Brief Summary

Tender — Award of tender — Application for interim interdict pending review — Applicants, as joint venture, sought to suspend execution of contract awarded to second respondent by first respondent following tender process — Applicants scored highest points in evaluation but contract awarded to second respondent — Applicants alleged tender award tainted by bias and improper evaluation — Court held that applicants failed to establish a clear right for interim relief, as the first respondent's discretion in awarding tender was not boundless and must comply with fairness and transparency principles as per the Constitution — Application for interim interdict dismissed.

Comprehensive Summary

Summary of Judgment

1. Introduction

The matter concerned an application for an interim interdict pending the institution and finalisation of a review application to set aside the award of a public tender. The interim relief sought was the suspension of the award and execution of a contract concluded pursuant to a tender process.

The applicants were Matlafalang Training CC and Learners International CC, who had tendered as a joint venture for the relevant contract. The respondents were the MEC: Free State Department of Public Works (treated in the judgment as including the Department and its officials acting in that capacity) and Katushya Security Services (Pty) Ltd, the successful tenderer.

Procedurally, the application was brought urgently as interim relief, aimed at preserving the position pending a contemplated review. The first respondent opposed the interim interdict. The second respondent did not oppose. The court dealt only with whether the requirements for interim interdictory relief had been met, on the premise that a review application would follow.

The dispute arose from a procurement process for the provision of security training to 137 participants in the Departmental National Youth Service Programme. The applicants sought to prevent the contract from being performed before the review could be heard, contending that performance would render a successful review practically ineffective.

2. Material Facts

The first respondent invited proposals (by press advertisement) from qualified service providers to deliver security training to 137 participants. The request for proposals comprised sections dealing with background, the scope of the programme, terms and conditions, and evaluation criteria.

The evaluation criteria required application of the 90/10 preference point system contemplated in section 2(1)(b)(i) of the Preferential Procurement Policy Framework Act 5 of 2000 and the regulations issued under it. On the stated approach, 90 points were divided into 45 for price and 45 for functionality, with the remaining 10 points allocated to specific participation goals and SMME considerations. The tender document required a bidder to achieve at least 40% of functionality (18/45) to be considered further; bidders scoring below that threshold would not be further evaluated, effectively disqualifying them.

Three tenders were received. The applicants’ tender price (excluding optional items) was R4 060 680,00 (VAT included). The second respondent tendered R473 937,58 (it was not apparent whether VAT was included). The third tender’s price did not appear from the papers.

In terms of the Department’s supply chain management policy (October 2007), the tender process involved a bid evaluation committee and a bid adjudication committee. It was common cause that the bid evaluation committee scored the applicants’ tender at 96,38 points, comprising full points for price and functionality and 6,38 points for specific goals, and it recommended award to the applicants as the highest-scoring tenderer.

There was, however, a dispute on the papers regarding the scoring of the second respondent’s tender. The first respondent alleged that the second respondent had scored 84 points (45 for price, 37 for functionality, and 2 for specific goals). The applicants alleged they had been informed by departmental officials that the second respondent scored 0 points for functionality and only 25 points overall, which (on their version) required disqualification for failing to meet the minimum functionality threshold. Notwithstanding that dispute, it was common cause that the applicants were the highest-scoring tenderer under the evaluation criteria as applied by the bid evaluation committee.

The bid adjudication committee did not follow the evaluation committee’s recommendation. It concluded that the applicants’ tender should not have been considered, and it recommended that the tender be awarded to the second respondent. A contract was entered into between the first respondent and the second respondent, apparently on 18 August 2008. The interim interdict application had been served on the first respondent on 13 August 2008.

The first respondent’s central factual defence to the interim interdict was that the applicants had not tendered for what was required by the scope of work in the request for proposals. The applicants’ tender was structured on the basis that successful participants would obtain a National Certificate: General Security Practices, requiring at least 124 credits, and they tendered for 130 credits comprising 20 unit standards (including the 10 unit standards expressly listed under skills programmes 1–3). The applicants’ tender did not provide a separate or ascertainable price limited to only the 10 listed unit standards.

The first respondent contended that the tender called only for the 10 unit standards listed under skills programmes 1–3, and that the applicants therefore tendered for a materially different programme, while the second respondent tendered for what was required. The court assessed that contention by interpreting the tender documents, including provisions which referred to the SASSETA grading system in terms of skills programmes 1, 2, 3, 4 and 5, and which required the proposal of supplementary unit standards aligned to the learners’ curriculum and programme objectives.

3. Legal Issues

The principal issue was whether the applicants met the requirements for an interim interdict suspending the award and implementation of the tender pending the launch and determination of a review application.

Within that enquiry, the court had to determine whether the applicants had established a prima facie right (though open to some doubt) to the final relief they intended to seek on review, namely the setting aside of the tender award to the second respondent. This required the court to consider whether, on the review grounds advanced, the applicants showed a prima facie prospect of success, and whether the first respondent’s contradictory factual allegations created serious doubt sufficient to defeat interim relief.

The dispute thus involved a combination of law (the procurement framework under section 217 of the Constitution and section 2 of the Preferential Procurement Policy Framework Act, and the test for interim interdicts), interpretation and application of law to fact (whether the procurement framework required award to the highest-scoring tenderer absent objective criteria, and whether the applicants’ tender was non-compliant), and an element of evaluative judgment inherent in interim interdict relief (irreparable harm, balance of convenience, and absence of alternative remedy).

4. Court’s Reasoning

The court began by setting out the established requirements for an interim interdict: a clear right or a prima facie right open to some doubt, a well-grounded apprehension of irreparable harm if interim relief is not granted but final relief is later obtained, a balance of convenience favouring interim relief, and the absence of another satisfactory remedy. The judgment emphasised the approach to assessing a prima facie right where factual disputes exist, following the two-stage enquiry articulated in the cited authorities: first, whether the applicant should obtain final relief on the undisputed facts and probabilities; and second, whether the respondent’s contradictory facts cast serious doubt on the applicant’s case (as opposed to some doubt, which is tolerable at the interim stage).

Because the final relief contemplated was a review of the tender award, the court treated the award decision as administrative action under the Promotion of Administrative Justice Act 3 of 2000, and held that the applicants therefore had to show, prima facie, that they would succeed in reviewing and setting aside that decision on the grounds advanced.

The court rejected the applicants’ allegation of bias as unfounded, because it was based only on an asserted geographical connection between the second respondent and a departmental head, without more. The court then focused on the remaining review grounds and, in particular, the contention that the tender should have been awarded to the applicants because they scored the highest points under the prescribed evaluation criteria.

In evaluating that ground, the court referenced section 217(1) of the Constitution, which requires state procurement systems to be fair, equitable, transparent, competitive and cost-effective, and proceeded on the basis (in the absence of the procurement policy being attached to the answering affidavit) that the first respondent’s procurement policy complied with the statutory framework in the Preferential Procurement Policy Framework Act. The court then analysed section 2 of the Act, particularly section 2(1)(f), which provides that the contract must be awarded to the tenderer who scores the highest points, unless objective criteria (in addition to the specified goals) justify an award to another tenderer.

On the first stage of the prima facie right enquiry, the court held that—on the applicants’ version together with the undisputed facts stated by the first respondent—the contract should have been awarded to the applicants in terms of section 2(1)(f), because the first respondent did not rely on objective criteria justifying an award to another tenderer. The first respondent’s justification was instead framed as non-compliance by the applicants with tender requirements, which the court treated as the true point of contradiction needing assessment at the second stage.

At the second stage, the court assessed whether the first respondent’s allegation—namely that the applicants “did not tender for what was required”—cast serious doubt on the applicants’ prospects in the contemplated review. This required interpreting the scope provisions of the request for proposals. The court considered the text indicating that the training programme “should be in line with” the SASSETA grading system in terms of skills programmes 1 to 5, and further provisions requiring service providers to propose supplementary unit standards and compile training materials incorporating fundamental and supplementary unit standards.

Against that wording, the court was not persuaded that the tender clearly called only for the ten unit standards listed under skills programmes 1–3. It regarded the first respondent’s contrary interpretation as insufficient to create serious doubt about the applicants’ review case. The court went further and observed that there was “much to be said” for the view that the scope was set out ambiguously to the extent that it may have been impossible to decide the tender on a basis consistent with the constitutional procurement requirements of fairness, transparency, competitiveness, and cost-effectiveness.

Turning to irreparable harm, the court accepted the applicants’ acknowledgment that, even if the review succeeded, the likely remedy would be a remittal for reconsideration rather than direct award to the applicants. Accordingly, the harm analysis could not depend on an assumption that the applicants would ultimately receive the contract. Instead, the court reasoned that if the contract were performed before the review was finalised, the training programme could be completed or substantially completed, causing the review to serve no useful purpose. The court treated this as an objectively reasonable apprehension of irreparable harm.

For similar reasons, the court found the balance of convenience favoured interim relief: suspending performance would preserve the review’s practical utility, whereas refusal would risk fait accompli performance. The court also found there was no suitable alternative remedy, expressly rejecting the suggestion that the applicants could sue for damages.

5. Outcome and Relief

The court granted interim relief suspending both the award of the contract under “proposal 19” and the execution of that contract pending the finalisation of a review application to be launched by the applicants to review and set aside the award.

The court ordered the applicants to launch the review application within 30 days of the order.

The first respondent was ordered to pay the costs of the interim interdict application.

Cases Cited

Gool v Minister of Justice and Another 1955 (2) SA 682 (C)

Spur Steak Ranches Limited and Others v Saddles Steak Ranch, Claremont and Another 1996 (3) SA 706 (C)

Simon N.O. v Air Operations of Europe AB and Others [1998] ZASCA 79; 1999 (1) SA 217 (SCA)

Millenium Waste Management (Pty) Ltd v Chairperson, Tender Board: Limpopo Province and Others 2008 (2) SA 481 (SCA)

Legislation Cited

Constitution of the Republic of South Africa, 1996, section 217(1) and section 217(3)

Preferential Procurement Policy Framework Act 5 of 2000, section 2 (including section 2(1)(b), section 2(1)(d), section 2(1)(e), and section 2(1)(f))

Promotion of Administrative Justice Act 3 of 2000

Rules of Court Cited

No rules of court were cited in the judgment.

Held

The court held that the applicants established the requirements for an interim interdict. In particular, they demonstrated a prima facie right (open to some doubt) to succeed in a review of the tender award, because on the material placed before the court the statutory procurement framework contemplated an award to the highest-scoring tenderer absent objective criteria, and the first respondent’s allegation of tender non-compliance did not create serious doubt when measured against the wording of the tender scope.

The court held further that there was a reasonable apprehension of irreparable harm because the programme could be completed before the review was determined, undermining the practical value of the review; that the balance of convenience favoured preserving the status quo; and that no adequate alternative remedy existed.

LEGAL PRINCIPLES

An applicant seeking an interim interdict must establish a clear right or a prima facie right open to some doubt, along with irreparable harm, favourable balance of convenience, and absence of an adequate alternative remedy. Where factual disputes arise, the prima facie right enquiry proceeds in two stages: first assessing the applicant’s case on undisputed facts and probabilities, then determining whether the respondent’s contradictory version casts serious doubt sufficient to defeat interim relief.

A tender award by an organ of state constitutes administrative action for purposes of judicial review under the Promotion of Administrative Justice Act 3 of 2000, requiring that interim interdict relief pending review be assessed with reference to prima facie prospects of success on review.

Under the Preferential Procurement Policy Framework Act 5 of 2000, and specifically section 2(1)(f), a contract must be awarded to the tenderer who scores the highest points unless objective criteria justify award to another tenderer. The procurement process remains bounded by section 217(1) of the Constitution, which requires systems that are fair, equitable, transparent, competitive and cost-effective; ambiguity in tender scope may undermine these constitutional requirements and may be relevant to the assessment of review prospects and interim relief.

Where performance of a contract pending review risks rendering the review nugatory (for example, through completion of the contracted programme), that risk may constitute a reasonable apprehension of irreparable harm, supporting interim suspension of the award and execution pending judicial scrutiny.

Matlafalang Trainning CC and Another v MEC: Free State, Department of Public Works and Another (5412/2008) [2008] ZAFSHC 136 (11 December 2008)