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[2008] ZANCHC 73
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Actaris South Africa (Pty) Ltd v Sol Plaatje Municipality and Another (1357/2007) [2008] ZANCHC 73 (12 December 2008)
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IN THE HIGH COURT OF
SOUTH AFRICA
(Northern Cape
Division)
Case
Nr:
1357/2007
Case
Heard:
11&12/11/2008
Date
delivered:
12/12
/2008
In
the matter between:
Actaris
South Africa (Pty) Ltd APPLICANT
and
Sol
Plaatje Municipality
1
ST
RESPONDENT
Intelligent
metering systems (Pty) Ltd 2
nd
RESPONDENT
Coram:
Williams J
et
Olivier J
JUDGMENT
Olivier J:
The
applicant, Actaris South Africa (Pty) Ltd (“
Actaris
”)
has cited the Sol Plaatje Municipality (formerly known as the
Kimberley Municipality and also referred to herein as “
SPM
”)
and Intelligent Metering Systems (Pty) Ltd (“
IMS
”)
as the first and second respondents respectively in an application
for the following orders:
“
1. Reviewing
and setting aside the decisions of the First Respondent taken in and
during 2007 to award the tenders under contract
numbers
F/MGT-VEND/2006, CEE/T/2006, F/INC-VEND/2006 and CE/F-RP/1/2006 to
the Second Respondent;
2. Referring
the adjudication of the aforesaid tenders back to the First
Respondent and directing it to adjudicate same in accordance
with
section 2(1)(c)
of the
Preferential Procurement Policy Framework Act
5 of 2000
, as read with the Regulations promulgated thereunder and
with paragraph 27(1) of the First Respondent’s Supply Chain
Management
Policy;
3 Ordering
the First Respondent to pay the costs of this application, such costs
to be paid jointly and severally with the Second
Respondent only in
the event that the latter opposes the application.
”
This application was
preceded by an urgent application in which the applicant applied for
and obtained an order preventing the
further execution of these
contracts pending the finalisation of the review application.
In
its replying affidavit Actaris raised certain new issues and invited
the respondents to file supplementary affidavit in this
regard. IMS
did not file its supplementary affidavits timeously and had to apply
for condonation and for leave to file such affidavit.
That
interlocutory application was settled between the parties on 9
September 2008 on the basis that the hearing of the main
application
was postponed, that IMS was ordered to file its supplementary
affidavits on or before 12 September 2008, that IMS
would pay
Actaris’ wasted costs and that SPM’s wasted costs would
be reserved for later determination.
On 11 September 2008
Actaris filed a further affidavit, which mainly dealt with the
financial standing of IMS.
IMS’
supplementary affidavit was not filed timeously. It was only filed
on 25 September 2008. IMS was therefore once again
compelled to
apply for condonation. This it did, but it also applied for the
rescission of the order in terms of which it had
to pay Actaris’
wasted costs of 9 September 2008, apparently on the basis that
Actaris had fraudulently withheld the fact
that it would in any
event make use of the opportunity to file a further affidavit.
The
circumstances which had led to the filing of Actaris’ further
affidavit have been fully explained and at the hearing
mr Stein,
counsel for IMS, did not contend otherwise.
The
filing of both these affidavits was therefore condoned and there
will be no rescission or amendment of the order of 9 September
2008.
In the circumstances
there is no reason why IMS should not be ordered to pay SPM’s
wasted costs of 9 September 2008.
BACKGROUND
On
1 November 2003 Actaris Measurement & Systems (Pty) Ltd
(“
Actaris
M&S
”),
an associate of Actaris, concluded a contract with SPM in terms of
which Actaris M&S would supply to SPM (for a
period of three
years) pre-payment vending software and hardware for the provision
of electricity. Revenue protection services
were expressly excluded
from that contract.
By
agreement between the parties Actaris M&S was at some stage
during
the course of the contract replaced by Actaris as service provider
and at the end of the contract period it was extended
on a month to
month basis until 31 August 2007.
On 5 November 2006,
however, SPM published invitations for tenders for four contracts
which are described as follows in the answering
affidavit of SPM’s
municipal manager, mr T F Mashilo:
“
contract
number CEE/T/2006, to finance, supply, deliver and install
pre-payment electricity meters or compatible software and devices
for
revenue protection (“the pre-payment electricity meters
contract”);
contract number
F/MGT-VEND/2006, for ownership, maintenance and management of the
pre-paid vending machines, hardware and stationary,
as well as the
management of third-party vendors (“the maintenance and
management contract”);
contract number
CE/F-RP/1/2006, for the provision of revenue protection services with
respect to electricity service provision (“the
revenue
protection contract”); and
contract number
F/INC-VEND/2006, for the provision and installation of a pre-payment
electricity vending system (“the pre-paid
vending machines
contract”).
After
a briefing session in November 2007 the bids were publicly opened on
the closing date for the tenders,
viz
8 December 2006.
SPM
then appointed K
hatima
Engineering Services (“
KES
”)
for a technical evaluation of the submitted tenders in order to, in
the words of mr Mashilo, “
provide
an initial evaluation for the purpose of short-listing bidders and a
final evaluation for the purpose of evaluation and/or
adjudication
”.
It needs to be emphasised that KES’ mandate and obligations
were limited to a technical assessment, and excluded
the assessment
of the financial aspects of the tenders.
KES
provided SPM with an initial technical report on 13 March 2007,
recommending the short-listing of four companies,
viz
Actaris, IMS, Netgroup and Conlog.
KES
then requested further information from the tenderers.
Site
visits were conducted between 17 and 19 April 2007. The site visits
were also attended by certain representatives of SPM.
According to
mr Mashilo the “
purpose
of the site visits was to conduct a proper assessment of the
technical aspects of the bids
”.
On
20 April 2007 the
short-listed
bidders made further presentations to representatives of SPM and
KES.
KES
then provided SPM with its final technical report on 24 May 2007,
and immediately thereafter with an amended version thereof.
In its
amended form it recommended the award of the tenders for the
pre-payment electricity meters contract (contract number
CEE/T/2006), the revenue protection contract (contract number
CE/F-RP/1/2006) and the pre-paid vending machines contract (contract
number F/INC-VEND/2006) to IMS.
No
recommendation was made regarding the remaining tender (for the
maintenance and management contract) and it was eventually
not
awarded to any of the bidders, on the basis that the required
maintenance and management would be included as part of the
services
tendered for by IMS in respect of the other three contracts.
Mr
N Mpolokeng, the cost and management accountant of SPM, was then
saddled with the task to calculate the price of each bid and
the
points scored by each bidder in respect of functionality (out of 45
points), price (also out of 45 points) and specific contract
participation goals (out of 10 points). These were recorded in an
excel spreadsheet designed for the purposes of the Preferential
Procurement Policy Framework Act, 5 of 2000 (“
the
PPPFA
”).
On
8 May 2008
Mpolokeng
addressed letters to each of the short-listed bidders, in which he
requested certain information regarding their pricing
in respect of
the pre-payment electricity meters contract and the revenue
protection contract. Actaris never responded to this
letter, but
the other bidders did (albeit in some cases not within the time set
by Mpolokeng in his letter).
On
25 May 2007 the bid evaluation committee and the bid adjudication
committee of SPM convened to consider the tenders. Both
recommended
the award of the three contracts to IMS.
The
recommendation of the bid adjudication committee was then submitted
to mr Mashilo, who was also the accounting officer of
SPM and who
finally took the decisions in accordance with the recommendations.
It
is SPM’s case that Actaris had, in respect of the pre-payment
electricity meters contract, failed to meet the 60 % threshold
for
functionality. It had been a condition of the invitations that a
bidder that failed to meet this threshold would be disqualified
from
further consideration. According to SPM the Actaris tender for this
contract was therefore not further considered.
It
is furthermore SPM’s case that IMS had outscored Actaris in
respect of the revenue protection contract and the pre-payment
vending machines contract.
Actaris has based its
application for the setting aside of the decisions on numerous
grounds, but in view of what follows it will
not be necessary to
deal with all of them.
COMPOSITION
OF
BID
EVALUATION COMMITTEE AND BID ADJUDICATION COMMITTEE ON 25 MAY 2007
In
terms of section 111 of the Local Government: Municipal Finance
Management Act, 56 of 2003 (“the
LGMFM
Act
”),
and in accordance with the
Municipal Supply Chain Management
Regulations
(
“the
Regulations”
)
published under government notice 868 in the Government Gazette of
30 May 2005, SPM adopted a supply chain management policy
(“
the
policy
”)
which prescribes the procedure to be followed in respect of tenders
like these. In terms of
regulation 12(1)(d)
SPM was compelled to
apply a “
competitive
bidding process
”
in this case,
inter
alia
because of the “
transaction
value
”
of the tenders.
In
terms of paragraph 26 of the policy (read with
regulation 25)
a
“committee system
for
competitive bids shall consist of the following committees:
“
(a) a
bid specification committee;
a bid evaluation
committee; and
a
bid adjudication committee
”
Such
a bid evaluation committee has to evaluate bids in accordance with
the particular specifications
of a tender and the applicable points system and
must
then “
submit
to the adjudication committee a
report
and recommendations
regarding the award of the bid …
”
(paragraph 27 of the policy and
regulation 28).
In
terms of paragraph 28(1)(a) of the policy (and
regulation 29(1)(a))
the bid adjudication committee “
must
… consider the
report
and recommendations
of the bid evaluation committee
”
before, in this case, making “
a
recommendation to the accounting officer to make the final award
”.
As
already mentioned mr Mashilo, in his capacity as the municipal
manager of SPM, was the accounting officer for such purposes
(section 60 of the LGMFM Act).
As
far as the composition of a bid evaluation committee and a bid
adjudication committee is concerned, paragraphs 27(2) and 28(2)
of
the policy (read with, respectively, regulations 28(2) and 29(2))
provide as follows:
“
27(2)
A
bid evaluation committee
must
as far as possible be composed of –
officials
from departments requiring the
goods or
services
;
and
at least one supply
chain management practitioner of the municipality”
“
28(2) A
bid adjudication committee must consist of at least four senior
managers of the municipality which
must
include –
the
chief financial officer or, if the chief financial officer is not
available
,
another manager in the budget and treasury office reporting directly
to the chief financial officer and designated by the chief
financial
officer; and
at least one senior
supply chain management practitioner who is an official of the
municipality; and
a
technical expert in the relevant field who is an official, if such
an official exists
.”
Pa
ragraph
28(4) of the policy (regulation 29(4)) provides that:
“
Neither
a member of a bid evaluation committee, nor an advisor or person
assisting the evaluation committee, may be a member of
a bid
adjudication committee
”.
It
was argued on behalf of Actaris that the composition of both the bid
evaluation committee and the bid adjudication committee
did not
comply with the policy in this case and that on this basis alone the
decision to award the tender to IMS fell to be set
aside on the
basis that “
mandatory
and material procedure or conditions prescribed by an empowering
provision was not complied with
”
(
s
6(2)(b)
of the
Promotion
of Administrative Justice Act
,
3 of 2000 (‘the PAJA”)).
Mnr
Cassim SC, counsel for SPM, contended that it was only in Actaris’
heads of argument that the composition of these bodies
was for the
first time “
directly
challenged
”
and that these arguments should and could have been raised after the
minutes of these committees (presumably for the meetings
of 25 May
2007) were made available to Actaris.
The
composition of these committees
was, however, raised as an issue in the replying affidavit, where it
was stated that none of the members of the bid evaluation
committee
had technical expertise and doubt was expressed about whether the
composition of that committee had complied with the
requirement
that, as far as possible, that committee had to be composed of
“
officials
from departments requiring the goods or services
”.
As far as the bid adjudication committee is concerned it was stated
that there was no indication that “
any
person serving on
(that
committee)
had technical expertise
”.
The
minutes of the bid evaluation committee meeting of 25 May 2007 could
by no stretch of the imagination have alerted Actaris
to the fact
that none of its members had been from the electricity department or
“
electricity
division
”,
as described by Mashilo in a supplementary affidavit to which I will
revert in due course. Quite to the contrary, it
creates the
impression that messrs Pretorius, Engelbrecht and Ludik had been
members of the committee in their capacities as
“MANAGER
RESPONSIBLE FOR THE USER DEPARTMENT”; which would clearly be
irreconcilable with Mashilo’s own description
of the members
of that committee, both in his answering affidavit and in the
supplementary affidavit already referred to.
The
same applies to the minutes of the bid adjudication committee’s
meeting on 25 May 2007, which erroneously reflect that
Pretorius and
Ludik were members of that committee.
There is accordingly
no basis upon which it can be argued that these minutes provided
Actaris with the facts necessary for this
challenge.
Those
facts came to light for the first time when they were volunteered in
Mashilo’s answering affidavit on behalf of SPM.
Actaris then raised
the issue in its replying affidavit and invited both SPM and IMS to
file supplementary papers. This IMS did
eventually do on 25
September 2008. SPM did not, at that stage, take up this
invitation. It was only well after these issues
had pertinently
been raised in heads of argument filed on behalf of Actaris on 19
August 2008, that a supplementary affidavit
by Mashilo was filed on
20 October 2008.
This
supplementary affidavit deals exclusively with the composition of
the committees as at 25 May 2007 and there can therefore
be no
prejudice whatsoever for SPM if these issues are taken into account
and considered.
It appears to be
common cause that, although mr Raymond Pretorius (the Chief
Electrical Engineer seconded to SPM from Eskom) and
mr Engelbrecht
(at the time the Chief Superintendent: Testing and Metering of SPM)
attended the meeting of the bid evaluation
committee on 25 May 2007,
neither of them were members of that committee.
There
appears to be no reason why it would not have been “
possible
”
(see paragraph 27(2) of the Policy) for Mashilo to appoint at least
one of these officials as a member of the bid evaluation
committee
(paragraph 25(2) of the Policy and regulation 26(1)(b)). No such
reason was suggested on behalf of SPM, and no attempt
has been made
to demonstrate that it would not have been possible to appoint any
of the other officials from the relevant department
(concerned with
the supply of electricity) as members of the bid evaluation
committee.
None of the members of
this committee were therefore officials of the department concerned.
Even
if Pretorius or
Engelbrecht
had attended the meeting of the bid evaluation committee on 25 May
2007 they would, as non-members, not have been
entitled to vote or
to take part in the decision of the bid evaluation committee.
This
p
uts
paid to not only Mashilo’s statement that Pretorius had
attended the meeting of the bid evaluation committee, but also
to
his contention that all “
line
managers
”
(whatever that may be) had been invited. On his own version those
“
line
managers
”
would not have had voting powers and their presence could never have
fulfilled the requirement that at least one official
of the relevant
department had to be a member of the committee.
It
was argued on behalf of IMS that the words “
as
far as possible
”
in paragraph 27 (2) of the policy are indicative of a directory
rather than a peremptory provision.
I
disagree. The
se
words must be read in context and the intention quite clearly was
that, should such officials be available for appointment
as members,
at least one “
must
”
serve as a member for the purpose of at least those meetings where
decisions will be taken and recommendations will be
made which would
affect the particular department.
There
was not even the
faintest
suggestion that it had not been possible to appoint at least one
official of the electricity department as a member of
the bid
evaluation committee, even if only for the purpose of these tenders.
T
here
is absolutely no reason why the composition of these committees
could not be revised from time to time, depending on the
nature of
the tenders to be considered and the departments to be affected, and
the provisions of the policy and the regulations
cannot be
interpreted in any other way.
There
is even less merit in the further argument of mr Stein, on behalf of
IMS, that the provisions of paragraph 28(4) of the
policy would have
precluded Pretorius from being a member of the bid evaluation
committee on the basis that he was an “
advisor
”.
Pretorius
was not an “
external
”
advisor, as suggested by mr Stein. He was an employee and official
in the employ of SPM, albeit seconded from Eskom.
In
any event, thes
e
provisions deal with membership of the bid adjudication committee,
and not the bid evaluation committee.
Despite
the availability of officials like Pretorius and Engelbrecht, who
had
clearly been “
technical
expert
(s)
in the relevant field
”,
neither of them had been appointed as a member of the bid
adjudication committee.
There
appears to be no reason why at least one of them could not have been
so appointed, which would have left the other available
to advise
and assist the bid evaluation committee (paragraph 28(4) of the
policy and regulation 29(4)).
It was argued on
behalf of SPM that nothing had prevented Pretorius from attending
the meeting of the bid adjudication committee
on 25 May 2007, and
that he had himself chosen not to attend that meeting. This
argument misses the point. Even if he had attended,
he would still
not have been a member of the committee and would therefore not have
been entitled to vote or to take part in
the decision itself.
The
unwillingness of an official (if that was indeed the reason for the
absence of Pretorius at the meeting of the bid adjudication
committee) would in any event not have relieved SPM of the
obligation to see to it that such a committee is properly
constituted,
in order to ensure that decisions taken by such a
committee are properly taken.
The
accounting officer of SPM had therefore failed to comply with the
requirements regarding the appointment of members and the
composition of these committees, and when the decisions were taken
to disqualify Actaris on the basis of functionality in respect
of
the one contract and to recommend the award of the tenders to IMS
these two committees were not properly constituted.
According
to
Mashilo one Khuza Bogacwi, the director of the Infrastructure and
Technologies Directorate, under which Directorate the line
functions
for electricity, water, roads and fleets fall, was a member of the
bid adjudication committee and can be assumed to
have obtained “
all
the relevant information regarding the requirements of this line
function for the purposes of informing the evaluation of
the
tenders
”
at the meeting of this committee.
Even
if this assumption, which clearly amounts to pure conjecture and is
not confirmed by an affidavit from Bogacwi, could be
made, the
ad
hoc
acquisition of such information would not have made Bogacwi a
“
technical
expert in the relevant field
”.
This
attempt by Mashilo to justify the composition of the bid
adjudication committee makes it clear that no “
technical
expert
”
as envisaged in paragraph 28(2)(c) of the policy served as a member
of the committee at the meeting of 25 May 2007.
The
fact is that there is no suggestion that no official who was such an
expert, and who could therefore have been appointed as
a member
(even if only for the purposes of that particular meeting),
“
existed
”
at the time of the meeting. To the contrary, even on SPM’s
own version, at least Pretorius or Engelbrecht (both
of whom are
conceded to have been such experts) could have been appointed as a
member and the other would still have been available
to serve as a
member of the bid evaluation committee for the purposes of its
meeting.
Neither
Pretorius nor
Engelbrecht would have been an “
external
consultant
”,
as suggested by mr Stein, and neither of them would therefore have
been precluded (by paragraph 28(4) of the policy)
from serving as a
member of the bid adjudication committee.
Once
again I do not agree with mr Stein’s argument that the phrase
“
if
such an expert exists
”
in paragraph 28(2)(c) of the policy is indicative of a directory
(rather than a peremptory) requirement. When the provisions
of that
paragraph are viewed in context it is clear that, where such an
expert official is available, he or she “
must
”
be appointed for the purposes of at least that particular meeting
where a tender which falls within his or her field of
expertise is
going to be considered.
It goes without saying
that the contents of these tenders and contracts are of a highly
technical and specialised nature.
As
already concluded, the
relevant provisions of the policy (and of the corresponding
regulations) are couched in peremptory terms. Apart from the fact
that there is no reason why they were not complied with, there are
clear indications that such non-compliance may have had a
prejudicial effect on the activities of these committees and the
conclusions reached by them.
The
failure to appoint an official of the relevant department of SPM as
a member of the bid evaluation committee resulted in a
decision
being made which
affected
that department (and the taxpayers and electricity consumers), but
to which such department was not able to contribute
effectively by
way of a vote or votes. Even if Pretorius and Engelbrecht had at
that meeting advised against recommending the
award of the contracts
to IMS, they would not have been able to vote.
The
position is even worse as far as the meeting of the bid adjudication
committee on 25 May 2007 is concerned. The absence of
a technical
expert as a member at that meeting not only resulted in the fact
that no technical expert took part in the vote and
in the decision
to recommend IMS, but also meant that the members of that committee
did not have the advantage of technical explanations
or advice.
More in this regard below, when the actual proceedings at that
meeting of the bid adjudication committee will be
dealt with.
I
cannot agree with mr Cassim’s submission that Actaris’
“
persistence
with
”
(this) “
challenge
seeks to elevate form over substance
”.
It is quite obvious what the reasons for these requirements in the
policy and the regulations are. The requirements
are intended to
ensure that the votes of the affected department and of a technical
expert form part of the decision-making process.
It is not at all
hard to understand the need for this where the financial
implications and the technical specifications of tenders
of these
proportions have to be considered.
The
accounting officer’s decision to award the particular bids to
IMS was therefore based upon recommendations made by a
bid
adjudication committee which had not been properly constituted. Its
decisions and recommendations could not have been valid,
not only
because of the way that it was itself constituted, but also because
of the fact that its decisions were based upon the
decisions and
recommendations of a bid evaluation committee which had also not
been properly constituted.
On
this ground
alone the decisions fall to be set aside on the basis that
“
mandatory
and material
”
empowering provisions were not complied with (
s
6(2)(b)
of the
PAJA
).
PROCEEDINGS
AT THE MEETING OF THE BID
AJUDICATION MEETING ON 25 MAY 2007
The
prejudice emanating from the deficiencies in the composition of the
two bid committees was
both
accentuated and compounded by the manner in which the meeting of the
bid adjudication committee on 25 May 2007 was conducted.
The
meeting was convened and conducted with undue, and indeed
inexplicable, haste.
It
started immediately after the conclusion of the meeting of the bid
evaluation committee.
The
meeting of the bid evaluation committee was only concluded at 16:45
on Friday 25 May 2007. If the meeting of the bid adjudication
committee did indeed take place after the conclusion of the meeting
of the bid evaluation committee (a question which will be
reverted
to in due course) it would therefore have started at some time after
16:45 and would probably have lasted well past
the end of normal
office hours.
The
letters informing IMS of the award of the tenders to it were dated
25 May 2007, which would mean that Mashilo must have received
the
recommendations of the bid adjudication committee sometime after
hours on that Friday and must then on that same day not
only have
come to a conclusion on the final award, but also, somewhat
amazingly, have had the need and the time to immediately
address
these letters to IMS.
He
did apparently not, however, at that stage have the need or the time
to inform Actaris of the fact that its bids had been unsuccessful.
This was only done on 4 July 2007, and only after Actaris had made
enquiries in this regard on 29 June 2007.
Those
who attended the bid adjudication committee’s meeting of 25
May 2007 were clearly brought under the impression that
they had to
come to a conclusion urgently. According to the transcript of the
proceedings at the meeting a certain mr Mogatwe
(it is not clear
whether the transcript should perhaps have referred to mr Bogacwi)
repeatedly stated that he understood the
urgency. For some strange
reason the transcript does not, however, reflect what had led to
these remarks.
It
is of some interest to note that, although the competitive bid
mechanism clearly requires that the meeting of the bid adjudication
committee takes place after the bid evaluation committee has already
concluded its meeting and has come to a conclusion, the
notice of
the meeting of the bid adjudication committee informed members that
the meeting of that committee would start at 14:00.
The notice of
the meeting of the bid evaluation committee read that that meeting
would start at 14:30 on the same day.
Although
the transcript has been made available by SPM on the basis that it
is a transcription of the proceedings at the meeting
of the bid
adjudication committee on 25 May 2007, it has been annexed to the
answering affidavit of Mashilo under cover of a
page purporting to
be the cover page of a transcription of the meeting of the bid
“EVALUATION” committee of 6 September
2007 (a meeting
which did indeed take place and will be reverted to in due course).
It
will for purposes of this judgment be accepted that it is indeed a
transcription of the proceedings at the bid adjudication
meeting of
25 May 2007. It does, however, quite clearly reflect that for some
reason only part of those proceedings was recorded.
According
to Mashilo the meeting of the bid adjudication committee was held
immediately after the meeting of the bid evaluation
committee in
order “
to
expedite a tender decision
”,
apparently because “
The
contract with Actaris had already been extended twice and the
continuation of this state of affairs was not desirable
”.
I
have to say that I find this explanation completely improbable and
extremely difficult to believe.
As
already mentioned, the existing contract was in any event extended
on a month to month basis until 31 August 2007. What
could the
need for such an urgent decision have been if the contract was in
any event going to be extended again for firstly
June 2007, then
July 2007 and finally for August 2007?
If
the reason for the urgency was to put an end to the contract with
Actaris as soon as possible, why was Actaris not informed
of the
outcome of its bids with the same measure of urgency as in the case
of IMS?
According
to the transcript
,
Mogatwe right at the outset remarked as follows:
“
We
will be taking, we will reach decisions. I will be uncomfortable to
decide with these and we need to see those conditions.
I
would say I am uncomfortable because I want us, I understand the
urgency, but I want us to have the documentation so that we decide
on
what we can proceed, given the workshop that we have on budgets.
Because we are going to take adverse decisions and it will
not be a
bidder, I speak briefly about the magnitude of the bidder contract.
So
I think we need to put it right. I understand the urgency but we
need to have a look at the
(inaudible)
ment,
apply our minds to the documents because of the
(inaudible)
contract.
So
I could be a bit uncomfortable to agree to something that I don’t
see.
”
The
chairperson then asked somebody called Pierre whether it was
possible to have the required documentation available that day.
It
appears quite clearly from the transcript that the documentation
required was actually the report and the recommendations of
the bid
evaluation committee, because mention was specifically made of the
conditions decided upon by that committee.
It
is equally clear that no written report or recommendations was made
available and that, instead, the members of the
bid
adjudication committee had to rely on what “
Eugene
”
(presumable mr Eugene Baise, a member of the bid evaluation
committee), who by his own admission had not even made notes
of the
proceedings and discussions of the bid evaluation committee, told
them in this regard.
According
to the transcript Baise also said that he would merely “
highlight
a few
(conditions)
that
was mentioned
”,
and he therefore clearly did not intend to even attempt to convey
the contents of the bid evaluation committee’s
deliberations,
conclusions and recommendations comprehensively.
When
regard is had to the contents of the transcript it is very clear
that it could by no stretch of the imagination be said that
a
comprehensive version of the decisions and recommendations of the
bid evaluation committee was furnished to those who attended
the
meeting of the bid adjudication committee.
As
only one of many examples of the inadequacy of Baise’s
responses and explanations, reference can be made to the following
answer of Baise to Mogatwe’s question regarding the duration
of the pre-payment electricity meters contract:
“
They
guarantee, they are open for ten years, but we need to have a
maintenance agreement with IMS to maintain the system. So it
is the
three year process, but I think also that was asked to be included in
the MOU, is to give a detail as to the project plan
for them to
install these meters within that three years, obviously of that I
think they have mentioned something like that. They
guarantee the
system for ten years, but it’s only three years.”
The
“
MOU
”
was apparently a reference to a memorandum of understanding which
would contain the conditions applicable to the awarding
of the bids
to IMS. Despite requests on behalf of Actaris no such documentation
have been made available by SPM.
When
somebody identified only as “
Speaker
1
”
wanted to discuss questions regarding the financial implications of
“
Financial
offer number 3
”
(a clear reference to one of the offers of IMS) the chairperson
reacted by making the following remark:
“
Can
I suggest something? Normally when we adjudicate we don’t
normally get a detailed history in terms of what questions
was asked
and what answer was given. Let us rather concentrate on the
questions that will help ourselves, and let Eugene clarify
any
conditions are included here. …
Because
we are going to be confused because now we are not the people that
were part of the committee, we are not be getting those
questions in
detail.
”
It
is clear that the chairperson want
ed
to discourage those present from considering what was discussed at
the meeting of the bid evaluation committee. That the chairperson
was only concerned with getting the meeting over with as soon as
possible is also borne out by her remark:
“
I
am trying to act, I am really feeling so sick. I want to be out of
here
”.
Repeated
questions about whether the IMS system was a closed or proprietary
one and about whether its meters and system would
be STS compliant
or compatible were on the fac
e
of it not met with comprehensible answers or explanations.
This
is perhaps not surprising
,
because these questions were put to Baise, who by his own further
admission was not “
a
technical person
”.
He was attached to the treasury department of SPM. That Baise was
unable to provide any meaningful explanations to
these questions
appears clearly from the chairperson’s remark: “
I
am not understanding why Raymond
(a clear reference to mr Raymond Pretorius)
isn’t
here
”.
That the question
whether the IMS system would be fully STS compliant did indeed
involve issues of a highly technical nature,
is borne out very
clearly by the evidence that has been tendered in this regard by all
three parties.
It
is clear on the papers that the STS compatibility or
non-compatibility of the IMS system bore serious financial and other
implications and therefore the absence of a technical expert as a
member
(or at least technical input) at the meeting of the bid adjudication
committee obviously resulted in prejudice. Not only did
it result
in a decision being taken on a highly technical issue without the
contribution or influence of the vote of an expert,
but also the
absence of technical advice and input resulted in the members and
others who attended not being properly informed
and not being able
to properly apply their minds.
Among
the vague answers given by Baise regarding the STS compatibility of
the IMS system was the remark that “
the
item page 33 and 34 there it addresses the STS meters and the
non-STS meters as well
”.
Due
to the fact that mr Baise did not bother to elaborate on this, it is
impossible to determine what exactly he was referring
to or to
conclude that the question had been answered (and the technical
position explained) sufficiently to ensure that the
members of the
bid adjudication committee properly understood the technical
position and, more importantly, what the findings
and
recommendations of the bid evaluation committee in this regard were.
What
one does, however, have to go on (from Mashilo’s affidavit) is
that the final technical report by KES was taken into
account and
relied upon at these meetings of the bid evaluation committee and
the bid adjudication committee. In its final report
KES concluded
and advised that:
“
Although
IMS meters have a unique metering system, however don’t comply
with STS specification … “.
“
The
priority points comparison score sheets indicate that ACTARIS and
CONLOG systems are the only two interoperable metering solutions
that
complies with the STS specification
”.
Both SPM and IMS are
adamant that the IMS system is STS compliant. On this version it
would therefore have to be assumed that
the members of the bid
adjudication committee had come to their conclusions and had made
their recommendations on the basis that
the IMS system was STS
compliant. This would, however, be irreconcilable with the KES
report, which was according to Mashilo
adopted as correct and taken
into account at that meeting.
According
to
its minutes the bid adjudication committee had, however, approached
the matter on the basis that
“…
IMS meters … don’t comply with STS specification …”
and
that only the system of Actaris and Conlog
“… complies with the STS specifications
”.
Such
an approach (and an acceptance of this as the correct factual
position) by the bid adjudication committee would not only
have been
in line with what Actaris’ case is as regards the STS
compatibility of the IMS system and with KES’ findings,
but
more importantly also with the contents of a document which forms
part of the record and which, according to the typed heading
on its
cover page, purports to be the “
AGENDA
& MINUTES”
of
the
“BID EVALUATION COMMITTEE MEETING … HELD ON …
25-05-07
”
(on the cover page the handwritten word “
Draft
”
also appears). Exactly the same remarks regarding the issue of STS
compatibility, word for word, appear in this document.
Although
the minutes of a bid evaluation committee meeting on 11 July 2007
reflect that the minutes of its meeting on 25 May 2007
were adopted
as correct, it is SPM’s case that this is in fact not what
happened and that the minutes of 25 May 2007 (which
according to
Mashilo were only draft minutes) were eventually revised and amended
at a meeting on 6 September 2007.
The
amended version of these minutes differs drastically from the
initia
l
version. In particular the remarks about the IMS system not being
STS compliant do not appear in the amended version at all.
In fact,
according to the amended version there could not have been any
consideration of the STS issue, which would raise the
question how
on earth the mistake could have been made, by the person who
prepared the so-called draft minutes, to note a fairly
detailed
discussion of this issue.
The
amended version also contains a number of material additions
regarding what had transpired and what had been discussed and
recommended at the bid evaluation committee meeting of 25 May 2007.
The most notable of these would perhaps be the “
NOTE
”
to the affect that Actaris’ failure to respond to the letter
regarding its pricing had left the committee without
information
which “
was
very critical in making the final decision
”.
I
find the timing of this addition very interesting. It was effected
after Actaris had requested reasons on 29 June and 3 August
2007,
but before Actaris’ failure to respond was stated as a reason
(for the awards) on 2 October 2007.
This
must be seen against the background of the further strange
coincidence that, according to Mashilo, not only had the proceedings
at the meeting of the bid evaluation committee on 25 May 2007 been
minuted completely incorrectly and incomplete, but also a
mistake
had once again been made in the minutes of 11 July 2007 as regards
whether the minutes of 25 May 2007 were approved and
adopted or not.
If it was realised at
the meeting of 11 July 2007 that the draft minutes of 25 May 2007
were not correct, as claimed by Mashilo,
why was the problem not
discussed and corrected there and then?
E
ven
more strange are the minutes of the meeting of the bid adjudication
committee of 25 May 2007, which meeting is supposed to
have taken
place immediately after the bid evaluation committee meeting and
where Baise is claimed to have apprised members of
that committee of
what had transpired at the earlier meeting of the bid evaluation
committee. Those minutes correspond perfectly
with the draft
(“
incorrect
”)
minutes, to the finest detail, but do not reflect any of the
amendments or additions of the amended version.
I
deem it unnecessary to burden this judgment with a detailed
description of the similarities between the “
incorrect
”
bid evaluation committee minutes and the bid adjudication committee
minutes, or of the differences between the contents
of these two
sets of minutes, on the one hand, and the amended minutes, on the
other hand. Even a superficial reading of these
documents will
reveal these similarities and differences.
The
minutes of the bid adjudication committee’s meeting of 25 May
2007 have not been claimed to also be incorrect. Neither
these
minutes nor the tra
nscript
of that meeting reflect any mention of a problem regarding Actaris’s
costing or of the fact that Actaris had failed
to respond to a
letter in this regard.
In
fact, the transcript reflects not even a mention of the name
Actaris. For some strange reason Actaris’ failure to respond,
which according to both the note in the amended minutes of the bid
evaluation committee and SPM’s reasons had played such
a vital
role in the consideration of the tenders, was according to the
transcript not even mentioned at the meeting of the bid
adjudication
committee and was not noted in the minutes of that meeting.
The transcript also
does not reflect any deliberation on the pricing of additional
meters, an issue which had according to the
amended minutes (but not
the draft minutes) of the bid evaluation committee been discussed
and deliberated and which one would
have expected Baise to have
raised at the bid adjudication committee’s meeting if he had
intended to provide that committee
with an oral version of, at
least, what had been recommended by the bid evaluation committee.
To
sum up thus far, even on SPM’s own version, what Baise had
conveyed to the bid adjudication committee on 25 May 2007
could by
no stretch of the imagination be claimed to have amounted to an oral
version of the “
report
and recommendations
”
which the bid evaluation committee had been supposed to
submit
and which the bid adjudication committee had been supposed to
consider
.
It
is therefore not necessary to decide whether it would in any event
technically have been possible, and in compliance with paragraphs
27(1)(d) and 29(1)(a) of the policy and regulations 29(1)(d) and 29
(1)(a), to “
submit
”
and “
consider
”
an oral version of the bid evaluation committee’s report and
recommendations.
It follows that the
mandatory provisions in this regard have also not been complied
with.
That this had
contributed to the confused and, with respect, mostly incoherent
discussions (if indeed it could be called discussions)
of the bid
adjudication committee is in my view clear.
The transcript
reflects that Baise did not volunteer any information. He only
responded to questions. Without a report and a
full version of the
recommendations of the bid evaluation committee, it would obviously
not have been possible for the members
of the bid adjudication
committee to have had a meaningful discussion or, indeed, to
properly apply their minds to the complicated
technical issues and
enormous financial implications involved in these bids.
I
deem it unnecessary to burden this judgement with examples of such
confusion and incoherence. Once again a simple reading of
the
transcript will reveal these. Suffice to say that what very little
of the 18 page transcript is coherent, simply cannot
seriously be
contended to be indicative of a proper application of their minds by
the members of the bid adjudication committee.
I
cannot, therefore, agree with mr Stein’s submission that the
transcript bears evidence that the members of that committee
had “
In
essence … properly considered and discussed … issues
such as affordability, proprietary issues, issues of integration,
the details of the financial offer of IMS … , legal
compliance and the nature of the IMS system”
.
There
was some argument on whether SPM had been obliged to furnish Actaris
with a copy of the transcript. In view thereof that
a copy of the
transcript had in fact been furnished, it is not necessary to decide
this issue. Suffice to say that what was
decided in
Johannesburg
City Council v The Administrator, Transvaal and Another
(1)
1970 (2) SA 89
(TPD) at 91E-92A regarding a “
record
of deliberations
”
(also referred to in
MEC
for Roads and Public Works, Eastern Cape, and Another v Intertrade
Two (Pty) Ltd
2006 (5) SA 1
(SCA) at 7D-H) may have to be revisited in view of the
constitutional rights to administrative justice and to reasons that
now
exist (
cf
Afrisun
Mpumalanga (Pty) Ltd v Kunene NO and Others
1999 (2) SA 599
(TPD) at 629F-632D).
I cannot, however,
agree with mr Cassim’s submission that the contents of the
transcript should not be taken into account
by the Court in this
application. SPM has, while being legally represented and in the
course of the review proceedings, chosen
to disclose and produce the
transcript and has clearly waived whatever right it may have had not
to do so.
The contents of the
transcript are clearly highly relevant in determining whether the
bid adjudication committee had functioned
properly in the
circumstances and whether its members had properly applied their
minds.
There
is no merit at all in mr Cassim’s argument that, at the stage
when the bid adjudication committee met, “(Actaris)
had
been disqualified for further evaluation in respect of the
pre-payment meters contract due to its failure to meet the
functionality
threshold”
,
that that contract had been “
the
major contract financially
”
and that the bid adjudication committee “
could
not have reversed
(Actaris’)
disqualification
… however long its deliberations could have taken
”.
It
goes without saying that neither KES nor Mpolokeng had the authority
or power to disqualify any bidders. All that KES could
do, was to
recommend the award of points on a certain basis. Mpolokeng’s
duty was then to reduce or copy those points
to a spreadsheet for
the purposes of consideration thereof by the bid evaluation
committee and the bid adjudication committee.
Both the bid
evaluation committee and the bid adjudication committee had only the
right to make recommendations on what should
eventually be decided
by the accounting officer regarding the award of the bids – in
this case the bid adjudication committee
did not have the delegated
power to make the award/s itself (see paragraphs 27(1)(d) and
28(1)(b)(ii) of the policy and regulations
28(1)(d) and
29(1)(b)(ii)).
Just as the bid
evaluation committee did not have the power to decide to award a
bid, it also did not have the power to decide
to disqualify and not
to award a bid. The bid evaluation committee simply had no power to
decide to eliminate any of the bidders.
In
order not to make itself guilty of mere rubberstamping, it would
have had to consider the points awarded by KES,
inter
alia
in respect of functionality, and to come to a decision on whether to
accept those points as correct or not. If it did, it could
then
make recommendations to the bid adjudication committee regarding who
to disqualify or eliminate and who to recommend to
the accounting
officer. The same applies to the bid adjudication committee.
On
mr Cassim’s argument both these committees would, at least as
far as the points awarded by KES to Actaris on functionality
in
respect of the pre-payment electricity meters contract are
concerned, have been no more than rubberstamps, having to accept
that those points could not be considered by it.
Even
if mr Cassim’s argument was for the moment assumed to be
correct in respect of the pre-payment electricity meters contract,
the problem would remain that the other two contracts which were
awarded had been “
considered
”
by a bid adjudication committee which had not been properly
constituted and whose members could not and did not properly
apply
their minds.
The
three contracts were awarded to IMS on t
he
basis that all three would form part of an integrated solution and
quite clearly all three awards would have to be set aside
if two of
them were fatally flawed.
SPM
as a municipality is an organ of State and its decision/s “
to
award or reject a tender constitutes administrative action
”
(see
Total
Computer Services v Potchefstroom Local Municipality
[2007] ZAGPHC 239
;
2008 (4) SA 346
(T) at 352B).
Counsel
for Actaris, mr Rogers SC, argued that SPM had failed to give
reasons within the 90 day period prescribed in section 5(2)
of the
PAJA and that, therefore and in terms of section 5(3) of the PAJA,
its decision/s regarding the bids had to be presumed
to have been
taken without good reason.
The relevant
provisions of section 5(3) of the PAJA read as follows:
“
If
an administrator fails to furnish
adequate
reasons for an administrative action it must, … in the absence
of proof to the contrary, be presumed in any proceedings
for judicial
review that the administrative action was taken without good reason”
.
(My emphasis)
What
the phrase “
adequate
reasons
”
means was dealt with in
Minister
of Environmental Affairs & Tourism v Phambili Fisheries
2003
(6) SA 407
(SCA) at 428A-F and clearly has nothing to do with
whether such reasons are given timeously.
Section 5(3) of the
PAJA makes no reference to the 90 day time limit and it is therefore
by no means clear that the legislator
intended the presumption to be
activated also in cases where adequate reasons were given, but
outside the 90 day time limit.
The
case of
National
Transport Commission and Another v Chetty’s Motor Transport
(Pty) Ltd
1972 (3) SA 726
(A), relied upon by mr Rogers, is also not really of
much assistance in this regard, because there no reasons at all were
given.
In
view of the basis upon which I have already come to the conclusion
that the decision/s fall to be set aside it is unnecessary
to come
to a final conclusion as regards the applicability of the provisions
of section 5(3) of the PAJA in these circumstances.
I have in any
event not approached the evidence and the above issues on the basis
of that presumption, but rather on the basis
that Actaris bears the
onus of proof.
Mr
Stein argued that, even if the Court should come to the conclusion
that the decision/s are reviewable, it should exercise its
discretion against setting aside those decisions. He submitted that
it would not be just and equitable (see
s
8(1)
of the
PAJA
)
to set aside these decisions, because:
the
IMS system is “
an
extremely capable system
”;
SPM
and its consumers are suffering prejudice because of the delay;
a new tender process
might have the same outcome; and
IMS has always acted
in good faith.
It is not for the
Court to speculate on what the outcome of a proper reconsideration
of the bids may be. It may happen that exactly
the same awards are
made after due compliance with all requirements and proper
consideration, but it may also be that the decision
is then in
favour of Actaris, or another bidder.
There
can be no doubt that Actaris has been prejudiced by SPM’s
conduct. It had the right to have its tenders properly
evaluated
and adjudicated. It may well be that, after due process and proper
consideration, the conclusion is that the Actaris
system is just as
capable or that, although slightly less efficient, it is the most
cost-effective system.
Much
was made in the papers and in argument of the capabilities of the
respective systems and of how exactly the pricing of IMS
and Actaris
should be interpreted, and what exactly the total costs of each of
their bids and proposals were going to be. These
are exactly the
issues which one would have expected to have been discussed and
considered by the bid evaluation committee and
the bid adjudication
committee, but which apparently were not.
In
view of the conclusion to which I have already come it is not
necessary to make any findings in this regard. It is in any
event
not for this Court to consider the merits of the tenders and of the
awards. What this Court is on review concerned with
is the way in
which those merits were dealt with in the bid process.
Both mr Rogers and mr
Cassim attempted to illustrate that the costs of the tenders of,
respectively, IMS and Actaris were actually
much higher than would
on the face of it appear to be the case.
The
fact is, however, that when regard is had to paragraph 8 of the
additional reasons of SPM, it appears that, at the very least,
its
own officials had been under the impression that the total costs of
the IMS tender were going to be R94 653 500,00, compared
to
Actaris’s discounted price of R35 000 000,00 excluding VAT.
There
is, however, no indication in any of the minutes or in the
transcript that this was discussed and considered at any stage
and I
do not think that it would be in the interest of justice or of the
public to now approach the matter on the basis of the
numerous
calculations and interpretations of the costing structures in the
tenders, which were produced in the papers and in
argument, but
which were on the face of it never considered by the appropriate
committees and officials. To exercise my discretion
in the manner
suggested by mr Stein and to allow IMS to further execute these
contracts while such serious financial implications
were on the face
of it not considered in the award of the contracts, would in my view
be reckless.
On
IMS’ own version SPM and the ratepayers of Kimberley are
already better off than they were under the contract with Actaris.
I therefore cannot agree that an order setting aside the awards
would cause prejudice to such an extent that the relevant bodies
and
officials should not be afforded the opportunity of themselves
properly considering the numerous technical and financial
implications of these tenders.
As
far as IMS is concerned, any possible prejudice that it may suffer
as a result of such a delay is in my view by far outweighed
by, one
the on hand, the losses that SPM (and in effect its consumers) will
suffer should it appear that the costs of the IMS
tenders are
significantly higher than would be necessary and justifiable on any
basis and, on the other hand, the obvious prejudice
that Actaris
would suffer through the unlawful rejection of its tenders.
In my view the
appropriate order would therefore be to set aside the award of the
three contracts to IMS and to refer the matter
back to SPM. No
order will be made as regards the contract which was not awarded.
There
is no reason why costs should not follow suit and none was suggested
in argument. I will order that such costs should include
the costs
of two counsel. The issues in this matter are fairly complex and
the papers voluminous.
In the premises the
following orders are made:
The
decisions of the first respondent, taken in and during 2007, to
award the tenders under contract numbers CEE/T/2006,
F/INC-VEND/2006 and CE/F-RP/1/2006 to the second respondent are set
aside and the adjudication of the aforesaid tenders are referred
back to the first respondent to deal with in accordance with all
applicable statutory and other requirements.
The
first and second respondents are ordered to pay the applicant’s
costs jointly and severally, the one to pay the other
to be
absolved pro tanto, such costs to include the costs of two counsel.
The second
respondent is ordered to pay the wasted costs of the first
respondent occasioned by the postponement of the application
on 9
September 2008.
________________________
C J OLIVIER
JUDGE
NORTHERN CAPE
DIVISION
I agree:
________________________
C C WILLIAMS
JUDGE
NORTHERN CAPE
DIVISION
For the
Applicant: Adv
Rogers SC
Instructed
by: Elliot, Maris, WIlamans & Hay, KIMBERLEY
For the
1
st
Respondent: Adv Cassim SC
Instructed
by: Engelsman Magabane Inc., KIMBERLEY
For the
2nd
Respondent: Adv Stein
Instructed
by: Du Toit-Bomela, KIMBERLEY