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[2009] ZAGPPHC 74
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Stefanutti & Bressan Earthworks (Pty) Ltd v Minister of the Department of Water Affairs and Others (51646/2008) [2009] ZAGPPHC 74 (26 May 2009)
IN THE HIGH COURT OF
SOUTH AFRICA
(NORTH AND SOUTH
GAUTENG HIGH COURT, PRETORIA)
DATE: 26/05/2009
CASE NO: 51646/2008
UNREPORTABLE
In
the matter between:
STEFANUTTI
& BRESSAN
EARTHWORKS
(PTY) LTD APPLICANT
And
THE
MINISTER OF THE DEPARTMENT
OF
WATER AFFAIRS 1
ST
RESPONDENT
REALEKA
INVESTMENTS (SA) (PTY) LTD 2
ND
RESPONDENT
MASWIKENG
PROJECT MANAGEMENT
AND
CONTRACTORS 3
RD
RESPONDENT
KAULANI
CIVILS (NORTH) (PTY) LTD 4
TH
RESPONDENT
JUDGMENT
SERITI, J
1.
Introduction
This matter came to
court by way of motion.
In the notice of motion
the applicant is seeking an order in the following terms:
“
1. That the award
of the tender in Contract no. W9760 for Dam Safety Rehabilitation:
Phase 1: Mashashane Dame to a joint venture
between the Second and
Third Respondents, known as Maswikeng Realeka JV be reviewed and set
aside;
2. That the aforesaid
contract is awarded to the Applicant; alternatively that the First
Respondent is ordered to take all necessary
steps to effect an award
of the tender in the aforementioned contract to the Applicant; …”
2.
Founding
Affidavit
It was attested to by Mr
Russell Crawford the Managing Director of the applicant. He alleges
that on 24 January 2008 the
applicant submitted its duly
completed tender documents to the Department of Water Affairs and
Forestry.
Various documents were
completed including all other formal requirements called for in the
tender process.
The Bid Adjudication
Committee of the Department of Water Affairs and Forestry had, in
terms of the document which called for tenders,
appointed Goba ARQ
Joint Venture as an engineering company which was to oversee the
calling for tenders and to act as the
department’s agent in the
tender adjudication process to the extent provided for in the request
for proposals.
On 25 January 2008 the
tender submission of the tenderers were opened in the presence of
their agents.
After the opening of the
tenders and prior to a detailed evaluation of the tenders, the
tenders are subjected to a “test
for responsiveness”.
The said test requires the following:
(a) compliance with the
requirements or conditions of the tender;
(b) that the tender offer
has been properly completed;
(c) is responsive to the
other requirements of the tender documents.
On 19 February 2008 the
applicant received a letter from Goba ARQ Joint Venture. The
said letter reads as follows:
“
Your letter dated
24 January 2008 (LP/im/001) in connection with the above mentioned
project has reference:
In this letter you have
raised certain qualifications regarding your rates submitted in your
tender. Below is our response to these
qualifications.
1 – Extension of
time
Your requirement is for
the extension of time for rain delays to be calculated based upon the
critical path method. As indicated
in the tender document, there is
a formula which shall be used to calculate the number of days per
calendar month which can be
claimed as extension of time in case of
adverse weather conditions.
2 – Zone 8
Material
The Zone 8 material is
gravel surfacing which needs to be sourced from a commercial supplier
as described in the Bill of Quantities.
The qualification in your
letter states that your submission is based on all Zone 8 material to
be sourced from site without screening.
This material will
definitely not be available on site and will have to imported. It is
also imperative that this material complies
with the limits as shown
on the grading envelope and no variations on this will be accepted.
3 – Site Borrow
Material
You qualify that your
rates on all gravel and stone material have been based on the
material to be available on site without any
crushing or screening,
except where the BOQ item explicitly states it should be obtained
from a commercial source.
We feel the issue around
the gravel material is adequately addressed in point no. 2 above as
the BOQ states this material should
be commercially sourced.
We assume the stone you
refer to in your qualification is for rubble masonry concrete.
Please refer to the
payment reference below as per the tender document:
‘
The rates tendered
shall cover the procurement, supply or production of all constituent
materials, haulage, stockpiling, the mixing
of mortar, the delivery
of materials to point of placement, the preparation and cleaning of
rock/stone plums, the placement of
mortar and rock/stone plums to
form a dense Rubble Masonry Concrete matrix, the filling with any
cavities with mortar and the curing
of the surfaces of the final
structure.’
4 – Zone 4A; 4B;
5 Material
Your qualification states
that your supplier of these materials could not guarantee that the
material priced would meet the grading
requirements as specified. It
is essential that all materials comply with the grading envelopes as
specified and no deviation
from these envelopes will be accepted.
5 – Bonds
As per the Appendix to
Tender the retention on this contract is set at 10% of the contract
value with 5% to be released once the
site is handed back to the
Employer and 5% to be released when the defects notification period
of 12 months has expired. Therefore
your request to have two equal
bonds of 2,5% of the contract value is not according to the
requirements under this contract.
We trust you find the
above response to your qualifications in order and request that these
qualifications be withdrawn.”
The applicant responded
to the said letter by confirming the applicant’s acceptance of
the conditions in the tender document
and also adjusted its rates as
a consequence of the sourcing of the relevant material other than
from on site.
The appointed evaluation
panel consisted of three persons and the scoring that was to be
followed in respect of the tender evaluation
was the 90/10 preference
point system.
After the evaluation
process the panel had to make recommendations to the department in
respect of the preferred bidder for appointment.
In accordance with the
tender process the tenders were considered for responsiveness and the
three tenders of the applicant, the
second and third respondent as a
joint venture and the fourth respondent respectively were all found
to be responsive.
The initial and adjusted
tender prices of the three tenderers were as follows:
Tenderer
Initial
Tender Price
Adjusted
Tender
Price
Applicant R10 192 982.46 R12 844 446.86
4
th
Respondent R14 946 554.34 R14 946 604.34
2
nd
and 3
rd
Respondents
R15 463 705.10 R15 463 390.09
The panel, using the
90/10 scoring according to the preference point system allocated the
following score to the tenderers:
–
The applicant
scored 90 for price and 1 for preference totalling 91 points;
–
The fourth
respondent scored 76 for price and 3.6 for preference totalling 79.6;
–
The second and
third respondent scored 72 for price and 6 for preference totalling
78.
The applicant was
recommended as it had achieved the highest score during the
evaluation process.
The recommendations of
the panel were referred to the “Branch Bid Evaluation
Committee” of the department which apparently
considered the
matter and recommended the second and third respondents’ bid
for approval to the “Department Control
Committee” of the
department.
The “Branch Bid
Evaluation Committee noted
inter
alia
as
follows:
“3. Recommendation
The end user recommends
acceptance of the bid as follows:
The third lowest bidder
with the second highest points: Bid No. 2
Messrs Maswikeng Realeka
Investments Joint Venture …”
In a letter dated 24
June 2008 the first respondent advised the Realeka Maswikeng Joint
Venture that the latter’s bid had
been accepted and that the
acceptance of the contents of the said letter constituted a binding
contract between the first respondent
and the second and third
respondents respectively.
On 30 June 2008 the
first respondent advised the applicant that the latter’s bid
was unsuccessful.
After several
correspondence was exchanged between applicant and first respondent,
applicant launched an urgent application on
23 July 2008. In
the application the applicant applied for an order whereby the
respondents are interdicted pending finalisation
of review
application, from commencing and/or continuing with any execution of
the aforesaid contract, including, but not limited
to site
establishment and further works.
The order prayed for in
the urgent application was granted 19 September 2008.
3.
Supplementary
Affidavit
After receipt of the
record of the proceedings from the first respondent, the applicant
served and filled a supplementary affidavit.
It was attested to by
Mr Russell Crawford. He dealt in details with the “Bid
Adjudication Report” prepared by Goba Arq
Joint Venture.
He pointed out that the said report recommended that the contract
should be awarded to the applicant.
The abovementioned
recommendation was overridden by Mr L S Moloi, Chief Director in
the employment of the first respondent.
Mr Moloi, in a note
that he wrote, stated that:
“–
There
seems to be too many qualifications from sand B.
–
To avoid any VO’s
due to low P & G rates and a program of five months instead of
nine months, I recommend Maswikeng Realeka.
–
This will also
help us achieve our BEE targets in the DSRP.”
On 28 April 2008 Mr
Hardus Muller an employee of the Department of Water Affairs and
Forestry, when responding to the abovementioned
remarks by Mr Moloi
said that there is no justifiable motivation why the applicant should
not be appointed.
Mr Moloi appended notes
to the said document, persisting that the applicant is not
recommended. He further said that:
“…
in the
interests of sharing the DSRP pie more widely, it makes sense to
appoint Maswikeng despite the R2.1 million premium.
–
That we have not
worked with them before makes it even more critical to appoint them.
–
Monopolising the
DSRP to S & B at all costs is not acceptable.”
At a meeting of the
Branch Evaluation Committee on 29 May 2008, which Mr Moloi
also attended, Mr Moloi recommended the
Maswikeng Realeka JV and
advanced following reasons for not awarding the tender to the
applicant:
“…
S & B
made many qualifications to their tender and their P & G’s
are unreasonably low;
–
In the interest
of sharing the DSRP it makes more sense to award the tender to
Maswikeng Realeka despite the R2.1 million
premium.”
4.
First
Respondent’s Answering Affidavit
It was attested to by Ms
Zandile Mathe, Chief Director for Financial Management in the
Department of Water Affairs and Forestry.
She explained the
process that was followed to evaluate the three tenders which were
found responsive. She further alleges that
the Chief Director: NWR1
Operations, after having considered the recommendation of the
appointed panel found that the applicant
who was recommended for
appointment had a non responsive tender offer which should have
been rejected and not evaluated with
the other tenders.
In particular, the
applicant’s tender offer did not comply with the tender
specifications and had qualifications which materially
had an effect
on the competitiveness, fairness and transparency of the tender
process.
The panel’s
recommendation was overruled by the Programme Manager and the next
qualifying tenderer was recommended to the
Branch Evaluation
Committee, which in turn made a recommendation to the Bid Evaluation
Committee. She further alleges that the
letter of the applicant
dated 24 January 2008 which was the covering letter
attached to the applicant’s tender
document raised various
qualifications regarding their rates. In the said letter the
applicant sought condonation for non compliance
with the tender
specifications. Other tenderers were not aware of the correspondence
between applicant and Goba Arq JV.
The applicant was
allowed by the panel to increase its original tender price with an
amount of R3 022 668.73. This aspect
alone materially
affects the competitiveness of the tender process and fly in the face
of the constitutional imperative that a
procurement process of a
state organ should be fair, competitive and transparent.
The recommendations of
the panel were referred to the branch bid evaluation committee of the
Department, which considered the bid
and made certain recommendations
to the control committee of the department which was under her
chairmanship.
The branch bid
evaluation committee recommended that the second and third
respondents tender be accepted and that the applicants
tender be
rejected due to deviation from specification in that the latter had
qualified its tender on too many items, that the
construction period
of five months will not be adequate to complete the project without
further extentions, variation orders and
that their rates for
preliminary and general items were unreasonably low and that the
required cost breakdown of various items
specified were not provided.
The Departmental Bid
Adjudication Committee, in their minutes dated 4 June 2008,
noted,
inter
alia
,
the following:
“
Recommendation
The end user
recommends acceptance of the bid as follows:
The third lowest bidder
with the second highest points: Bid No. 2
Messrs Maswikeng Realeka
Investments Joint Venture …”
She further alleges that
the tender was intended to be issued for an estimated period of nine
months due to financial considerations.
The second and third
respondents had already commenced with the project and have incurred
expenses for which the department is
liable.
5.
Applicant’s
Replying Affidavit
It was attested to by Mr
Russel Crawford, Managing Director of the applicant. He alleges that
the tender of the applicant was
not found to be non responsive
up to the time the second and third respondents’ joint venture
was awarded the tender.
At no stage did
applicant request for deviation from the standard tender procedure.
The contract specific
tender data allows for adjustment of prices pursuant to a correction
of rates. The adjusting of the applicant’s
tender price falls
within the contract specific tender data and was so accepted by both
the first respondent and the engineering
team appointed by it.
At all relevant times,
both prior and after the adjustment of its prices, the applicant’s
tender was the cheapest. The applicant
was and remains the
front runner in regard to pricing. No other tenderer was
prejudiced by the adjustment of the applicant’s
prices.
He further alleges that
on 4 June 2008 Mr Moloi signed the recommendation of the
NWR1 Branch Bid Evaluation Committee,
recommending that the tender be
awarded to Messrs Maswikeng Realeka Investments Joint Venture. On
5 June 2008 he forwarded
this recommendation to the
Chairperson of the Department Control Committee.
On 6 June 2008 Ms Mathe
as Deputy Chairperson approved the document to serve at the
Departmental Bid Adjudication Committee. On
11 June 2008 Ms
Mathe as Chairperson of the Departmental Committee approved the
recommendation for the appointment of the
second and third
respondents as successful bidders.
He further alleges that
Ms Mathe in the answering affidavit has failed to deal with the
merits of the applicant’s tender
as set out by the panel of
engineers in their Bid Adjudication Report.
6.
Findings
It is common cause that
on 21 December 2007, the first respondent invited tenders
for the provision of Dam Safety Rehabilitation
Programme at
Mashashane Dam, Limpopo Province.
The applicant together
with four other tenderers submitted their bids timeously. The
applicant’s bid was accompanied by
a letter dated 24 January
2008.
The Bid Adjudication
Committee of the Department of Water Affairs and Forestry appointed
Goba ARQ Joint Venture to oversee
the calling for tenders and to
act as the department’s agent in the tender adjudication
process.
After the opening of the
tender documents, there were certain correspondence exchanged between
the abovementioned agents and some
of the tenderers.
The adjudication panel
consisted of three people two of whom are engineers and one a project
manager.
After evaluating the
bids, the panel wrote a detailed report wherein they dealt
inter
alia
with compliance with the tender requirements, qualifications, price,
experience of tenderers, preferential procurement procedures,
tender
programme, recommendations, etcetera.
Under the heading “Tender
Programme” the panel noted,
inter
alia
,
“The Engineer’s opinion is that a five months
construction period is realistic especially if the construction will
take place during the winter months when rain is not likely to
interfere with the construction programme”. The panel
allocated
following points to the tenders they evaluated:
Applicant – 91.0
Kaulani Civils –
79.6
Maswikeng Realeka JV –
80
There was a calculation
error in the points allocated to the Maswikeng Realeka JV. Total
points should be 78 and not 80.
Panel recommended that
the tender should be awarded to the applicant. The above report is
dated March 2008.
On 3 April 2008,
Mr Hardus Muller, apparently an Acting Director: Strategic Asset
Management addressed a memorandum to
the chairperson: Department Bid
Adjudication Committee. He alluded to the panel’s report in
the said memorandum. In the
said memorandum he analysed the panel’s
report and concluded by stating that the applicant should be awarded
the tender.
Ms L S Moloi who is
apparently the Chief Director in the employment of the first
applicant, did not agree with the recommendations
of the panel and Mr
Muller and he noted the following at the bottom of Mr Muller’s
memorandum:
“–
There
seems to be too many qualifications from S & B;
–
To avoid any VO’s
due to low P & G rates and a program of five months instead of
nine months, I recommend Maswikeng Realeka;
–
This will also
help us achieve our BEE targets in the DSRP.”
On 21 April 2008 Mr
Muller addressed another memorandum to Chief Director: Infrastructure
Operations Management. In the said memorandum
Mr Muller again
attempted to motivate why the applicant should be awarded the tender.
He stated,
inter
alia
,
that:
“
4. That
adjudication of these tenders was done strictly in accordance with
the guidelines of the Department and where the tenderers
did not meet
the required criteria the tenderer was regarded as non compliant
or non responsive to the tender …
but that both the
tenders of Stefanutti and Maswikeng were compliant and responsive …
There is therefore no
justifiable motivation why S & B should not be
appointed.”
Mr Moloi again made
notes at the foot of the last page of the memorandum and the said
note read as follows:
“
I do not recommend
appointing Stefanutti because of their many qualifications and
unreasonably low P & G’s and other
rates.
In the interest of
sharing the DSRP pie more widely, it makes sense to appoint Maswikeng
despite the R2.1 million premium.
That we have not worked
with them before makes it even more critical to appoint them.
Monopolising the DSRP to
S & B at all costs is not acceptable.”
In the answering
affidavit the two memoranda written by Mr Muller and the notes made
thereon by Mr Moloi are not dealt with.
Ms Zandile Mathe, Chief
Director for Financial Management alleges that “In particular,
the applicants tender specifications
and had qualifications which
materially had an effect on the competitiveness, fairness and
transparency of the tender.”
The quoted statement is made by
her despite the contrary view contained in the detailed report of the
panel which evaluated the
bids and without in any way commenting in
full on the panel’s report.
She further said “It
is worth highlighting that the department has got its own team of
experts which include engineers that
are qualified to consider
recommendations made by the panel applying their technical knowledge
and thus provide a meaningful and
informed recommendation to the
adjudication committee to either accept or reject the panel’s
recommendations.”
Except the above quoted
statement, there is no report from the alleged experts nor has she
disclosed the identity of the alleged
experts. There is also no
confirmatory affidavit from any of the alleged experts.
The allegations made by
Ms Mathe mentioned above are not helpful at all.
In his heads of
argument, the first respondent’s counsel submitted that the Bid
Adjudication Committee of the first respondent
rejected the tender of
the applicant for non compliance with specifications, qualifying
its price on other matters and the
price adjustment. It is further
stated that the applicant’s tender was thus found to be
non responsive.
The panel of experts, in
their detailed report dealt
inter
alia
with qualifications of the tenders. They stated that the applicant
qualified their tender on a number of issues. They further
stated
that after clarification was sought on the said issues a number of
the qualifications were waived and two remained. They
also mentioned
how the two remaining qualifications relating to materials were dealt
with.
Paragraph F2.17 of the
“Standard Conditions of Tender” which is applicable in
this matter allows clarification to be
sought from a tenderer. It
further states that no change in the total of the prices or substance
of the tender offer is permitted.
The “Tender Data
(Contract Specific)” document contains certain clauses which
are applicable in this matter. Paragraph
F2.17 thereof reads as
follows: “Clarification of Tender Offer after submission:
For this contract the
employer may, after clarification with the tenderer, agree to amend
the total of the prices stated by the
tenderer in his tender offer.”
In the introductory part
of the “Tender Data” it is provided that “The
Tender Data shall have preference in the
interpretation of any
ambiguity or inconsistency between it and the Standard Conditions of
Tender.”
The contract specific
allows the amendment of the total price after clarification was
sought and it takes precedent over the “Standard
Conditions of
Tender” on this point.
The submission by first
respondent’s counsel that the applicants was not entitled to
adjust its price is without any basis.
The second submission by
the first respondent’s counsel mentioned above is that the
applicant’s tender was not responsive
and should have been
rejected at the evaluation stage.
Paragraph F3.8 2A of the
Standard Conditions of Tender reads as follows:
“
A responsive
tender is one that conforms to all terms, conditions and
specifications of the tender documents without material deviation
or
qualification. A material deviation or qualification is one which,
in the Employer’s opinion, would:
(a) detrimentally affect
the scope, quality, or performance of the works, services or supply
identified in the Scope of Work;
(b) change the Employer’s
or the tenderer’s risks and responsibilities under the
contract; or
(c) affect the
competitive position of other tenderers presenting responsive
tenders, if it were to be rectified.”
The applicant’s
tender was not found to be non responsive by the panel of
experts and consequently same was not rejected.
There is no evidence
that the tender of the applicant will have any negative impact on the
scope and quality of the work, nor
that it will change the employer’s
risks nor affect the competitive position of other tenderers.
In the answering
affidavit Ms Mathe staed that in accordance with the tender process
the tenders were considered for responsiveness
and all three tenders
were found to be responsive.
In fact, the panel of
experts recommended that the tender be awarded to the applicant,
which is a clear indication that the said
panel did not find the
applicant’s tender to be non responsive.
The reasons advanced by
Mr Moloi, in the notes he made on the two memoranda prepared by Mr
Muller does in no way suggest that the
tender of the applicant was
found to be non responsive. Some of his reasons for holding the
view that the applicant should
not be awarded the tender have been
adequately dealt with in the panel’s report and some of them
are totally irrelevant.
In his memorandum dated
21 April 2008, Acting Director: Strategic Assets
Management, Mr Muller stated
inter
alia
:
“
4. The
adjudication of these tenders was done strictly in accordance with
the guidelines of the Department and where the tenderers
did not meet
the required criteria the tenderer was regarded as non compliant
or non responsive to the tender.”
From the above, it is
clear that the submission that the applicant’s tender was
non responsive is without any basis
and should also be rejected.
I cannot find any
justification for the failure of the first respondent to follow the
recommendations of the panel of experts and
their Acting Director Mr
Muller. The applicant should have been awarded the tender.
The applicant’s
counsel, submitted, among others that there is no justification for
the referral of the tender award process
back to the first respondent
as the court is in as good position as the first respondent. Any
referral of the tender award to
the first respondent will cause
further delays.
On the other hand, the
first respondent’s counsel submitted that if the court awards
the tender to the applicant, the first
respondent might not have the
funds for the project.
In the answering
affidavit, it was stated amongst others, that the court, if it sets
aside the award of tender made by first respondent,
court should not
award the tender to the applicant as the court will not be privy to
all material considerations that are relevant
to the reconsideration
of the tender.
I do not agree with the
first respondent’s view. All the relevant factors are
contained in the documents filled in this
cased. The first
respondent did not mention the alleged relevant factors that this
court might not be privy to.
In a document marked
annexure ZM4 attached to the answering affidavit, there is a stamp
dated 8 June 2008 which indicates
that sufficient funds are
available for this project.
The submission by the
first respondent’s counsel that the first respondent might not
have funds for this project does not
accord with the facts of this
case.
There are no objective
facts which suggests that this court should not award or cause the
awarding of the tender to the applicant.
The court therefore
makes the following order:
1. The award of the
tender in Contract no. W9760 for Dam Safety Rehabilitation: Phasw 1:
Mashashane Dam to a joint venture between
the second and third
respondents, known as the Maswikeng Realeka JV is set aside.
2. The first respondent
is ordered to take all necessary steps to effect an award of the
tender in the aforementioned contract to
the applicant.
3. The first respondent
is to pay the costs of this application.
4. The first, second and
third respondent, jointly and severally are to pay the costs of the
application in case no: 35153/08.
W L SERITI
JUDGE OF THE NORTH
GAUTENG HIGH COURT
51645/2008/sg
Heard on
: 20
May 2009
For
the Applicant
:
Adv N Davis SC
Instructed
by
: Friedland
Hart & Partners, Pretoria
For
the Respondents
: Adv
M Mphaga & M Mojapelo
Instructed
by
: The
State Attorney, Pretoria
Date
of Judgment
: