support and BEE
Roy
Sherriff
Executive
Capital
and Asset Management
The
compilation of the capital budget for inclusion in the company
business plan. Support for investment decision making
using
business cases, funding for which is approved by a funding
council. Capital funds allocation and accounting support
to
project managers for capital work in progress. Updating and
maintaining the asset register and associated depreciation.
The Chairperson of
PRC is the Group Executive: Procurement Services who must sign the
letter awarding the tender after the relevant
authority (either PRC
or EXCO) has taken a decision to award the tender and recorded the
decision in writing. The PRC meets every
week. Its quorum is three
members and decisions are taken by simple majority.
The
PRC must provide direction, guidance, advice and support to the CFST.
It must review the CFST activities and assist the CFST
to meet its
objectives. The PRC functions include approving or supporting the
final award of bids or recommending the final award
of bids;
approving recommendations on the shortlist of bidders and ensuring
and monitoring compliance by bidders with Telkom’s
procurement
process.
(6)
EXCO
takes decisions to award a contract where the aggregate of payments
expected to be made under the tender does not exceed
R800 million.
EXCO consists of all of Telkom’s Chief Officers. At the time
of the award of RPF085/07 EXCO’s members
were:
(i) Reuben
September, Telkom’s Chief Executive Officer, the Chairperson;
(ii)
Motlatsi
Nzeku, Telkom’s Chief of Operations;
(iii)
Thami
Msimango, Telkom’s Chief of Global Operations and
Subsidiaries;
(iv)
Naas
Fourie, Telkom’s Chief of Strategy;
(v)
Peter
Nelson, Telkom’s Chief of Finance;
(vi)
Charlotte
Mokoena, Telkom’s Chief of Human Resources; and
(vii
) Ouma
Rasethaba, Telkom’s Chief of Corporate Affairs.
(7)
During
November 2007 Telkom decided to publish RPF085/07 for the supply of
Point to Point Split Mount Radio Equipment. The initial
criteria
included commercial and technical criteria which were prepared by
CFST. Before RPF085/07 was published the RPF approved
all the
critical criteria and the weightings to be applied. In simple terms
Point to Point Radio Equipment enables the wireless
transfer of data
from a single point to a single point. The equipment is essential
for wireless connectivity within Telkom’s
network where
physical infrastructure such as copper or optical fibre cannot be
employed.
(8)
On
22 November 2007 RFP085/07 was published. It invited tenders for
Point to Point Microwave Equipment operating in the frequency
range
L6GHz to 38GHz. The critical criteria to be met were stipulated in
the invitation. It was a condition of the tender that
all
prospective bidders attend a bidders’ conference on 29
November 2007. The purpose of the conference was to enable
Telkom
and all prospective bidders to clarify the bid requirements.
Representatives of Maredi, Ericsson, Telsaf and Mobax SA
(Pty) Ltd
(‘Mobax’) attended the conference. RFP085/07 is
contained in a number of comprehensive volumes.
(9)
Pursuant
to the publication of RFP085/07, Maredi, Ericsson, Telsaf and
Mobax submitted tenders. These tenders were then evaluated
by the
SME consisting of the following persons –
Person
Service
Organisation
Responsibility
James
Wood
Procurement
Chairperson
Christina
Naidoo
Procurement
Commercial
conditions
Noncedo
Mayikana
Procurement
BEE
Sandra
Malusi
Procurement
Life
Cycle Costing
Rajan
Chetty
Supplier
Quality
Supplier
quality
Giel
Laubscher
TSI
Functional
specification
Ian
Durston
TSI
Functional
specification
Paul
Mulder
TSI
Network
management system specification
Luigi
Pavona
TSI
Functional
specification
Clifford
Ardendorff
Capability
Management
Turnkey
statement of work
Innocent
Matlala
NBMC
Program Management
Turnkey
statement of work
Corne
Nortje
Network
Strategy
Life
cycle costing
Thembi
Mazibuko
TSI
Management
specification
Trevor
Schwikkard
NNOC
Maintenance
and support
Amith
Samlal Davideen
TSI
Management
specification
Shaun
Dick
TSI
Management
specification
Johan
Boshoff
NNOC
Maintenance
and Support
Gerrie
Opperman
TSI
Functional
specification
Henning
Vallgraaff
Supplier
Quality
Supplier
quality
(10)
The
evaluation was done in four phases –
(i)
Critical
Criteria Evaluation and Short Listing
– This is the so-called ‘paper evaluation’ and
was done between 2 January 2008 and 18 January 2008.
This
involved comparing the content of the tender with the critical
criteria required. Each tenderer completes and signs
a
Statement of Compliance stating that its bid complies with all
critical criteria. The tender document is examined
to see
whether what is described complies with the critical criteria
specified in the invitation to tender. Each bidder
completes and
signs a Statement of Compliance which states that its bid
complies with all critical criteria. Unless the
bidder complies
with such criteria it will not qualify for inclusion in the short
list. No other information is considered.
Where possible the
bidder’s claim of compliance with critical criteria is
verified by reference to the supporting
documentation. But where
there is no evidence in the bid or supporting documents the
declaration of compliance is accepted
at face value. Actual
physical compliance is assessed at a later stage. On this paper
evaluation Maredi, Ericsson, Telsaf
and Mobax were short listed.
The short list was then submitted to CFST and PRC for approval,
which they granted.
(ii)
Evaluation
and Scoring of Non-Critical Evaluation
Criteria.
- This was done between 14 January 2008 and 1 February 2008.
Once again the content of the tender is compared with a
predetermined
scoring matrix established and approved by the
CFST and the PRC before publication of the RFP. Maredi,
Ericsson, Telsaf
and Mobax all successfully passed this
evaluation.
(iii
)
Preparation
and Physical Evaluation
– This comprises a physical technical evaluation of the
equipment offered by the bidder. In this phase the bidder is
required to demonstrate the equipment to the SME in accordance with
a test plan. According to Telkom its test plan required
the
equipment to be set up for four different scenarios. Maredi
disputes this and contends that it was only required to set
up
three. Maredi alleges that set up four fell outside the parameters
of the tender. This dispute involves the one leg of the
application
for review and will be dealt with more fully later.) It is not in
dispute that Telkom sent an explanation of the
pre-determined test
plan to all the short listed bidders: Maredi, Ericsson, Telsaf and
Mobax. The object of this test plan
is to determine whether the
bidders actually comply with the technical critical criteria and the
criteria of high importance.
On 8 February 2008 Telkom communicated
the test plan set-up to Maredi and all the other short listed
bidders. The physical
demonstration and evaluation of the
equipment was to take place in accordance with an agreed schedule.
Maredi, Ericsson and
Telsaf requested extensions and Telkom granted
only those requested by Maredi and Ericsson. The SME found that
Maredi’s
equipment did not comply with the technical criteria.
Maredi disputes that its equipment was required to comply with the
relevant
criteria. As already mentioned this will be dealt with
more fully later.
(iv
)
Clarification
Session
– On completion of the physical evaluation clarification
sessions are held to clarify any uncertainty which arises with
regard to compliance with the technical critical criteria. Two such
sessions were held with Maredi. The first session was to
explain
the questions put to Maredi for clarification and what was required
by the SME in response to these questions. The
second session
allowed Maredi an opportunity to explain its written responses put
by the SME in the first session. Only the
SME evaluated the bids.
(11)
On
21 May 2008, after completion of the evaluation, the SME prepared a
memorandum containing the SME’s recommendation of
the
suppliers of choice. The memorandum describes the various
evaluation phases already described in this judgment. Four bidders
were short listed and were referred to as bidder 1 (Maredi), bidder
4 (Mobax), bidder 7 (Ericsson) and bidder 9 (Telsaf). The
SME
concluded its comprehensive memorandum as follows:
‘The
technical SME team recommends that:
Bidders 4, 7 and 9 are considered as
the suppliers of choice based on the technical compliance BUT
subject to acceptable costing.
Bidder 1 cannot be considered as a
supplier at this particular point in time, since they did not fully
comply with the critical
criteria as on 20 December 2007 as per the
bid documentation and as confirmed during subsequent clarification
exercises. Compliance
might however have been possible if the date
of closing of the bid was June 2008.
Since bidder 7’s system is
already deployed in the Telkom network, consideration should be
given to the current investment
in the installed base of equipment,
network management solution, integration time and costs, training
and spares.’
(12)
At
its meeting on 4 June 2008 the CFST considered the SME memorandum
and resolved to accept the SME recommendation subject to
certain
qualifications including that the tender would be apportioned 60 %
to Telsaf and 40 % to Ericsson and that this would
be subject to
change in the event that Ericsson reduced its services costs.
(13)
On
5 June 2008 the CFST prepared its recommendation for the award to
the PRC. The recommendation reads as follows –
‘
In terms of clause 6.3.6.5 of
the Delegation of Authority it is recommended that RFP085/07 be
awarded in the following manner:
Bidder no 9, Telsaf Data, ranks first
and bidder no 1 Maredi Telecom and Broadcasting ranks second based
on the scoring with the
LCC of all three scenarios taken into
account. As indicated in paragraph 10.1 above however, effectively
Maredi is eliminated
based on non-compliance to critical criteria.
Thus Telsaf Data ranks first and Ericsson second.
With Telkom already having Ericsson’s
technology in the network it will facilitate the continuity with the
provision of
digital microwave links to the Mobile Cellular
Operators while the new technology of Telsaf Date is being
introduced.
Based on dual
supply principles this business should be split between Telsaf Data
and Ericsson in a 60 %/40 % ratio, respectively.
However, the
proviso should be that Ericsson align their turnkey costs to those
as proposed by Telsaf Data. The business split
will be adjusted
accordingly based on the total costs for all three scenarios after
Ericsson has revised their pricing.’
(14) Chief of
Operations is required to approve the recommendation before it is
made to the PRC. In this case the Chief of
Operations did not
immediately sign the recommendation. He first required that
certain matters be clarified. On 6 June 2008
the Chief of
Operations and Marius Mostert, the Group Executive: Procurement
Services, met to discuss these matters. The
Chief of Operations –
(i) wanted to be
assured that Telkom was not being disadvantaged on costing;
(ii) wanted
clarity on all critical criteria and areas of technical
non-compliance;
(iii
) wanted
to be assured that the continued testing had no material impact
on the final scoring.
With regard to
(1), the primary concern was that the Life Cycle Costing (LCC)
analysis did not take into account the support and
maintenance costs
outside the guarantee period. Each of the bidders offered different
support and maintenance guarantees and the
idea was to normalise the
bidders for comparative evaluation purposes. Mostert undertook to
take this up with Procurement Services.
With regard to (2), Mostert
clarified the scope of the technical critical criteria as well as the
importance of having the required
interfaces and capacity. He also
explained to the Chief of Operations the applicant’s areas of
technical non-compliance.
With regard to (3), Mostert pointed out to
the Chief of Operations that the test had commenced on 7 April 2008
but could not be
concluded due to logistical problems and the tests
were therefore considered to be inconclusive. The tests were not
regarded as
failed as they could not be performed. Recommencing the
tests with functional test equipment therefore did not constitute an
advantage
to Ericsson. Mostert also emphasised the fact that the
ranking pre and post the physical evaluation with Maredi disqualified
due
to non-compliance with critical criteria, still resulted in
Telsaf and Ericsson as the successful bidders. Pursuant to further
questions posed by the Chief of Operations Mostert submitted to him
two memoranda, one on 1 August 2008 and one on 22 August 2008.
(15)
On
22 September 2008 the CFST prepared a recommendation for submission
to the PRC which is the same as the recommendation it prepared
on 5
June 2008 but did not submit.
(16) On 22
September 2008 the PRC considered the recommendation at a special
meeting. The second extension granted to Ericsson
to demonstrate
its equipment was considered. The minute of the meeting records the
following:
‘
Mr Khoza
referred the members to an e-mail sent by the Vice President of
Ericsson to Ms Pahlane on the 11 April 2008 motivating
the extension
that was requested and stating the reasons for the extension as
being wrong cables/equipment and indicated that
the members approved
the revised date for the testing on 9 April 2008 based on the
technical report provided by Telkom’s
technical team which
indicated that the equipment was damaged/faulty and not wrong. The
wrong equipment illustrates that Ericsson
was not ready and should
therefore not have been allowed the extension. He further indicated
that the previous of the PRC to
extend the testing date for Ericsson
was based on the wrong or misrepresented information.
Mr Roodt enquired
why the PRC Chairperson to whom the e-mail was addressed did not
bring the matter to the members for discussion
and why Ericsson was
allowed to continue with the testing.
The Chairman requested suggestions
from the members on how the matter should be addressed and
thereafter suggested that the validity
of the extension to Ericsson
be investigated by internal audit to ensure that procedurally
Ericsson was not given an unfair advantage
with the approval of the
revised testing date.
Mr Khoza required confirmation as to
whether the recommendation will be resubmitted together with the
audit findings.
The Chairman indicated that he would
request for the internal audit to be completed by Friday 26
September 2008 and the recommendation
will be presented together
with the audit findings at the next PRC meeting.
All members agreed to above
suggestion by the Chairperson.
Decision: Referred back for decision
at the next PRC meeting including the internal audit findings.’
(17)
On
1 October 2008 the internal auditor furnished his report to the
Chairperson of the PRC. The report sets out the facts relating
to
Ericsson’s testing of the equipment as follows:
‘
Procurement Services obtained
approval from the Procurement Review Council (PRC) on 20 October 2007
to republish an open RFP 4 Point
2 Point Split Radio Equipment. The
tender was published on 22 November 207 and on 24 January 2008 the
short listed bidders were
notified that Telkom would like to test
their equipment.
E
ricsson
SA (Pty) Ltd chose to test with Telkom locally, the agreed date being
17 March 2008. The test date was moved to 7 April
2008 on request of
Ericsson. On 7 April 2008 testing was hampered due to damaged
equipment, faulty cables and misunderstandings
by Ericsson’s
staff as to what the testing should entail (problems that one would
think should have been sorted out upfront
given the significance of
the contract and the additional extension in deadlines allowed before
testing occurred). Testing was
unsuccessful notwithstanding the fact
that the Telkom evaluation team were very accommodating from what TIA
can gather ito the
documentation reviewed. Telkom requirements for
the test scenarios were also clearly communicated. On 9 April 2008
the Vice President
(VP) of Ericsson contacted Telkom requesting
another extension to test and followed up with a letter on 11 April
2008 to the Chairperson
of the PRC indicating that the testing should
have been done abroad and that the wrong cables were shipped to SA.
The PRC was
concerned about granting an additional extension and
referred the matter to Telkom’s Legal Department. Telkom’s
Legal
Department advised that Ericsson should be given a further
(second) extension to bring their equipment to SA to do the testing.
This decision was based on an earlier extension for another bidder.
Following this advice the PRC voted in favour of the extension
and a
letter was sent to Ericsson indicating the new test date of 7-11 May
2008.’
The auditor made
a number of recommendations.
(18)
On
2 October 2008 the PRC considered the report. The minute reflects
the following in respect of RPF085/07:
‘5.1
Feedback:
Recommendation to Award of RFP085/07 for the end to end
solution of point to point mount radio equipment. Mr Marius
Mostert raised an issue WRT the fact that he was informed by
a member of the SME team that they were labelled liars
by a
member of the PRS and that this was a seriously allegation. Mr
Zethembe Khoza reaffirmed his statement and indicated
that his
view on this matter remain the same. The Chairperson
indicated that this concern was noted.
The recommendation was presented for
award by the CFST to PRC on 22 September 2008. Members were not in
agreement with the recommendation
by the CFST as it was believed that
Ericsson’s final technical scores was as a result of a second
approval granted by Telkom
to Ericsson for testing which was based on
faulty/damaged equipment vs Ericsson’s referral to wrong
equipment.
This raised concerns regarding the
validity of the extension granted to Ericsson and the impact thereof
on the award.
Mr Augustine indicated that PRC
members agreed to refer the matter to Telkom’s Internal Audit
Division to ascertain whether
the tender process was compromised by
granting Ericsson additional time for the testing and revert back to
the PRC with the intention
of making a decision on the award. The
audit findings were presented to members.
Minutes of the Special PRC held on 22
September were read and were accepted as true reflection of what was
discussed at the meeting.
The internal auditor report from Audit
Division was also circulated and discussed at length.
Based on the audit findings the
members voted as follows:
Anton Klopper: Based on the current
backlog in respect of facilities to the MCOs and VANS providers,
supported a dual supply as
per the recommendation presented by the
CFST however for a two (2) year period only, with an option to extend
for one (1) year.
Gary Reddy: The same as Anton Klopper
however would like the split in business to be reviewed and increased
with the bidder that
provide the best price after the turnkey prices
is finalised with Ericsson.
Marius Mostert: The same as Anton
Klopper and emphasised the need for a dual supply to support Telkom’s
market requirement
and also informed the members that the test was
inclusive based on the SME visit on 7 April 2008 and therefore had to
be done on
6 May 2008 to obtain conclusive results.
Bruce Harbour: The same as Anton
Klopper and Gary Reddy.
Zetheme Khoza: Supported a single
supply award to Telsaf Data (Pty) Ltd since their proposal complied
fully with all Telkom procedures
and based on their pricing. Mr
Khoza also indicated by granting the award to Ericsson will question
Telkom ability to uphold its
own policies and procedures as he
believes that the process was not transparent with equitable
treatment of all vendors; one PRC
member was involved in discussion
with a vendor during the process and that Maredi’s
non-compliance was not material. He
recommended that a faze-in
faze-out approach should be adopted to bring the new supplier, Telsaf
up to speed.
Stafford
Augustine: The Chairperson informed members prior to requesting them
to vote that when making a decision that their voting
should be a
business decision for Telkom, in the best interest of Telkom and also
clarified with Anton Klopper as to whether the
process could be
defended in a court of law.
Based on Anton Klopper’s
response that the process is defendable the Chairman supported a dual
supply as per the recommendation
represented by the CFST however for
a two (2) year period only, with an option to extend for one (1)
year.
To the point of Mr
Khoza, Mr Mostert indicated that his interactions was only around the
logistics of the testing as the international
trip was not approved
and that the finalisation of the testing was done in conjunction with
Procurement. He also indicated that
no unfair advantage was given to
Ericsson as the first test was inconclusive.’
(19)
On
8 October 2008 the Chief of Operations addressed the following
letter to the Chairperson of the PRC:
‘I have
feedback from
one
of my representatives in the PRC that reported to me serious
anomalies and lack of transparency, failure to meet Telkom’s
policies and procedures, lack of equitable treatment to bidders.
He
pointed out that these procedural anomalies are most certainly and
materially damaging for Telkom. Among them he stated the
following:
(1) Modification
of specification after bid closure without consulting the Business
Owner who approved the specification.
(2) Unfair
and inequitable treatment of bidders by giving bidder(s) that fail
tests a second opportunity without disclosure to
others and without
due consideration of equitable treatment.
(3) Possible
tampering in procurement process by some of the PRC who talk,
consult or advise bidders outside the process of tender
while the
tender is under evaluation.
(4) Possible
misrepresentation and/or withholding of information to conceal the
accurate picture of events and this influence
the outcome of a
tender adjudication process.
I
need your response to this memo before Friday 10
th
October 2008 because I intend to table it in the EXCO of next Monday
13 October 2008.
Please
be aware, that I don’t discuss the Procurement tenders and bid
but need assurance from my representatives that the
principle of
fairness, equitable treatment and transparency are upheld in order to
protect the company. Lastly, I signed the specification
in my areas
of responsibility to ensure that I can meet my deliverable.
Compromise of these deliverables, specification and business
operational tactics compromise my success rate to deliver for
customer, shareholders and others.’
(20)
On
10 October 2008 the Chairperson of the PRC replied to this
memorandum as follows:
‘
Your
memorandum dated 8 October 2008 under the same heading refers. I
will address the issues raised in respect of the perceived
anomalies
in the PRC in point format.
1.
Modification
to specification after bid closure
The bid in question is the
Construction Consolidation bid where the critical criteria for
engineering works was relaxed since only
two bidders, at that stage,
would meet Telkom’s critical criteria under Engineering. The
SME team submitted a request in
order to mitigate the risk to Telkom
and requested relaxation on one or two areas of the critical area
under Engineering, so as
to allow for greater participation of
bidders to the benefit of Telkom. The relaxation was done in
consultation with Legal Services
and was applicable to all the
bidding entities. No bidding entity was prejudiced through this
relaxation. The Business Owner
was represented at SME, CFST and PRC
level.
Furthermore, the submission to EXCO
fully discloses this relaxation and EXCO will have all the relevant
information to enable them
to either accept or reject the
recommendation for award coming from the PRC.
2.
Inequitable
treatment of bidders – allowing ‘re-test’
without
disclosure to other bidders
This
issue refers to the fact that a specific bidder was allowed a second
extension to do equipment testing. I need to add that
another bidder
was also given an extension to test their equipment. The second
extension to allow for a further test date was
previously granted by
the PRC on 9 April 2008 after some intense discussions. The testing
was then commenced on 6 May 2008.
The
matter of allowing a second testing date to the said bidder was
brought up again on 18 September 2008 and the PRC suggested
that an
audit should be done by Internal Audit to determine if the tender
process was compromised and/or complied with in granting
this
extension.
The
audit report indicated that Telkom should weigh up its reputational
risk as far as not honouring their approval to allow testing
by the
bidder or to consider non-compliance to our internal policy which
states that “a bidder/tenderer
might
be
disqualified if the demonstration is late. Telkom reserves the right
to extend the demonstration date. Applications must be
submitted to
Procurement in writing at least one week before the deadline.”
This
testing arrangement between Telkom and the said bidder was based on a
request from the bidder that was approved by Telkom and
needed no
further disclosure to any other bidder.
The
PRC took cognizance of the audit report when they arrived at their
recommendation to EXCO. This audit report and the testing
by the
said bidder are also disclosed in the submission to EXCO.
3.
Possible
tampering in Procurement process by
some
PRC members
This matter was also raised at the PRC
and the member involved indicated that he was contacted by the bidder
after the earlier inconclusive
test and subsequent to the
non-approval of the international testing. The member indicated that
although his section is responsible
for the equipment, he always
referred the bidder to Procurement with respect to the logistics of
conducting the test.
However, if strong evidence suggests
any irregular behaviour by any PRC member, the matter can be referred
to TARPS for further
investigation.
Problems of this nature can be
mitigated in future by having PRC members recusing themselves when
bids for their environments are
discussed.
4.
Possible
misrepresentation
I
would only be able to respond effectively to this point when I have
more information on the matter. If it refers to the matter
of the
cables used by the bidder during the testing, the minutes of the PRC
held on 9 April 2008 was reviewed by the PRC and from
this it was
clear that active debate took place on the extension matter and that
the decision to extend was properly discussed
by the PRC before an
extension of the test date to the bidder was granted. The allegation
of misrepresentation by the SME team
is serious and should be backed
up with evidence so that proper action can be initiated internally.
I hope you will
find
the above explanations in order and would like to reaffirm that the
PRC will always operate with the highest integrity and in the
best
interest of Telkom.’
(21)
On
13 October 2008 the PRC prepared a recommendation for submission to
EXCO. The PRC’s recommendation was as follows:
‘In
terms of clause 6.3.6.4(c) of the Delegation of Authority this
recommendation is submitted to the executive committee
for approval
to award RFP085/07 for the provision of End-2-End Solutions for Point
to Point Split Mount Radio Equipment as follows:
To bidder no 9 (nine), Telsaf Data
(Pty) Ltd and bidder no 7 (seven), Ericsson SA (Pty) Ltd who ranks
first and second respectively.
Based on dual supply principles this
business should be split between Telsaf Data and Ericsson in a 60
%-40 % ratio respectively.
However, the proviso should be that
Ericsson aligns their turnkey costs to those as proposed by Telsaf
Data. The business split
will be adjusted accordingly based on the
total costs of all three scenarios after Ericsson have revised their
pricing.
For a two (2) year
period, with an option to extend for 1 year.’
(22)
On
15 October EXCO considered the PRC’s recommendation and the
minute reflects that –
‘With
the exception of Mr Nzeku (i.e. the Chief of Operations) who had
reservations concerning the testing, a conditional
approval to
approve the recommendation from Procurement to award RFP085/07
provisioning of End-2-End Solutions for Point to Point
Mount Radio
Equipment to Telsaf Data and Ericsson was granted. The Acting Chief
of Finance had to request confirmation where Maredi
stated that it
had not met the technical criteria and report back to the CEO before
unconditional approval was granted.
Concern
as to changes to procurement processes and role of the business owner
were expressed. It was agreed that:
1. A
letter from the CEO be drafted addressed to Procurement where it
must be emphasised that before any change to any rule is
implemented, that this be properly approved and the consequence of
such a change be examined very carefully. Mr Fredericks
to draft;
2. The
business owner has an important role in the procurement process and
also needs to take certain responsibility with the
evaluation
process. Mr Fredericks to resolve with Procurement;
3. Legal
can not have a dual role within Procurement. It cannot be a part of
the award decision making process and then provide
an opinion as to
that process. Adv Rasetaba and Mr Fredericks to resolve.’
(23)
Pursuant
to the decision taken by EXCO on 15 October 2008 Mr Deon Fredericks,
the Acting Chief of Finance, reported back to the
CEO in a
memorandum dated 27 October 2008. Apart from verifying that Maredi
had confirmed that it had not complied with the
technical
specifications, Mr Fredericks reported on two other matters: viz –
(i) Whether the
extension granted to Ericsson for the purpose of testing its
equipment invalidates the tender process; and
(ii
) Whether
the interaction between Mr M. Mostert, a member of the PRC, and a
representative or representatives of Ericsson ‘impacted
negatively on the tender process’.
With regard to the
question of whether Maredi confirmed that it did not comply with the
technical specifications Mr Fredericks
verified that Maredi conceded
this and that non-compliance was confirmed by Telkom’s
technical evaluation report. With regard
to the extension granted to
Ericsson Mr Fredericks observed that it is clear from the audit
report of 1 October 2008 that the extension
was not appropriate and
that this was confirmed by a report from the evaluation team which
made it clear that Ericsson was not
ready to perform the test. Mr
Fredericks nevertheless expressed the view that ‘in the light
of the extension given to Ericsson
we need to continue and cannot
retract the approval now’. With regard to the interaction
between Maredi and representatives
of Ericsson Mr Fredericks reviewed
the internal audit report which confirmed that the interactions had
not influenced the extension
granted by the PRC. Mr Fredericks’
conclusion was that EXCO could approve RFP085/07 as proposed by the
PRC.
(24)
In
November 2008 Mr Fredericks met Mr September, Telkom’s CEO, to
discuss the memorandum and on 20 November 2008 Mr September
decided
that the conditional approval of the PRC’s memorandum could be
considered to be unconditional. On 1 December 2008
Telkom sent
letters of award to the successful tenderers.
[12] In its heads
of argument Maredi contends that it has established a very strong
prima
facie
case
and that this
prima
facie
case
is so strong that it need not show that the balance of convenience
favours it strongly. In Maredi’s heads of argument
Maredi
deviates from the grounds set out in its founding affidavit and
contends that it has shown that it has a very strong case
that the
decision to award the tender will be set aside on the following
grounds:
(1) Telkom’s EXCO (and CEO) took
their decision on the basis of a misrepresentation to them that the
applicant admitted non-compliance
with the technical critical
criteria;
(2) Telkom’s decision not to
award at least part of the tender to Maredi, on the basis that Maredi
did not meet the requisite
technical critical criteria, is vitiated
by the fact that, in truth, it did meet those criteria; and
(3) The manner in
which Telkom extended the dates for testing Ericsson’s
equipment was procedurally unfair and demonstrated
improper
favouritism.
[13] For the first
two grounds Maredi relies on s 6(2)(e)(iii) of PAJA;
Swart
v Minister of Law and Order and Others
1987
(4) SA 452
(C)
at
479H-480D;
Pepkor
Retirement Fund and Another v Financial Services Board and Another
2003
(6) SA 38
(SCA)
paras
47 and 48;
Government
Employees Pension Fund and Another v Buitendag and Others
2007
(4) SA 2
(SCA)
paras
11 and 12;
Chairpersons
Association v Minister of Arts and Culture
2007
(5) SA 305
(SCA)
para
48 and
Hangklip
Environmental Action Group v MEC for Agriculture Environmental
Affairs and Development Planning
2007
(6) SA 65
(C)
at
80G-82B. For the third ground Maredi relies on s 6(2)(a)(iii) of
PAJA.
[14] It will be convenient to consider
the first two grounds together. The first ground is based on
Telkom’s own evidence
and was not alleged in the founding
affidavit. Maredi contends that the decision to award the tender was
premised on the understanding
by EXCO and Telkom’s CEO that
Maredi had confirmed that its tender did not comply with the
requisite technical specifications
whereas in fact –
‘
A dispute existed between the
applicant and representatives of the third respondent as to whether
or not features that the applicant’s
tender admittedly lacked
were features that were required, on a correct construction of the
technical critical criteria.’
Maredi contends that for purposes of
this ground –
‘
The relevant
issue is not the correctness of the applicant’s assertion that
it complied with the technical critical criteria
but the fact of the
existence of a dispute as to this issue. EXCO sought an assurance
that the applicant
admitted
its non-compliance and the tender decision was premised on an
erroneous belief that it had done so. Had EXCO been aware of the
existing as to the proper interpretation of the technical critical
criteria, it would have been called upon to determine whether
the
applicant was correct in its assertion in relation to this
interpretation issue, but it never considered that issue because
it
had been misled as to the applicant’s stance.’
[15] The second ground is also based
on an alleged dispute as to the specification with which Maredi was
required to comply. These
are set out in the specification for
Point-2-Point Split Mount Radio Equipment (specification number
SP-1659). The alleged issue
is whether Maredi’s equipment was
required to provide all the functions listed simultaneously or not.
It is common cause
that Maredi’s equipment cannot provide all
the functions simultaneously. Maredi’s heads of argument
summarised the
central issue as follows:
’49. The
question that arises for consideration is who has correctly
interpreted the technical critical criteria
specifications. Is
the third respondent’s interpretation as encapsulated by
Giel Laubscher’s summary on P1096
correct or is that of the
applicant?
50. It is clear
from a reading of section 7.2.1h that the platform must be able
to support multiple interfaces and in addition
must have a cross
connect functionality.
51. The question
arises whether it must be able to support the multiple interfaces
while being utilized in the cross connect
mode – 4 way or 8
way.’
[16] For these two grounds the
applicant is largely dependent on the facts set out in Telkom’s
answering affidavit which for
present purposes must be accepted as
correct. Maredi either cannot or does not dispute most of this
evidence and relies on inferences
and argument in its replying
affidavit. The two witnesses are Mechiel Johannes Laubscher,
Telkom’s Manager of Wireless and
Electromagnetic Compatibility,
who was part of the SME which tested the equipment and Deon Jeftha
Fredericks, a chartered accountant,
who is Telkom’s Group
Executive: Corporate Financial Accounting Services.
[17] The following evidence by
Laubscher is admitted by Maredi –
(1) He
has been employed by Telkom since 1984 and since then has had
substantial experience in Transmission and Microwave the
technology
relevant to the tender. While working for Telkom he has received
considerable technical training and he has been
registered as a
professional technologist with the Engineers Council of South Africa
since 1999;
(2) In about 2006
he was involved in compiling the technical specifications, including
SP-1659 (which contains the contentious
items, 4, 6, 8 and 10) for
the tender. Spec – 1659 covers the technical requirements for
the equipment involved in the
tender;
(3) The
tender was published for Point-2-Point Microwave Equipment making
use of a Multi Server Provisioning Platform (MSPP) capable
of
interfacing with PDH, SDH, and Ethernet with the future inclusion of
Native Ethernet Capability. Telkom’s business
objective was
to acquire a solution that would suit its needs by being more cost
effective and efficient: e.g. by simplifying
the installation and
maintenance by having an MSPP solution which meets the specification
requirements of SP-1659;
(4) On 29 November
2007 Telkom had a bidders’ conference to give Telkom and
bidders an opportunity to clarify the bid requirements.
Maredi’s
representatives attended and participated at the conference.
Laubscher gave a presentation at the conference
and explained all
technical aspects fully;
(5) In the Life
Cycle Costing Telkom instructed the bidders to list all the
equipment offered in the tender;
(6) The SME
evaluated Maredi’s bid in four phases –
(i) Between 2
January 2008 and 18 January 2008 SME conducted a paper evaluation.
In this phase Telkom relied on the information
presented by the
bidder and accepted it as correct without testing the truthfulness
or accuracy thereof. In order to qualify
for inclusion in the
shortlist a fully compliant statement against all critical criteria
was required;
(ii) Maredi
submitted one offer which included the NEC Pasolink Neo. Maredi
indicated full compliance with all Telkom’s
technical critical
criteria. During the paper evaluation phase Telkom relied on the
answers given by bidders. The statement
(correctness) is only
tested later;
(iii) Based on
Maredi’s written responses to the technical critical criteria
in the tender conditions Maredi was short listed
for further
participation;
(iv) Between 14
January 2008 and 1 February 2008 the SME conducted a second paper
evaluation which involved scoring technical
non-critical criteria
against a pre- determined scoring matrix;
(v) The
third phase involved furnishing each short listed bidder with
Telkom’s requirements of the configurations to be
tested. On
8 February 2008, at a clarification session, Telkom explained the
test configurations to the short listed bidders.
The tests are
designed to determine whether the short listed bidders actually
comply with the technical critical criteria and
the criteria of high
importance. Telkom communicated the test configuration to Maredi
and all the other short listed bidders.
On 14 February 2008 Maredi
acknowledged receipt of the test configuration by e-mail. In this
e-mail Maredi indicated that
it would not be able to comply with
test setup 4 of Telkom’s test configuration at the time of
testing and that the Neo
Enhanced Nodal (which was not offered when
the bid closed) would only be available in June 2008;
(vi) Between
31 March 2008 and 4 April 2008 in the fourth phase, SME conducted
the physical testing of Maredi’s equipment.
This involved
the physical testing of the equipment based on the four test
setups which Telkom had communicated to Maredi;
(vii) Maredi’s
equipment was found to be satisfactory in the tests for setups 1 to
3. However Maredi’s equipment was
found to not comply with
Telkom’s requirements when tested in setup 4;
(viii) On
completion of the evaluation phase Laubscher prepared a table
depicting Maredi’s failure to comply with the critical
criteria;
(ix) After the
evaluation phase was completed clarification sessions were held to
enable Telkom to clear up any remaining uncertainties
in respect of
compliance with the critical criteria. These clarification sessions
involved written questions and answers. During
the clarification
session held on 20 May 2008 Maredi indicated that its equipment did
not comply with the functionality required
in respect of SP-1659
para 7.5.1 a, c, d, e and g. Furthermore, in a letter dated 27 May
2008 addressed by Maredi to Telkom,
Maredi stated that ‘the
SDH Nodal solution one box equipment will be available in June
2008.’ Laubscher states that
this was non-compliance with an
MSPP solution (i.e. SP-1659 para 7.3.2.1(h)(i), (ii) and (iii));
(x) The SME found
that Maredi’s equipment was non- compliant with the technical
critical criteria and was accordingly disqualified
from the tender.
This is reflected in the SME’s recommendation to the CFST, the
CFST’s recommendation to the PRC
and the PRC’s
recommendation to EXCO;
(xi) Laubscher has
no personal interest in the testing that was conducted or in the
award of the tenders to any of the bidders.
Furthermore, the SME
team executed its mandate professionally and impartially. Its
function was to test the equipment offered
in each short-listed bid
documents in a professional and unbiased manner. This was done in
respect of each of the short-listed
bidders. (As appears from the
personnel listed above, when the SME evaluated the tenders it
consisted of 19 members of which
Laubscher was one.).
[17] The following
evidence of Fredericks is not or cannot be disputed by Maredi –
(1)
When
the tender was awarded he was one of the members of Telkom’s
EXCO. (The other members are listed above. With Diedericks
they
are number 7 and include all of Telkom’s chief officers.) He
conducted the investigation requested by EXCO at its
meeting on 15
October 2008;
(2) On
15 October 2008 EXCO provisionally accepted the recommendation of
PRC to award RFP085/07 to Telsaf and Ericsson subject
to the Acting
Chief of Finance (Diedericks) obtaining confirmation that Maredi had
stated that it had not met the technical criteria.
On such
confirmation being provided to the CEO (September) PRC’s
recommendation would be unconditionally accepted. (My
paraphrase of
the EXCO minute, annexure DF2 at p429);
(3) Diedericks
investigated whether Maredi had stated that it did not comply with
the technical criteria and reported to the CEO
by means of a
memorandum dated 27 October 2008. Diedericks had to report to the
CEO to satisfy the CEO that Maredi had confirmed
(in its own
documentation) that it had not complied with all the technical
specifications;
(4) In addition to
the matters referred to in the minute Diedericks was required to
consider whether the extension granted to
Ericsson for demonstrating
its equipment invalidated the tender process. During his
investigation Diedericks also considered
whether the interaction
between Marius Mostert and a representative or representatives of
Ericsson impacted negatively on the
tender process;
(5) In his
memorandum to the CEO Diedericks confirmed that Maredi had stated
that it did not comply with all the technical specifications
and
that this was in accordance with Telkom’s technical evaluation
report; that although the extension granted to Ericsson
was not
appropriate in the circumstances, approval had been granted and it
could not be withdrawn and that although one member
of management
had interacted with Ericsson this did not influence the extension
granted by the PRC. Diedericks concluded that
Telkom could accept
the PRC’s recommendation to award the tender to Telsaf and
Ericsson;
(6) The technical
evaluation report dated 21 May 2008 was prepared by the SME team
and states the following with regard to
Maredi’s
non-compliance with items 6 and 10 of SP-1659:
‘Items
6 & 10: The aggregation node offered as the Nodal concept is a
2 way DXC card, and was not used for demonstrating
test setup 4.
This card does not have an STM-1 interface on the unit as required
by Spec 1659 par 7.2.1h(i). Impact of this
non-compliance is very
limited capacity.
The
solutions tested in setup 4 was not offered in the bid, it will be
commercially available in June 2008 according to the road
map
information received in February 2008. At the time of testing no
Ethernet interface was available on this card as required
by Spec
1659 par 7.2.1h(i). Non-compliance to this criterion will put Telkom
in a position where we will not be able to comply
with the latest MCO
requirements iro backhauling.
Bidder 1 provided a Neo Nodal for
testing but was not offered in the bid documentation. A Neo Enhanced
Nodal chassis was available
for viewing only – it could not be
powered up and the functionality could not demonstrate in any way.
Item
6: A single platform is required which offers converged services in
order to enable Telkom to grow into an NGN environment
seamlessly.
This type of solution is very flexible and scalable to allow for
network evolution and growth. The initial cost of
this solution is
higher compared to a standalone microwave system, but it becomes more
cost effective as the demand for more capacity
at a site grows.
Growing the site will only require the addition of outdoor units,
antennas, modem cards, interface cards and
licenses as necessary –
all indoor infrastructure (including the sub-rack, the controller
cards, element management connectivity,
power supplies, power
cabling, and floor space) have already been included in the initial
SAPEX cost. The system offers a pay
as you grow option. This
platform will also reduce OPEX costs as it allows for remote traffic
configuration and routing.
If
all the required interfaces cannot be provided on one platform, it
implies that additional equipment needs to be purchased to
satisfy
the interface and cross connect requirement. This additional
equipment (such as an Ad Drop Multiplexer) will increase
the cost to
Telkom (additional training, spares holding, Element Management
System connection) as well as introduced more potential
points of
failure.’
1.3.6 result subsequent to second
clarification session.
1.3.6 Bidder 1 –
Although the bidder claims compliance, no evidence could be found
that supported the claim that the
equipment was in fact offered in
the bid. This response given is in spite of it being stipulated
during the clarification
session that the bidder must reference
Volume, page and paragraph to substantiate a claim of compliance.
According to the
technical SME team and the LCC team, bidder 1 did not offer the Paso
link Neo Nodal as no technical references
as stipulated during the
clarification could be found and no costing information was
furnished. In addition, no critical criteria
SOC or any other SOCs
were submitted for the Paso link Neo Nodal. The bidder replied that
they did offer this solution but still
did not provide references to
substantiate their claim. Please refer to annexure A question 3
bullet 1.’
1.3.7 Explanation
of non-compliances with respect to table 4 (also referenced in
table 7)
1.3.7 Bidder 1
Item 10 The specification requires
STM-1 and gigabit Ethernet interfaces (items e and g respectively).
The bidder states the following
for the 2 Way DXC which was offered
and costed: … as for items e and g does not warrant the air
interface in this configuration
which is a maximum of 100 MBit/s’
Please refer to annexure A question 2. Please note that the 2 Way
DXC expandable card
which is used in the Paso Link Neo Nodal, can be
interconnected with each other to form an 8 Way System but this card
was not offered
in the LCC or technically (also no reference given as
stipulated during the clarification session). The 2 Way DXC card
does not
have this function. It is thus clear that the bidder
indicates non-compliance to the requirement of an STM-1 and Gigabit
Ethernet
interfaces based on the “maximum 100 MBit/s”
statement.
In addition, the bidder also indicates
non-compliance to the critical criteria in accordance to Annexure A
paragraph 3, bullet 4,
that no Ethernet interfaces are available on
their Paso Link Neo Nodal at this point in time but will be available
in June 2008.
Recommendations
The technical SME team recommends
that:
…
Bidder 1 cannot be considered as a
supplier at this particular point in time, since they did not fully
comply with the critical
criteria as on 20 December 2007 as per the
bid documentation and as confirmed during subsequent clarification
exercises. Compliance
would however have been possible if the date
of closing of the bid was June 2008’
[18] Laubscher’s and Diederick’s
evidence is supported by contemporaneous documents whose contents
have not been disputed.
With regard to Maredi’s first ground,
which is not a ground relied upon in the founding affidavit. It is
striking that –
(1) During the
clarification session held on 20 May 2008 Maredi’s
representative conceded that it did not comply with certain
critical criteria. In Maredi’s replying affidavit, Maredi
admits that its answers given at the clarification session created
the impression that Maredi conceced that because the 2 way Card did
not support converged services and multiple interfaces
simultaneously and because the Paso Link Neo Nodal that was offered
to Telkom’s test team did not have Ethernet interfaces,
the
tendered product did not comply with the critical criteria (replying
affidavit p1209 para 17.8-1211 para 17.16).
(2) When Maredi
allegedly discovered this erroneous response, on 27 May 2008 it
addressed a letter to Telkom in which it said
‘the proposed
equipment from Maredi/NEC does meet all Telkom’s critical
solution criteria and hence the fact that
we conducted the testing
in Japan successfully … in all 3 scenarios that was
requested which are in line with the tender
specifications
Maredi/NEC do comply fully with each piece of equipment
requested … The roadmap that was submitted,
for the
non- critical requirements, to Telkom during the clarification
indicated that the SDH Nodal solution one box type equipment
will
be available in June 2008 (annexure TU13 p315);
(3) This letter
does not allege that Maredi erroneously answered the questions at
the clarification session or how this error arose,
that Maredi
disputes that it required to deliver equipment which could perform
according to setup 4 and could perform according
to the tender
requirements.
There is
accordingly no basis for finding that Diecericks erred for holding
that Diedericks erred in finding that Maredi did not
comply with the
critical criteria. Even if Maredi is committed to rely on the first
ground it is not borne out by the evidence.
[19] With regard to
the second ground the key issue is the correct interpretation to be
given to SP-1659. Maredi concedes that
if Telkom’s
interpretation is correct Maredi’s equipment did not comply
with SP-1659 in all respects.
[20] The main
difficulty for Maredi to overcome is that in terms of clause 4 of
the Proposal Conditions for RFP085/07 Maredi was
obliged to accept
Telkom’s interpretation of any specific requirement in the RFP
document if there was a difference of
interpretation between Maredi
and Telkom. In view of this provision there is no room for Maredi
to contend now that its interpretation
is correct and Telkom’s
is not. Furthermore, the following object facts militate against a
finding that Maredi’s
interpretation is correct:
(1) At the bidders
conference Maredi was entitled to question the requirements of the
tender. It did not do so. Laubscher testified
that Telkom’s
requirements were fully explained at the conference. Maredi’s
replies are a bald denial;
(2) After the
bidders were short-listed Telkom sent to each short listed bidder
its requirements of the configurations to be tested.
Maredi did not
object to setup four and to sate that the equipment was not required
to perform in accordance with setup 4;
(3) At a
clarification session held on 8 February 2008 Telkom explained these
test configurations to Maredi and the other short
listed bidders.
Maredi did not object to setup 4 and state that the equipment was
not required to perform in accordance with
setup 4. Maredi’s
bald denial that the test configurations were not explained is not
convincing. Maredi’s e-mail
to Telkom dated 14 February 2008
(MJL 6 p 1045-1046) states that it will be able to have test setups
1, 2 and 3 ready for SME
to evaluate; that with regard to test
setup 4 the fully functional setup (i.e. the Neo Enhanced Nodal)
will be ready by June
2008. The e-mail concludes by saying:
‘
It is our
understanding that due to the fact that in specification 1659 there
was no clear requirement for such a product but we
do recognise that
in the clarification meeting it was mentioned to such “additional
requirements” must be available
within 6 moths to which we
will comply’;
(4) At the
clarification session held on 20 May 2008 after testing Maredi’s
representative conceded that Maredi’s
equipment did not comply
with all applicable critical criteria. There is no suggestion in
the record that Maredi objected to
Telkom’s interpretation of
the specification;
(5) After
Maredi allegedly discovered that this concession was wrong it did
not convey this to Telkom or explain how the error
arose and allege
that Telkom’s interpretation was wrong;
(6) There is no
indication in the papers that any other short-listed bidder had
difficulty in interpreting the specification as
Maredi allegedly
does;
(7) Two other
short-listed bidders Mobax and Ericsson were able to perform setups
1 to 4 during the test phase;
(8) Maredi raises
the interpretation of the specification as a substantive issue
only after its tender was not accepted.
[21] In view of
Telkom’s evidence and the probabilities disclosed by the
objective facts Maredi has a very weak case in respect
of the second
ground.
[22] With regard to
the third ground it seems clear that whatever the reason, whether it
be faulty test equipment or faulty tender
equipment, Ericsson failed
the physical test phase and for that reason alone should have been
disqualified from the tender. It
also seems clear that there were
improper communication between Ericsson and Marius Mostert which
probably resulted in Ericsson
having a second opportunity to
demonstrate its equipment. For present purposes it will be accepted
that this is so. It will also
be accepted that this shows bias in
favour of Ericsson on the part of Telkom and that this is
procedurally unfair
vis-à-vis
the
other short-listed bidders who were not disqualified: Telsaf and
Mobax. Nevertheless, in my view, this does not warrant the
grant of
interim relief in favour of Maredi. The reasons for this are
threefold:
(1) Maredi’s
case on the first and second grounds is very weak: i.e. there is
little or no likelihood that Telkom’s
decision to exclude
Maredi will be set aside;
(2) Neither Telsaf
nor Mobax seeks an order that the award of the tender to Telsaf and
Ericsson be set aside;
(3) The decisions
to extend the date for the testing of Ericsson’s equipment
and effectively give Ericsson a second opportunity
to demonstrate
its equipment were taken by PRC which is authorised to take such
decisions. These decisions are substantive
decisions which should
have been the subject of attack in the review.
[23] In addition,
as already pointed out the balance of convenience heavily favours
Telkom and not Maredi. During argument Maredi’s
counsel
conceded that unless the court found that Maredi has a very strong
prima
facie
case
it would not be entitled to interim relief. A last and not
unimportant factor which weighs with me is that Maredi approached
the
court with a case based on documents that seem to have been
wrongfully or unlawfully obtained from Telkom. Telkom and Ericsson
pertinently requested that Maredi explain where it obtained these
documents and Maredi failed to do so. The obvious inference
is that
Ericsson and Telkom’s contention is correct: that Maredi
obtained the documents by some wrongful or unlawful means.
I am
hesitant to assist an applicant who approaches the court for relief
in these circumstances.
Order
[24] The
application for interim relief in terms of Part A of the notice of
motion
is dismissed with costs, such costs to include the costs consequent
upon the employment of two counsel by each of the first
and third
respondents.
_______________________
B.R
SOUTHWOOD
JUDGE OF THE
HIGH COURT
CASE NO:
597/09
HEARD
ON: 20 February 2009
FOR
THE APPLICANT: ADV. A.J. FREUND SC
ADV.
M. SMIT
ADV.
M. SELLO
INSTRUCTED
BY: Mr. J. Feris of Cliffe Dekker Hofmeyr Inc.
FOR
THE FIRST RESPONDENT: ADV. D.N. UNTERHALTER SC
ADV.
A. COCKRELL
INSTRUCTED
BY: Mr. D.M. Pretorius of Bowman Gilfillan
Attorneys
FOR
THE THIRD RESPONDENT: ADV. D.A. PREIS SC
ADV.
C. WOODROW
INSTRUCTED
BY: Mr. G.K. Hay of Mahlangu Inc.
DATE
OF JUDGMENT: 17 April 2009