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[2024] ZANCHC 64
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Boinko Trading and Investment (Pty) Ltd v Northern Cape Agricultural High School and Others (CA&R 24/2023; 319/2023) [2024] ZANCHC 64 (5 July 2024)
IN
THE HIGH COURT OF SOUTH AFRICA
(NORTHERN CAPE
DIVISION, KIMBERLEY)
Case No: CA&R
24/2023; 319/2023
Heard: 20 May 2024
Judgment delivered: 5
July
2024
Reportable: YES /
NO
Circulate to Judges: YES
/
NO
Circulate to Regional
Magistrates: YES /
NO
Circulate to Magistrates:
YES /
NO
In the matter between:-
BOINKO TRADING AND
INVESTMENT (PTY) LTD
APPLICANT
and
NORTHERN CAPE
AGRICULTURAL HIGH SCHOOL FIRST
RESPONDENT
MEC: DEPARTMENT OF
EDUCATION
NORTHERN CAPE
PROVINCIAL GOVERNMENT
SECOND RESPONDENT
ZAKMOR SUPPLIERS &
GENERAL TRADING
THIRD RESPONDENT
CORAM:
MAMOSEBO J ET STANTON J
JUDGMENT
Stanton J:
INTRODUCTION
:
-
[1]
Zakmor Suppliers and General Trading
(“
Zakmor
”) was the successful tenderer in a
contract between the Northern Cape Agricultural High School (“the
School”)
and the MEC: Department of Education Northern Cape
Provincial Government (“the Department”) (jointly “
the
Respondents
”) for the demolishment and disposal of the
asbestos hostel Asterhof and for repairs and renovations to the
school hostel
(Lekkerboer) and abattoir, under tender number
ST100/2022/23 (“
the tender
”).
[2]
In this review application the applicant, Boinko Trading and
Investments (Pty) Ltd
(“
Boinko
”), as the
unsuccessful tenderer, seeks the following relief in its amended
notice of motion, that: -
2.1
The decision by the Department to award
the tender to Zakmor be reviewed, declared unlawful and set aside;
2.2
The contract entered into between Zakmor
and the Department pursuant to the award of the tender be declared
ab
initio
, void and setting same aside;
2.3
All payments made by the School to
Zakmor pursuant to the award of the tender be declared void; and
2.4
The Department be directed to award the
tender to Boinko, alternatively that the School be directed to
re-evaluate and adjudicate
all bids received and to make an award in
line with the tender documents.
[3]
The Department and the School opposed the application. Zakmor did
not.
[4]
The essential facts, not in dispute, are briefly these. According
to the Department’s
Norms and Standards published during
November 2016, the first-line priority of the Department included the
removal of all inappropriate
structures made from materials such as
asbestos, wood and metal by November 2019. In view of the fact
that the Department
has limited Implementing Agents and no supply
chain management policy,
a school
allocation was done in terms of sections 44 and 45 of the Public
Finance Management Act, Act 1 of 1991 authorising the
principal of
the School to perform all duties in respect of the tender on the
Department’s behalf (“
the
School Allocation policy
”).
On 17 November 2022, the project was advertised on the bulletin
board of OK Grocer and Shoprite in Jan Kempdorp,
on the School’s
Facebook page and bulletin board as well as at Toubrin Internet and
in the newspaper. The information
session was scheduled and
took place on 23 November 2022. The closing date for the
submissions of bids was 07 December 2022.
Thirteen applications
were submitted of which only three were found responsive. The
Department’s price specification
was an amount of
R8,325,692.95. Zakmor’s price bid was R8,008,525.98.
Although Boinko scored the highest points
on tables 3 and 4,
its financial offer was considered and found to be 27,6% short of the
estimated budget. The tender was
awarded to Zakmor on 15
December 2022, who had to complete the work within five months.
Boinko filed
its review application on 15 February 2023, but did not seek interim
relief for Zakmor’s appointment to be stayed
pending the
outcome of the review application.
[5]
According to Boinko, the
application is subject to the provisions of the Promotion of
Administrative Justice Act, Act 3 of 2000
(“PAJA”) as
well as the principle of legality by virtue of the fact that the
impugned decision is unlawful, invalid
and unconstitutional as a
result of the School’s disregard of the supply chain management
policies and section 217 of the
Constitution of the Republic of South
Africa, more specifically in that: -
5.1
The tender box was not opened and the bid prices were not read out in
public on the date
and time of the closing of the tender;
5.2
Zakmor should have been disqualified as unresponsive on the basis
that it failed to submit
a valid Central Supplier Database report
(“CSD report”) and a valid asbestos certificate; and
5.3
The respondents were obliged to appoint Boinko as it was the
contractor with the highest
score and lowest price as provided for in
the School Allocation policy, and accordingly the Bid Adjudication
Committee (“the
BAC”) had acted irregularly, with bias
and therefore unfairly.
APPLICABLE
LAW: -
[6]
It is well established that a tender process implemented by an Organ
of State is an
"administrative action" within the meaning
of PAJA. The awarding of government tenders is governed by
section 217(1)
of the Constitution of the Republic of South Africa,
1996 (“the Constitution”). Awards must be made in
accordance
with a system that is fair, equitable, transparent,
competitive and cost effective. But a procurement system may
provide
for categories of preference and for the advancement of
categories of persons as provided for in (section 217(2)). National
legislation must prescribe the framework for the implementation of
any preferential policy (section 217(3)). This is done
by the
Preferential Procurement Policy Framework Act 5 of 2000 (“the
PPPF Act”). It provides that Organs of State
must
determine their preferential procurement policy based on a points
system. The importance of the points system is that
contracts
must be awarded to the tenderer who scores the highest points unless
objective criteria justify the awarding thereof
to another tenderer
(section 2(1)(f)).
[7]
As observed by Cameron JA in the matter of
Logbro
Properties CC v Bedderson NO and others
[1]
:
-
"The starting
point must be that the tender process constituted an administrative
action under the Constitution. This
entitled the appellant to a
lawful and procedurally fair process and an outcome, where its rights
were affected or threatened,
justifiable in relation to the reasons
given for it…”
[8]
What is fair administrative process depends on the circumstances of
each case. In
Metro
Projects CC & another v Klerksdorp Local Municipality &
others
[2]
,
the Supreme Court of Appeal confirmed that:
“
Fairness must
be decided on the circumstances of each case. It may in given
circumstances be fair to ask a tenderer to explain
an ambiguity in
its tender; it may be fair to allow a tenderer to correct an obvious
mistake; it may, particularly in a complex
tender, be fair to ask for
clarification or details required for its proper evaluation.
Whatever is done may not cause the
process to lose the
attribute of fairness or, in the local government sphere, the
attributes of transparency, competitiveness and
cost effectiveness.”
The
opening of the tender box: -
[9]
Boinko
inter alia
challenges the award of the tender on the
basis that the opening of the tender box was not in accordance with
the tender specifications,
that it was not opened in public in the
presence of the tenderers, and therefore the process was unfair,
neither equitable nor
transparent or competitive.
[10]
The tender documents specified the closing date for the submission of
the tender and the opening
of the tender box as 16:00 on 07 December
2022.
[11]
According to Boinko: -
11.1
The tenderers present at 16:00 on 07 December 2023 were informed that
the tenders would be opened at
10:00 on 08 December 2022 as the
Department’s officials were absent;
11.2
The School’s principal, the SGB chairperson and the
Department’s officials were again not
present; and the opening
of the tender box did not take place on 08 December 2022;
11.3
It received the Bid/Tender opening information from the School’s
principal on 15 December 2022,
having demanded same on 14
December 2022; and
11.4
The Bid/Tender opening information reflects the opening date of the
tenders as “07-08/11/2022
at 11H00”.
[12]
Mr P Mthombeni, on behalf of Boinko, in support of his argument that
the tenders had to be opened
in public in the presence of the service
providers, and the failure to do so, resulted in the procedure to be
not transparent and
grossly irregular, relied on the fact that the
School Allocation policy required the advertisement to stipulate that
the “
BIDS WILL BE OPENED IN THE PRESENT OF THE SGB MEMEBERS,
NCDOE OFFICIALS AND SERVICE PROVIDERS/REPRESENTATIVE.” [sic]
He contended that it would be non-sensical to specify it as a
requirement for the advertisement, and then disregard that
requirement
when the tender box is opened.
[13]
This argument however, is not borne out by facts. The School
Allocation policy does not
stipulate the manner in which, or in whose
presence, the opening of the tender box should occur. Furthermore,
the School
Allocation policy does not stipulate at which time and on
which date the tender box would or should be opened. It merely
reads “
With the closing of tenders, all submissions should
be placed in a (SEALED) box/STEEL (LOCKABLE CONTAINER) and opened in
an SGB
meeting or a delegation of the SGB. A list should be
made with the names and the tender price of the contractors who
submitted.
This list should form part of the meeting minutes.”
In addition, the minutes of the Bid Evaluation Committee
(“the BEC”) specify that the opening procedure was done
in
the presence of the principal, Mr VB Mgwevu, Mr M Motshabi, SGB
members and officials from the Department, Ms M Jantjies and Ms
N
Loff. Mr Mgwevu, Mr Motshabi, Ms Jantjies and Ms Loff all deposed to
confirmatory affidavits.
The
CSD report and asbestos certificate: -
[14]
It is common cause that the tenderers were required to submit a valid
CSD report and asbestos
certificate to qualify for consideration.
[15]
According to Boinko, Zakmor submitted a CSD report dated 17 December
2022, indicating that Zakmor
was granted the opportunity to submit
same after the closing date, where other bidders were not granted the
same opportunity; and
were accordingly found to be non-responsive.
Boinko also contends that Zakmor did not submit a valid
asbestos certificate
as the certificate included in the record was
only valid from 30 September 2019 until 29 September 2022. Mr
Mthombeni submitted
that the respondents’ explanation in their
answering affidavits is unacceptable as the valid A Man Asbestos
(Pty) Ltd certificate
should have been included in the record, and
not attached to their answering affidavits. Boinko therefore
submits that the
BEC was obliged to disqualify Zakmor, or to declare
it non-responsive, which it failed to do, and as a result, the
process was
not fair, equitable, transparent or competitive as
required by section 217 of the Constitution.
[16]
In my view, this ground of review is unmeritorious in view of the
following: -
16.1
The respondents proffered the following detailed explanation in their
answering affidavit: -
16.1.1
Mr OG Mogatle, the deponent to the respondents’ answering
affidavit and the Director,
Legal Services of the Department, was
informed by Mrs M Owambo, the secretary of the BAC, who also deposed
to a confirmatory affidavit,
that she had prepared the file of the
successful bidder by removing the file binding of the Zakmor tender
and placing same together
with the minutes of the BEC and BAC into
one Lever Arch file;
16.1.2
Zakmor submitted 2 asbestos certificates in the names of Mamfene
Trading CC and A Man Asbestos
(Pty) Ltd;
16.1.3
The valid A Man Asbestos (Pty) Ltd certificate that formed part of
the record, must have accidentally
been removed when the record was
compiled;
16.1.4
The Mamfene Trading CC asbestos certificate, which was included in
the record, expired on 29
September 2022, but the A Man Asbestos
certificate, attached to the founding affidavit, is valid from 29
August 2022 to 28 August
2025; and
16.1.5
Zakmor submitted a valid CSD report dated 4 December 2022, as is
evident from the certification
thereof. The CSD report, dated
17 December 2021 was filed as it is a requirement that before a
supplier is appointed, the
supplier’s CSD status has to be
verified again; and
16.2
The minutes of the BEC also confirm that Zakmor was not disqualified
on the basis that it had not submitted
a valid CSD report and
asbestos certificate.
Evaluation
of Boinko’s tender against that of Zakmor: -
[17]
According to the minutes of the BEC: -
17.1
Boinko scored the highest in respect of the 80/20 preference point
system, which is reflected as follows:
-
NAME
OF BIDDER
BID
PRICE
PRICE:
POINTS
B-BEE
POINTS
TOTAL
BOINKO
TRADING AND INVESTMENTS
R6,072,570.40
80
20
100
ZAKMOR
SUPPLIERS AND GENERERAL TRADING
R8,000,525.89
54.60
20
74.60
GEEZFIX
R8,838,491.75
43.56
20
63.56
17.2
Boinko is a reputable contractor with numerous similar R&R
projects that have been completed successfully;
and it can be
concluded that Boinko has the prerequisite experience and is
considered capable of successfully executing the tender;
17.3
Zakmor was ranked highest based on financial offer and preferences;
and its financial offer was considered
very competitive and
considerably lower than the allocated budget estimate; and
17.4
The BEC recommended that Zakmor, who scored the second highest in
accordance with the PPPFA, should
be appointed.
[18]
The BAC’s minutes reflect that:
“
As
per scoring, BOINKO TRADING AND INVESTMENTS scored the highest,
however, in terms of pricing, he reached 27,06% short from the
estimated budget which was more than the prescribed 20% and his
prices were not market related. This company has elaborated
on
Page 34 of the Tender document that they have current commitments.
Therefore,
coming in second place is ZAKMOR SUPPLIERS AND GENERAL TRADING and
his prices are more market related prices and only
has a shortfall of
3,9%. This company also elaborates on Page 34 of the Tender
Document that he does not have any current
commitments that could
hinder him from execution of the project.
These
recommendations were consulted with the Chief Works Inspector (Mr
Donavan van Wyk) from NCDoE and are attached.”
[19]
Mr D van Wyk’s report confirms that Boinko’s tender
amounts are too low (more than
20%) and not market related, but that
Zakmor’s tender is market related and acceptable as it only has
a 3,91% shortfall.
[20]
Boinko avers that it should have been appointed as the successful
tenderer in view of the fact
that it had the lowest bid price and
scored a total of 100%, while Zakmor scored only 74,60%. In
support of its arguments,
Boinko relies on paragraphs 8 and 9 of the
School Allocation policy, which reads: -
“
8.
The SGB or a delegation of the SGB should then meet and adjudicate
the project. The
process should be minuted and the scoresheet
must form part of the minutes. The contractor with the highest
score and the
lower price should always be appointed. If for
some realistic reason, the best candidate will not be appointed, the
reasons
should be minuted. (This should only happen in
exceptional cases and with just reasons).
9.
If the tender amount of the contractor with the highest score is more
than 20%
lower than the estimated amount, this contractor should be
given the chance to withdraw their tender. If they are happy to
continue with this price, he should be appointed.”
[21]
It is neither in dispute that Boinko had the highest score and lowest
bid price, nor that Boinko
was not given the opportunity to withdraw
its tender in terms of paragraph 9 of the School Allocation Policy.
[22]
The respondents, however, assert that the BAC considered all
available information and documentation
received from the BEC,
including the report submitted by Mr van Wyk. In addition, they
allege in their answering affidavit
that Mr Van Wyk, who deposed to a
confirmatory affidavit, was called before the BAC to give an
explanation on his finding and report;
and that he explained that
when the bid price differs from the price specifications by more than
20%, this is identified and considered
as high risk as the contractor
could run into financial difficulty and would not be able to complete
the project, either on time
or at all.
[23]
On scrutiny of the minutes of the BAC, it is, however, not minuted
that Mr van Wyk either attended
or advised the BAC that the possible
award to Boinko could be high risk. In contrast, the minutes of
the BEC state that Boinko
is capable of successfully executing the
tender.
[24]
In my view, neither exceptional circumstances nor just and realistic
reasons therefore existed
to justify the awarding of the tender to
Zakmor as opposed to Boinko.
The respondents also fell
foul of the the PPPF Act.
[25]
It follows that the award of the tender to Zakmor is invalid and
reviewable.
[26]
That is, however, not the end of the matter. In appropriate
circumstances a court will
decline, in the exercise of its
discretion, to set aside an invalid administrative act. As was
observed in
Oudekraal
Estates (Pty) Ltd v City of Cape Town
[3]
:
-
"It is that
discretion that accords to judicial review its essential and pivotal
role in administrative law, for it constitutes
the indispensable
moderating tool for avoiding or minimising injustice when legality
and certainty collide."
[27]
Scott JA, in
Chairperson:
Standing Committee and others v JFE Sapela Electronics (Pty) Ltd and
others
[4]
,
with reference to
Associated
Institutions Pension Fund and others v Van Zyl and others
[5]
,
confirmed that there is an element of public interest in the making
of final administrative decisions and the exercise of administrative
functions, to which he added considerations of pragmatism and
practicality. He held as follows: -
“
In my view, the
circumstances of the present case as outlined above, are such that it
falls within the category of those cases where
by reason of the
effluxion of time (and intervening events) an invalid administrative
act must be permitted to stand. While
the court a quo correctly
found that the award of each of the three tenders was invalid when
made, it appears not to have appreciated
that it had a discretion to
decline to set aside those awards. It follows that in my view
the court a quo erred in making
the order it did and this Court is
free to set aside that order.”
[28]
The five month project was awarded to Boinko on 15 December 2022,
more than 15 months prior to
the hearing of this application. In
the present case Boinko did not file an application requesting an
interdict pending the
finalisation of its review application. Boinko
does not submit in its founding or supplementary affidavit that the
project
has not been completed. In their answering affidavit,
dated 28 June 2023, the respondents state that Zakmor “…
has
by now completed the work, alternatively is almost at a stage of
completion.”
In reply, Boinko merely denies the
allegations and states that “
The duration of the contract
does not in any way exonerate the respondents from the unlawful
awarding of the tender.”
[29]
I can therefore come to no other conclusion than that the project has
been completed; and that
in this matter, by reason of the effluxion
of time, the invalid administrative act must be permitted to stand.
[30]
In view of my findings, an appropriate costs order in the
circumstances would be that the parties
pay their own costs.
ORDER:
-
In
the result, the following order is made: -
1.
The application is dismissed.
STANTON
J
I
concur
MAMOSEBO
J
Obo
the Applicant:
Adv.
P Mthombeni
On
instruction of:
Motlhamme
Attorneys
Obo
the First and Second Respondents:
Mrs.
M.P Olivier
On
instruction of:
The
State Attorney
[1]
2003
(2) SA 460
(SCA) at page 466 para 5.
[2]
[2003]
JOL 11590
(SCA) at para 13.
[3]
2004
(6) SA 222
(SCA) para 36 at 246D.
Also
see Moseme Road Construction CC and others v King Civil Engineering
Contractors (Pty) Ltd and another
[2013] 3 All SA 549
(SCA) at para
15.
[4]
[2005] 4 All SA 487
(SCA) at paragraphs [28] and [29].
[5]
2005 (2) SA 302
(SCA at para 46.