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IN THE HIGH COURT OF SOUTH AFRICA
WESTERN CAPE DIVISION, CAPE TOWN
APPEAL CASE NO: A216f2022
COURT A QUO CASE NO: 5106/2021
I o the aoptication between
MEMBER OF THE EXECUTIVE COUNCIL
FOR HEALTH, WESTERN CAPE
And
TULLIS LAUNDRY SOLUTIONS
AMLAZI EQUIPMENT SERVICES (PTY) LTD
Date of hearing: 8 November 2024 APPELLANT
(FIRST RESPONDENT a quo)
FIRST RESPONDENT
(APPLICANT a quo)
SECOND RESPONDENT
Date of judgment: Judgment delivered electronically on 21 January 2025
JUDGMENT
Summary -The appeal involves a dispute between the Member of the Executive Council
(MEC) for Health, Western Cape, and Tullis Laundry Solutions, with Amlazi Equipment
Services (Pty) Ltd as the second respondent regarding the supply, installation, and
maintenance of laundry equipment. The Court a qua per Nuku, J found that the MEC's
evaluation process lacked objective criteria to justify awarding the tender to a bidder other
than the highest scoring one.
The appeal was dismissed for the following key reasons:
1. Lack of Objective Criteria:
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o The tender evaluation process lacked clear, predefined, and objective
criteria for assessing functionality, its initial threshold role and beyond.
o Functionality was improperly used as a subjective factor in the final award
decision, contrary to the Preferential Procurement Policy Framework Act
(PPPFA) and relevant regulations.
2. Procedural Irregularities:
o The evaluation process fused the initial functionality assessment with
subsequent award criteria, leading to inconsistencies and subjectivity.
o Tullis' bid was treated as acceptable during the initial evaluation but later
penalized for deviations without clear, stipulated criteria.
3. Non-Compliance with Regulations:
o Regulation 5 of the Preferential Procurement Regulations (2017) requires
functionality criteria, points, and thresholds to be explicitly stated in the
tender documents. These were absent, making the process procedurally
unfair.
4. Unfair Advantage to Amlazi:
o The evaluation process favoured Amlazi, based on subjective opinions
formed during site visits and interviews, without tying these assessments to
objective, pre-disclosed criteria.
VAN DEN BERG, AJ
[1] Functionality is the quality of being useful, practical, and suitable for the
purpose for which something was made, or the quality of being suited to
serve a purpose well. In the sphere of procuring goods or services for the
state, functionality may also indicate a bidder's experience or the quality
and reliability of the goods tendered. Functionality has a specific role in
public procurement as a quality criterion. Functionality sets the bar for a
tender to be responsive or acceptable1. However, the question arises as to
whether functionality could also serve as objective award criteria for
Clause 1.12 of the General Contract Conditions (GCC) defines "functionality" as meaning
' ... the ability of a tenderer to provide goods or service in accordance with specification as set
ouot in the tender documents'
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awarding a contract to a bidder other than the highest scoring one. If
functionality could be applied as such, at what stage of the bidding process
may it be used? These are some of the aspects that are relevant to this
appeal that deal with the awarding of a bid for the supply, delivery,
installation, testing, and commissioning of laundry equipment for the
Tygerberg Hospital.
[2] The Member of the Executive Council for Health, Western Cape ('the
MEG'), appeals against the decision of the High Court of South Africa,
Western Cape Division, Cape Town, delivered by Justice Nuku, on 5
October 2021. Leave to appeal to this Court was granted by the Supreme
Court of Appeal on 14 October 2023. Central to the appeal is the review
and setting aside of the appellant's decision to award Bid
WCGHCC0232/2020 ("the Bid") to the second respondent, Amlazi
("Amlazi"). The first respondent ("Tullis") challenged the award of the Bid to
Amlazi.
[3] Tullis was successful and the Court reviewed and set aside the decision
taken by the appellant (the MEC) to award the tender for the supply,
delivery, installation, testing, and commissioning of 3 (three) laundry lines
at the Tygerberg Hospital. The Court declared the contract concluded
between the MEC and Amlazi invalid and ordered that the matter be
remitted to the MEC so that the procurement process could commence
afresh without unreasonable delay. The Court also gave directions that the
procurement process, if it is to be evaluated based on functionality, must
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comply with the provisions of Regulation 5 of the Preferential Procurement
Regulations, 2017 ("the Regulations") published in terms of the Preferential
Procurement Policy Framework Act, 5 of 2000 ("PPPFA"). The declaratior}
of invalidity was suspended pending the remittal of the procurement
process to the MEG.
[4] Tullis challenged the award of the Bid to Amlazi on several procedural and
substantive grounds. Ultimately , the dispute, in essence, relates to the
specification, use, and application of functionality when awarding the bid.
On appeal, the following issues had to be decided:
(4.1] What was Tullis' pleaded case in its founding papers in the review
application , and did the court order go beyond what was pleaded?
[4.2] Did Tullis impugn the tender conditions based on the vagueness
of the tender conditions?
[4.3] The difference between responsive Bids, deviations, and the
stage at which the functionality enquiry was conducted.
(4.4] The just and equitable remedy granted by the Court.
[4.5] Did the MEG pre-empt the appeal?
THE TENDER PROCESS
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[5] The Bid concerns the supply, delivery, installation, testing, and
commissioning of laundry equipment for the Tygerberg Hospital. The need
for the Bid arose because the Tygerberg Central Laundry was experiencing
challenges with ageing equipment , which impacted the provision of an
efficient and quality laundry and linen service. The Bid envisaged the
modernisation of the Tygerberg Central Laundry over 3 (three) years at a
total contract value of R122,185 ,060 (including VAT). The Tygerberg
Central Laundry processes the laundry of 38 institutions, including
Tygerberg Hospital, Karl Bremer Hospital, and Somerset Hospital. The
laundry has three washing lines, each consisting of a tunnel washing
machine, ironer, garment finisher, blanket and towel folder. The average life
span of some of the equipment is more than twenty-five years with the
highest cost driver being maintenance on outdated machinery. The needs
and demands in respect of laundry service are substantial and integral to
health service in the province.
[6] The MEC issued the tender on 16 July 2020, with the closing date being 21
August 2020. The closing date was extended to 14 September 2020. Tullis
and Amlazi and two other tenders submitted Bids. Tullis submitted a Bid for
a total amount of R95,429,200.44, whereas Amlazi's Bid was for an amount
of R122,185 ,060.00. Mzwalo Investments (Pty) Ltd trading as Lumacon
Airconditioning ("Mzwalo") tendered a price of R171,958 ,008.79 and Zamil
Engineers and Contractors CC ("Zamil') offered a price of
R198,526 ,950.13.
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[7] The invitation to bid was subject to the General Conditions of Contract
("GCC"). Paragraph 5 of the pre-amble to the invitation to bid advised the
prospective bidders that:
"This bid will be evaluated on the Bidder's proven ability to provide the service i.e.
infrastmcture, technical and operational capacity as well as the 90/10 Preference
Procurement Points System as provided for in the bid document."
[8] The MEC further indicated that all equipment covered by the specification
would be purchased from one successful bidder. In Section 3 of the GCC,
paragraph 3.11.4 the MEC reserved the right not • ... to accept the lowest or
any bids and reserves the right to accept the proposal which it deems to be in the
best interest of the WCGH even if it implies a waiver by the Department of certain
bid requirements which the Department considers to be of minor importance and
not complied to within the proposal'. However, no specification was made in
the tender documents as to the evaluation criteria for measuring
functionality, the points for each criteria or the minimum qualifying score for
functionality. The bid document does not specify these issues or that the
Bids would be evaluated on functionality. The invitation to bid further invited
the bidders to state if their offer complied with the specifications. If a bidder
indicated that its bid did not comply, they were invited to provide an
explanation. Tullis noted that it did not comply with all of the specifications
since they offered different machinery performing the same functions. The
MEC further explained that not all deviation would automatically render a
bid non-compliant or non-responsive.
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[9] On 14 August 2020, a compulsory site meeting was held at the Tygerberg
Central Laundry to grant potential service providers the opportunity to raise
questions concerning the requirements and any other related matters. This
compulsory site meeting must be distinguished from the inspection visits,
or reference site investigations subsequently conducted by three members
of the BEC at two of the bidders' local offices and installation reference sites
in Johannesburg and Pretoria during which the equipment supplied by Tullis
and Amlazi was compared and evaluated in terms of a questionnaire and
discussions with laundry managers and officials.2.
(10) The Bid Evaluation Committee ("BEC') evaluated the 4 (four) Bids and
prepared a memorandum dated 19 November 2020. The BEC decided
regarding the Bids submitted by Mzwalo and Zamil that:
"The offers of two highest bidders were found non-compliant for the reasons
indicated in the attached evaluation sheet and their pricing is exorbitant. It appears
from the evaluation schedule that Mzwalo is listed on the National database of
companies or persons prohibited from doing business with the public sector and
that it had no experience . Zamil's bid was unsigned and had no experience and
provided no references regarding the provision oflaundry services and machinery."
[11] It stands to reason that the BEC deemed Amlazi and Tullis' bids to be
'compliant' and thus acceptable . The BEC did not reject Amlazi and Tullis'
bids as being 'non-compliant'. This is important since it is common cause
that Tullis' bid deviated in 12 respects from the bid specifications and that
the SEC would subsequently find that 11 of the deviations were material.
BAC approval of recommendation para 1.3 to 1.6, dated 19 November 2020
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[12] It further appears from the BEC's memorandum, as mentioned earlier, that
3 of its members were nominated to conduct site inspection visits to the
recommended bidders' local offices and installation reference sites in
Johannesburg and Pretoria, as indicated in their bids.
[13] The BEC memorandum reports in paragraph 1.5 that:
"The purpose of these reference site visits was to see the equipment offered in
production and speak to the Laundry Managers regarding their experience with the
companies Amlazi and Tullis with regard to their maintenance and spares lead
times, technicians' availability, frequencies of downtimes and breakages on
different models of equipment."
[14] Meetings were arranged where the representatives of Amlazi and Tullis
were required to make presentations regarding the history of the
companies , all aspects of their businesses, and the equipment they had
offered in their bids. The institutions that Amlazi and Tullis referenced were
also visited to observe the equipment at work and speak to the Laundry
Managers. For purposes hereof, a questionnaire was developed, which was
used during the site inspections to compare and/or evaluate the two
companies.
[15] Paragraphs 1.6 to 1.15 of the SEC memorandum regarding the evaluation
of the equipment offered by the two companies (Amlazi and Tullis) recorded
the following:
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"1.6. The equipment supplied by the two companies Tullis arid Amlazi was
compared/evaluated in terms of the above and based on discussions with the
Laundry Managers and officials of the Infrastructure Development
(Department of Public Works Gauteng) regarding complaints on the Jensen
equipment offered by Tullis. Laundries must wait sometimes up to 4-6 weeks
for Jensen spares to arrive from Germany and 7 days or more for the
technician to attend to breakdowns.
1.7. The Department of Infrastructure Development advised that Tullis have (sic)
four technicians but only one experienced trained technician on this specific
equipment and sometimes rely on assistance from Amlazi to do the
maintenance on some of their Jensen machines if their technician is not
available or do not have the knowledge to repair or install the specific model
of Jensen/Sen.king equipment.
1.8. This would influence service delivery if the laundry equipment is not kept in
optimal production status and therefore would be an operational risk for the
Department to appoint Tullis.
1.9. The Kannegiesser equipment supplied by Amlazi is more reliable and spares
are always available. Amlazi provides excellent service with 30 (thirty) years'
experience on Kannegiesser and Jensen equipment. Amlazi installed 20
(twenty) Jensen/Sen.king and 11 (eleven) Kannegiesser tunnel washers so far
and have 4 (four) trained technicians in Cape Town and 6 (six) in Gauteng.
A technician is always available on short notice and after hours, with the
result that equipment does not have long downtimes. Tullis does not have
enough knowledge about the Jensen/Sen.king equipment they offered, does
not work after hours and mainly concentrates on sales rather than on service
of equipment. Tullis is a division of Lead Laundry & Catering and
concentrates mainly on the sale of catering equipment and on-premise stand
alone washing machines to hotels, state, and private hospitals. Amlazi also
have a service contract with Pretoria Private Laundry and the manager
reported excellent services from Amlazi and all equipment was in good
working condition.
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1.10. At the Chris Hani Baragwanath hospital, the laundry manager indicated that
they experience a problem with the sensors on the Jensen/Senking equipment
as well as with water pressure that is a common problem with Jensen/Senking
equipment. The Kannegiesser equipment have a longer service Jife than
Jensen and therefore less breakdowns. The Jensen equipment provides more
problems [than] the (sic) Kannegiesser equipment and, therefore, the
Kannegiesser equipment is preferred by all the laundries that the BEC
members visited.
1.11. At Masakhane Laundry, officials from the Department of Infrastructure
Development indicated that they are in the planning phase to change the PLC
panels of the Jensen machines to Siemens control panels with the assistance
of Amlazi. The Department of Infrastructure Development are responsible
for the co-ordination of all maintenance relating to all the Gauteng
Department of Health's equipment, including laundry equipment.
1.12. In tenns of pricing of spares, Amlazi is flexible, prices can be negotiated.
Amlazi and does not charge for certain parts, while Tullis/Lead is not
prepared to negotiate on any spares pricing. Furthermore, the Jensen/Senking
spares are more expensive than Kannegiesser and not always available.
I. 13. It was identified by the BEC members that most of the equipment installed
by Tullis are maintained by Amlazi technicians .
1.14. Furthermore, Tullis indicated several deviations from the equipment
specifications. This is not acceptable. The BEC have discovered with our
site visits that all the deviations have not a positive impact on
productions. The tumble dryers will have more moving parts, and will
need more maintenance, and will be a high-cost factor. The hangers are
not suitable because its (sic) plastic and replacement will be more
frequently. Mostlv we have discovered no robo folders because of high
breakage of hangers, The deviations have a higher cost implication and
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that is why we cannot accept the deviations because our specifications
are based on previous experience and it proofs (sic) successful.3
1.15. In conclusion, in terms of the discussions and observations at these reference
sites, we are satisfied that Amlazi has the capacity, technical expertise
available, and turnaround times to render the equipment, maintenance, and
servicing as per the specified requirements. Amlazi has already proven its
capacity with the current maintenance contracts at Pretoria Private Laundry,
Tygerberg and Lentegeur Laundries and it provides excellent service. Amlazi
has more than enough capacity to provide the maintenance and servicing of
the equipment, with 10 trained technicians available countrywide and 4
permanently based in Cape Town. We could not identify any reference to
service contracts with Tullis Solutions ... "
[16] Despite recording the aforesaid information in detail, the BEC
recommended in paragraph 5 of the 'BID EVALUATION COMMITTEE
APPROVAL OF RECOMMENDATION' as follows:
'5 SITE VISIT FEEDBACK
The BEC noted DBAC members concerns on the feedback from site visits in
particular the lack of formal written feedback from official engaged by BEC
representatives on the site visits.
The BEC noted the feedback from BEC representatives on the poor maintenance
track record of Tullis instalJation sites.
The BEC also noted feedback from BEC representatives that officials engaged on
the site visits were hesitant to provide formal written feedback on the poor
maintenance track record ofTulls installation sites.
Emphasis added with reference to para [17] hereunder
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The BBC resolved that in the absence of formal written feedback from officials
engaged by BFC representative s on the site visits that the site visit feedback will be
noted as a concern and will not used in the BEC decision making process to
recommend a bidder as the site visit feedback may be regarded as hearsay in a legal
challenge.'
[17) The BEC's memorandum was submitted to the Bid Adjudication Committee
("BAC'), which requested, inter alia, a list of deviations by Tullis from the
Bid equipment specifications .. The BEC prepared a further memorandum
("the second BEG memorandum"), which sets out each of the deviations
and what the BEC considered to be the impact of the said deviations4• In
4 The second BEC memorandum recorded the following regarding deviations of the bid
specification:
Paragraph 3.3. 4 of the bid specification, the second BEG memorandum recorded that:
"A drive chain that requires tension will needs (sic) special maintenance in the long term. There
have been challenges at Tygerberg Central Laundry with the Tunnel Washer with a drive chain that
requires tension which has resulted in significant downtime and linen service backlogs. "
Paragraph 3.5.4.b of the bid specification, the second BEG memorandum recorded that:
"This can result in an increase in the colour run from one compartment to another and can
discolour and pennanently damage linen which is costly to replace. "
Paragraph 9.2. 7 of the bid specification, the second BEC memorandum recorded that:
''There will be an increase in long-term maintenanc e cost, as too many mechanical systems in place.
Engineering had to replace similar tumble dryers previously due to ongoing difficulties which
impacted on washing and drying ratios and tonnage throughput per day at both Lentegeur and
Tygerberg laundries. The tunnel dryers in question has (sic) been replaced with tumble dryers which
are air flow operated. "
Paragraph 13.2 of the bid specification, the second BEC memorandum recorded that:
"Cannot accept less than 3000 mm due to different sheet sizes which will result in tearing of sheets
and increased condemning of good linen. "
Paragraph 13. 7 of the bid specification, the second BEG memorandum recorded that:
"The vacuum suction bar and upper spreading bar is required to enhance the equal movement of
items such as sheets on the ironers. This is important to positively impact on linen ironing
throughput per laundry service shift. "
Paragraph 14.2.4 of the bid specification, the second BEG memorandum recorded that:
"It is important to lift rolls 400 mm out of beds for cleaning to prevent staining of linen and to
promote efficient servicing of ironing equipment. "
Paragraph 14.2.8 of the bid specification, the second BEG memorandum recorded that:
"Stainless steel is resistant to erosion and subsequently (sic) corrosion as a result of the high steam
velocity. It also has high strength in welding points by mating same materials. Carbon is not
resistant erosion and subsequen tly (sic) corrosion as a result of high steam velocity. It also has low
strength in welding points by mating different materials. "
Paragraph 15. 2. 7 of the bid specification, the second BEG memorandum recorded that:
"Non provision of coupling of the facility for automatic coupling of lanes 1.2 and 4 will result in
clogging and negatively impact on tonnage. "
Paragraph 16.2 of the bid specification, the second BEC memorandum recorded that:
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weighing up the deviations, the SEC relied upon the investigation and
conclusions reached by the reference site inspection delegation, as is
recorded in paragraph 1.14 of the BEC Memorandum quoted above. This,
in tum, led to the decision recorded in the second BEC memorandum that:
"The laundry equipment technical experts in the BEC reviewed the Tullis
deviations and have confirmed that these would result in operational and
maintenance challenges which will negatively impact service delivery. The
Tullis deviations are therefore not acceptable. "
[18] On 18 January 2021, the BEC adopted a resolution in terms of which Amlazi
was recommended for the award of the Bid subject to negotiation being
completed by 22 January 2021. Amlazi was informed on 4 February 2021
that its Bid had been accepted and Tullis was informed on 9 February 2021
that its Bid had been unsuccessful. Tullis' attorneys exchanged
correspondence with the appellant and the review application followed. In
Tullis' founding affidavit, the awarding of the tender is attacked on the
following basis:
28. . .. Despite Tullis' tendered equipment and BBBEE status being equivalent,
and notwithstanding Tullis' price being markedly superior, the Department
awarded the tender to Amlazi.
"Plastic hooks are not heat resistant and corrode easily. It also changes in fonn due to the heat
and damages the automatic sensors over a long-term. This will increase the maintenance cost and
down time of the robo folder. "
Paragraph 16.3 of the bid specification, the second BEC memorandum recorded that:
"Tunnel finisher with 4 zones promotes Health and Safety for staff by positively impacting on the
heating mechanisms and reduces the risk of staff sustaining burn injuries. It also reduces creasing
and improves the finishing of linen."
Paragraph 18 of the bid specification, the second BEC memorandum recorded that:
"A drop type stacker has many mechanical systems which will increase maintenance cost (sic)
resulted in extended down time in the event of a breakdown. With the drop type stacker one linen
item is dropped onto the robo folder system whilst 5 linen items are dropped onto the folder
system with a single lifting stacker. Efficiency and throughput are improved with a single lifting
stacker."
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29. This is, firstly, inconsistent with section 2(1)(f) of the Preferential
Procurement Policy Framework Act 5 of 2000. It provides in peremptory
terms that a "contract must be awarded to the tenderer who scores the highest
points, unless objective criteria ... justify the award to another tenderer." In
tum, Regulation 11 (2) of the Preferential Procurement Regulations
(prescribed pursuant to Act 5 of 2000) requires that "[i]f an organ of state
intends to apply objective criteria in terms of section 2(1)(f) of the Act, the
organ of state must stipulate the objective criteria in the tender documents."
No objective criteria had been identified in the bid. Instead, the bid itself
specifically refers to regulation 1 i of the preferential procurement
regulations, reiterating that "the bidder obtaining the highest number of total
points will be awarded the contract." I refer in this respect to clause 3.1 of
WCBD 6.1, which forms an integral part of Bid WCGHGC0232 /2020. To
the extent that paragraph 3.11.4 of section 3 (containing the general
conditions on p. 74 of 120 of the tender documentation) might be construed
as purporting to reserve a right to award the tender to a different bidder, the
department has no such right to reserve (as the Constitutional Court observed
in a related situation), I am advised. This applies particularly in circumstances
where the subsequent provision (paragraph 3.12 of the same section and on
the same page) sets out the only evaluation criteria. It reads: "The bids will
be evaluated according to the 90/10 Procurement Preference Points System.
See the attached WCBD 6.1." Thus the only evaluation criteria governing the
tender were preferential procurement points and price.
[17) The MEG answered as follows to paragraph 29 of Tullis' founding affidavit:
"193. Save for admitting (to the extent that they are correctly quoted), the statutory
and regulatory provisions referred to herein, I deny the remaining allegations
in this paragraph.
194. As regards the application of the statutory provisions and the Regulations to
the facts of this matter, I say the following:
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194.1. First, before the issue of scoring the highest points arises, the Bidder
must be compliant with the bid specifications. It is common cause that Tullis
was not and that it sought no less than twelve deviations .
194.2. Second, the exception in respect of the objective criteria to justify the
award to another tenderer does not arise. The facts are these: While Tullis'
tender was some R23 million lower than that of Amlazi, Tullis did not meet
the bid specifications.
194.3. Third,, Tullis is mistaken, it is not correct that "the only evaluation
criteria governing the tender were preferential procurement points and price."
I point out in this regard that clause 4 of the General Conditions of Contract
(FA, Annexure B4, p 114) states in terms: ''The goods supplied shall conform
to the standards mentioned in the bidding documents and specifications".
194.4. Fourth, what Tullis seeks to do, is to use a review mechanism to unseat
a reasonable, objective, impartial and carefully considered decision to
appoint a compliant bidder (Amlazi). To achieve its ends, Tullis unjustifiably
and impermissibly incorporates and imposes its own specifications in the
place of the bid specifications as imposed."
[18] In opposing the review application, the MEC dispelled the notion that only
price and preference procurement points were considered in evaluating
the Bids in stating as follows:
"I also point out that the bid price is not the only major consideration. Functionality
and meeting the requirements of the bid specification must be met before the issue
of price arise."
LEGAL POSITION
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[19] Section 217 of the Constitution serves as the foundation upon which this
appeal must be decided in light of the relevant legislative provisions. In
Millenium Waste Management (Pty} Ltd v Chairperson of the Tender
Board Limpopo Province and others. 5 Jafta JA stated:
''The final Constitution lays down minimum requirements for a valid tender process
and contracts entered into following an award of tender to a successful tenderer
(s217). The section requires that the tender process, preceding the conclusion of
contracts for the supply of goods and services, must be 'fair, equitable, transparent,
competitive and cost-effective'. Finally, as the decision to award a tender
constitutes administrative action, it follows that the provisions of the Promotion of
Administrative Justice Act (PAJA) apply to the process. This is the legislative
background against which the present matter must be considered."
[20] The PPPFA contains the following relevant provisions in furtherance of the
aforesaid constitutional objectives and requirements:
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6 [20.1] The term "acceptable tender' is defined as "any tender which, in
all respects complies with the specifications and conditions of
tender as set out in the tender document. '-'6
[20.2] The term ''functionality" is defined in Regulation 1 of the
Preferential Procurement Regulations, 2017 published in
Government Gazette 32 of 2017 which applied at the time of the
award of the tender that functionality is " ... an ability of a tenderer
2008 (2) SA 481 para 4
Section 1
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to provide goods or services in accordance with specificat ions as
set out in the tender documents. "
[21] There is, therefore, a clear overlap between the term "acceptable tender"
and "functionality".
[22] In terms of Regulation 4 (as it applied at the relevant time), an organ of
State must indicate in the invitation to submit a tender:
[22.1] If that tender will be evaluated on functionality .
[22.2] That the evaluation criteria for measuring functionality are
objective.
[22.3] The evaluation criteria, weight of each criterion, applicable values
and minimum qualifying score for functionality.
[22.4] That no tender will be regarded as an acceptable tender if it fails
to achieve the minimum qualifying score for functionality as
indicated in the tender invitation, and
[22.5] That tenders that have achieved the minimum qualifying score for
functionality must be evaluated further in terms of the applicable
prescribed point system.
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[23] Regulation 5 of the Procurement Regulations reads as follows:
"(1) An organ of state must state in the tender document if the tender will be
evaluated on functionality.
(2) The evaluation criteria for measuring functionality must be objective.
(3) The tender document must specify-
(a) The evaluation criteria for measuring functionality.
(b) The points for each criteria and, if any, each sub-criterion;
and
(c) The minimum qualifying score for functionality.
( 4) The minimum qualifying score for functionality for a tender to be
considered further-
(a)
(b) Must be determined separately for each tender; and
May not be so low that it may jeopardise the quality of the
required goods or service or high that it is unreasonably
restrictive.
(5) Points scored for functionality must be rounded off to the nearest
two decimal places.
(6) A tender that fails to obtain the minimum qualifying score for
functionality as indicated in the tender document is not an acceptable
tender.
(7) Each tender that obtained the minimum qualifying score for
functionality must be evaluated further in terms of price and the
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preference points system and any objective criteria envisaged in
regulation 11."
[24] Section 2(1 )(f) of the PFA provides that the contract must be awarded to
the tenderer who scores the highest points, unless objective criteria justify
the award to another tenderer. In line herewith, Clause 3.1 of the GCC
provides regarding adjudication using a point system: ' ... Subject to
Regulation 11 of the Regulations, the bidder obtaining the highest number of total
points will be awarded the contract.'
[25) In Rainbow Civils cc v Minister of Transport and Public Works.
Western Cape and others,7 the Court stated:
"Functionality as it is variously defined in the Tender Document, concerns the
ability of the tenderer to deliver what is required, to meet the ·needs of the tender,
to deliver a service or commodity which is fit for purpose. It is based on the
objectively measurable criteria of experience and standing, capability and
resources. As such it has direct bearing on the question of whether a tender is cost
effective, i.e. whether it yields the best possible value for money. To my mind it is
self-evident that it is not cost effective to award a tender to a party who ticks the
right boxes as regards price and preference, but is unable to get the job done
properly-whether through lack of experience, adequate personnel or financial
resources."
[26] Rainbow Civils suggests that functionality can serve more than a ''gate
keeping" function and can be taken into account a second time around after
a tenderer has been evaluated on price and preference where it may not
have achieved the highest scores, but demonstrated a superior ability to
7 (21158/2012) [2013] ZAWCHC 3 (3 February 2013) para 109
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provide the relevant goods and service. This dual role of functionality as an
assessment tool in decidi_ng upon the responsiveness or acceptability of a
tender opposed to its broader general application has not yet been resolved
by the Courts. In Nexus Forensic SeNices v SASSA8 the Court disagreed
with the reasoning in Rainbow Civils. In Nexus, Van Niekerk AJ sets out
the history of this controversial issue and refers to the decision in
Sizabonke Civils CC trading as Pi/con Pro/ects v Zulu/and District
Municipalitv. 9 which effectively rejected the use of functionality as an
award criteria. In Nexus, it was held that the provisions of section 2( 1 )(f) of
the PPPFA are clear, namely that the objective criteria referred to therein
must be additional criteria, in other words these must be criteria over and
above those which have already received consideration as specific goals in
terms of section 2(1)(d) and (e) of the PPPFA.
[27] The Court, therefore, rejected in Nexus the dual application of functionality
as part of our law. Functionality should be assessed as a qualification
criterion in the first stage of adjudication , with only bidders obtaining the
minimum threshold score for functionality proceeding to the second round
of adjudication, where only price and preference points will be taken into
account in ranking bidders.
[28] Section 2(1 )(f) of PPPFA only permits the consideration of objective criteria
in determining a tender. This raises the question as to whether the site visits
8
9 (2016) ZAGPPHC 579 (21 June 2016)
2011 (4) SA 406 (KZP)
21
conducted by the SAC, the representations, and the subsequent
adjudication by the BEG and BAG were objective. Again, a distinction needs
to be drawn between an opinion fonned by the members of the SAC and
objective criteria.
[29) In Walele v City of Cape Town,10 the following is stated in the majority
judgment:
"If indeed the decision-maker was so satisfied on the basis of these three
documents, his satisfaction was not based on reasonable grounds. The documents
fall far short as a basis for forming a rational opinion. Nor does the mere statement
by the City to the effect that the decision-maker was satisfied suffice. In the past,
when reasonableness was not taken as a self-standing ground for review, the City's
ipse dixit could have been adequate. But that is no longer the position in our law.
More is now required if the decision-maker's opinion is challenged on the basis
that the subjective precondition did not exist. The decision-maker mus.t now show
that the subjective opinion it relied on for exercising power was based on
reasonable grounds. In this case, it cannot be said that the infonnation, which the
City admitted had been placed before the decision-maker, constituted reasonable
grounds for the latter to be satisfied."
[30] The MEG acted on the basis of the findings and recommendations by the
BAC's officials who attended the site inspections and listened to the
representations by the two tenderers and other officials. If the MEG wished
to award the tender to an entity other than which scored the highest points
in terms of section 2(1 )(f), not only must this decision be based on objective
criteria, but the objective criteria must also be fleshed out in the tender
documents or the invitation of tender. Allowing subjective criteria to be used
10 2008 (6) 129 (CC)
22
as an overall spanning functionality test will be at odds with section 2(1 )(f)
of the PPPFA read together with the regulations.
(31) In Q Civils (PtyJ Ltd v Mangaung Metropolitan Municipality and
others,11 the Court stated:
"Objective criteria with reference to s 2(l)(t) of the PPPFA referred to supra can
be defined as those (a) not listed in paragraphs (d) and (e) of section 2(1) of the
PPPF A, (b) which are objective in the sense that these can be ascertained
objectively and their existence or worth does not depend on someone's opinion and
(c) bear some degree of rationality and relevance to the tender or project."
[32) The decision-maker may not view or consider information which was never
asked from the tenderers. The decision-maker can, therefore, only view the
information put before it. Otherwise , it may lead to subjective factors being
taken into consideration. This may lead to what the Court described in Q
Civils as "it is well known that when subjective factors walk in the door,
rationality flies out of the window". The objective criteria justifying the
awarding of a tender to a tenderer other than the one with the lowest tender
should not cause the process to lose the attributes of fairness,
transparency, competitiveness, and cost-effectiveness. In South African
Nationai Roads Agency Limited y Toi Collect Consortium, 12 Wallis JA
(as he was then) held:
120) As to objectivity, which is an aspect of the constitutional requirement that
the public procurement process be fair, it requires that the evaluation of the tender
be undertaken by means that are explicable and clear and by standards that do not
11 (A48/2016) [2016] ZAFSHC 159 (8 September 2016) para 40
12 2013 (6) SA 356 (SCA)
23
permit individual bias and preference to intrude. It does not, and cannot, mean that
in every case the process is purely mechanical. There will be tenders where the
process is relatively mechanical, for example, where the price tendered is the only
relevant factor and the competing prices are capable of ready comparison. The
application of the formula for adjudicating preferences under the PPPF A may
provide another example. However, the evaluation of many tenders is a complex
process involving the consideration and weighing of a number of diverse factors.
The assessment of the relative importance of these requires skill, expertise, and the
exercise of judgment on the part of the person or body undertaking the evaluation.
That cannot be a mechanical process. The evaluator must decide how to weigh each
factor and determine its significance in aniving at an appropriate decision. Where
that occurs it does not mean that the evaluation is not objective. Provided the
evaluator can identify the relevant criteria by which the evaluation was undertaken
and the judgment that was made on the relative importance and weight attached to
each, the process is objective and the procurement process is fair.
[21] Where the evaluation of a tender requires the weighing of disparate factors
it will frequently be convenient for the evaluator to allocate scores or points to the
different factors in accordance with the weight that the evaluator attaches to those
factors. But the adoption of such a system, without its being disclosed to tenderers
in advance, does not mean that the tender process is not objective. If anything, the
adoption of the scoring system enhances the objectivity of the process, because, in
the event of a challenge to the award of the tender, the basis upon which the
evaluation was undertaken emerges clearly."
[33] The KwaZulu-Natal Local Division, Durban considered the role that
functionality plays in evaluating and awarding bids in Wattpower Solution
CC and another v Transnet SOC Limited and another.13 Transnet
argued in the Wattpower judgment that functionality and due diligence are
the same. The test for functionality as a test for responsiveness of bids
13 [2021) JOL 52070 (KZD)
14 24
involves a cursory glance at compliance, while the due diligence exercise
process followed in Wattpower provides for an in-depth assessment of
capability. Could an organ of the state be penalised before the final
awarding of points is made to conduct a more thorough investigation, in
order to satisfy itself with the competence of the bidder to carry out the
works? As is the case in this appeal, the bidders in Wattpower were given
notice, in advance, of the investigation or due diligence that would be
conducted in the form of the inspection in loco and oral submissions .
Transnet argued that s2(1 )(f) of the PPPFA, read together with the relevant
regulations, clearly contemplates that, apart from the evaluation based on
points and preference, an objective assessment is provided to determine
whether the preferred (or highest scoring) bidders are capable of performing
in terms of the contract.14 Transnet argued that the objective criteria are not
only applied in awarding the contract but to determine the bidder's ability to
'get the job done'. Chetty, J, in Watt Power, stated at para [16) as follows:
' ... Trans net submits that the objective criteria it applied in not awarding the
contract to the applicant was essentially the applicant's inability to "get the job
done". In this regard, see Rainbow Civils CC v Minister of Transport and Public
Works Western Cape and Others (21158/2012) [2013] ZAWCHC 3 (6 February
2013), para 109 where the court stated:
"Functionality as it is variously defined in the Tender Documen t concerns the
ability of the tenderer to deliver what is required, to meet the needs of the tender,
to deliver a service or commodity which is fit for purpose. It is based on the
objectively measurable criteria of experience and standing, capability and
resources. As such, it has a direct bearing on the question of whether a tender is
cost-effective, i.e. whether it yields the best possible value for money. To my mind
it is self-evident that it is not cost effective to award a tender to a party who ticks
Wattpower, Ibid at [14) and (15]
25
the right boxes as regards price and preference , but is unable to get the job done
properly -whether through lack of experience, adequate personnel or financial
resources" . '
[34) In Urban Icon (Pty} Ltd Sourth Africa National Roads Agency Soc Ltd
and others, 15 the Court had to decide on the question whether a state entity
may take into consideration the ability of a tenderer to deliver on several
tenders simultaneously, despite having qualified and scored the highest.
Tolmay, J held that:
15 '[25] The PPPF A Regulations define "functionality" as "the ability of a tenderer to
volume goods or services in accordance with specifications as set out in the tender
documents". In terms of regulation 5(5), a tender that fails to obtain the minimum
qualifying score for functionality as indicated in the tender documents would not
be regarded as an acceptable tender. Regulation 5(7) provides that each bid that
obtained the minimum qualification score for functionality must be evaluated
further in terms of price and the preference point system and any objective criteria
envisaged in regulation 11. The objective criteria referred to in regulation 11 are
the objective criteria contemplated in section 2(1 )(f) of the PPPF A. SANRAL
argued that it is cJear from the language and scheme of the PPPF A and the
applicable regulations that functionality is simply a threshold assessment to
determine if a bidder has the minimum attributes necessary to provide the services
as specified in the tender document. It was argued correctly that an assessment into
functionality and an objective criteria assessment may consider similar general
topics, but the assessment is not the same for three reasons:
[25 .1] The functionality assessment occurs before the preference points assessment
and the objective criteria assessment occurs after the preference point assessment.
[25.2] The functionality assessment is ordinarily a binary assessmen t of all
timeously submitted bids. The due diligence assessment is an assessment of the
highest scoring bid vis-a-vis one or more other acceptable bids.
2023 JDR 4841 (GP)
26
[25.3] The purpose of a functionality assessment is to determine whether bids are
acceptable or not. The purpose of a due diligence assessment is to determine
whether the tender should be awarded to a better other than the highest scoring
bidder.
[26) Urban Icon's argument, on the other hand, is that, once it passed the binary
functionality assessment, SANRAL was obliged to assess it in terms of the 90/10
principle. Thereafter, it was not permissible to take into consideration any other
factor including the factor that the tenderer was to be appointed to deliver all 7
projects. Urban Icon's argument basically is that, if such considerations were
relevant, they ought to have been included in the tender documents . However, this
position loses sight of effect as it was correctly argued by SANRAL that the ability
to deliver on a number of tenders cumulatively would not be included in the subject
matter of each individual tender. I agree that the consideration of the capacity and
ability of a tenderer to deliver on more than one tender is a relevant and rational
consideration. The holistic approach argued for by SANRAL is both rational and
in accordance with the applicable legislation. To ignore the background and facts
would be particularly shortsighted and could have devastating consequences for
SANRAL and for the country. A contextual approach is therefore called for,
considering the ability of a tender to perform in seven tenders is, simultaneously,
both lawful and rational, even if the individual tenders did not make provision for
such an eventuality.'
[35] The facts in this appeal differ from those that served before the court in the
Urban Icon's matter. The MEC employed functionality both as a minimum
requirement test to determine if bids were acceptable and also objectively
after the bids that were deemed acceptable were scored for price and
BBEE. It would have been different if the bid was awarded to Tullis, but after
that, due to a due diligence exercise as employed in Urban Icon's, it was
found that the tender should not be awarded to Tullis. The BEC conflated
the functionality assessment before the preference points assessment and
27
the objective criteria assessment (if specified) that may occur after the
preference point assessment.
[36) Therefore , the question to be answered in this appeal is how objective the
opinions are of the members of the SAC who conducted the site visits and
participated in the submissions and discussions with Amlazi and Tullis. How
did the reference site inspections influence the decision-making rationale
of the BAC? Did the BEC divorce itself from the findings of the three
delegated SAC reference site inspection delegations, as it proclaims it did?
The answer to these questions is found in paragraph 1 .14 of the BEC
memorandum that records the Tullis' deviation was evaluated based upon
the information gathered during the reference site inspections 16. In the Watt
Power matter, the unsuccessful tenderer argued that any opinion expressed
in such a process is subjective and inconsistent with the requirements in s
2(1 )(f). In Minister of Law and Order v Dempsey, 17 the court held that the
prerequisite of an opinion (in that case dealing with an arrest and detention)
was a subjective jurisdictional fact. The tender lacks objective criteria for
measuring fairly and in a transparent manner bid specification deviations.
The specification fails to establish clear, objective criteria that distinguish
between major and minor deviations, which could lead to inconsistent
assessments.
16
17 See paragraphs (15] and (17) above
1988 (3) SA 19 (A)
28
[37] Section 2(1 )(f) of the PPPFA provides that, where a contract is to be
awarded to an entity other than that which scored the highest points in terms
of s2( 1 )(f), such a decision must be based on objective criteria. The
objective criteria must also be fleshed out in the tender documents or in the
invitation to tender. The failure to stipulate such objective criteria constitutes
in itself an irregularity.
[38] In Pelatona Pro/ects (Pty) Limited v Phokwane Municipality and 14
others, 18 the court held that:
' ... Objective criteria must, in my view, be discernible from the infonnation made
available to the decision-maker. If this is not the case, it would mean that the
decision-maker may look at criteria or information other than that put before it.
Such a decision would detract from the fairness of the process. It may well lead to
subjective factors being taken into consideration. It is well known that, when
subjective factors walk in the door, rationality flies out the window. The objective
criteria justifying the awarding of the tender to a tenderer other than the one with
the lowest tender should not cause the process to lose the attributes of fairness,
transparency, competitiveness, and cost effectiveness.' .19
[39] The importance of objective criteria was also recognised by Wallis, JA in
South African National Roads Aaencv Limited v Toll Collect
Consortium.20 There may be tenders where the process is relatively
mechanical. However, the evaluation of many tenders, such as the one in
this appeal, 1s a complex process involving the consideration and weighing
of a number of diverse factors. The evaluator must decide how to weigh the
18
19
20 Unreported NCD judgment under Case No. 691/04, para 31 as referred to in Q Civils Pty Ltd v
Mangaung Metropolitan Municipality and Others (A48/2016)[2016] ZAFXHC 159 (8
September 2016) para 40
Watt Power at [24]
2013 (6) SA 356 (SCA) paras [20] -[21]
29
different factors and determine their significance in arriving at an
appropriate weighted decision. The relevant criteria must be identifiable
from the bid invitation or specification . The evaluation process will be
objective and fair if the relevant criteria can be identified.
[40] The overriding principle that a decision-maker must act in accordance with
an "ever-flexible duty to act fairly" fairness must be decided on the
circumstances of each case. In particular complex tenders, it may,
therefore, be fair to ask for clarification or details required for evaluation;
however, whatever is done may not cause the process to lose the attributes
of fairness, objectivity, transparency , competitiveness, and cost
effectiveness.
WHAT WAS TULLIS' PLEADED CASE IN ITS FOUNDING PAPERS IN THE
REVIEW APPLICATION?
[41] It was argued on behalf of the MEC by Ms Pillay SC that Tullis failed to
plead in its founding affidavit the ultimate true ground of appeal relied upon
by the Court a quo regarding functionality. The judgment held, so the
argument went, that Tullis' ground of review was that, in the process of
evaluation of the bids, the MEC conflated the acceptability of the bid with
functionality .
[42] It is trite that, in motion proceedings , the affidavits constitute not only the
evidence, but also the pleadings. A party is accordingly expected to allege
30
the required facts and present evidence in support thereof. The necessary
facts to prove the claim appear from the founding affidavit and its supporting
documents. Holding parties to pleadings is not pedantry in the words of
Justice Jafta in the minority judgment in SATAWU and another v Garvas
and another21 but an integral part of the principle of legal certainty which is
an element of the rule of law, one of the values on which our constitution is
founded. However, this contention by the MEC does not account for the
following factors.
[43) In paragraphs 28 and 29 of the founding affidavit ,Tullis alleges that the Bid
was awarded despite Tullis' tendered equipment and BBBEE status being
equivalent, and notwithstanding Tullis' price being markedly superior to
Amlazi. Tullis further contended that no objective criteria had been identified
in the bid. Instead, the bid itself specifically refers to regulation 11 of the
preferential procurement regulations , reiterating that "the bidder obtaining
the highest number of total points will be awarded the contract. The only
evaluation criteria governing the tender were preferential procurement
points and price.
[44] In the course of submissions in response to the point raised by the MEC,
Mr Maleka SC, who appeared with Mr Scott on behalf of Tullis, submitted
that the issue of functionality was raised before the Court of first instance
and was fully argued. Tullis' argument postulated that the MEC's decision
21 2013 (1} SA 83 (CC)
31
to evaluate the tender based on functionality in the absence of objective
criteria was unlawful. The argument before us, as did the judgment below,
proceeded on the footing that the issue of functionality is directly related to
the constitutional principle of a fair and open procurement process. That
being so, it is trite, so the argument went, that the Court may raise such an
issue mero moto.
[45] It should be further observed that the narrow approach favouring the strict
application of the aforementioned principles is further qualified on the
basis that the Court has a wide discretion in applications in which disputes
of fact arise to ensure that a just and expeditious decision is reached in
matters where an application is brought before Court in terms of Uniform
Rule 53. Uniform Rule 53(4) expressly provides an applicant in review
proceedings to amplify its founding affidavit upon receipt of the record. It
would be an oversimplificat ion to find that the issue of functionality is not
fundamental to the award of the tender in casu or was the pleaded and
argued case before the Court a quo and before us. It follows from all these
considerations that the judgment did not go beyond the pleaded case and
the Court was entitled to review the administrative decision of the MEC
regarding the role of functionality in awarding the bid.
DID TULLIS IMPUGN THE TENDER CONDITIONS BASED ON THE
VAGUENESS OF THE TENDER CONDITION?
32
[46) The Constitutional Court, in A/lpay Consolidated v Chief Executive
Officer, SASSA,22 held that vagueness and uncertainty are grounds for
review under section 6{2)(i) of PAJA. Clarity and certainty are directly
related to the rule of law and just and fair administrative action. If tender
specifications are unclear or vague, it may render a procurement process
procedurally unfair under s 6(2)(c) of PAJA. Every person is entitled to know
the case s/he must meet. This, in tum, requires adequate and sufficient
information to enable a prospective tenderer to make bids that cover all the
requirements expected for the successful award of the tender.
[47] In this regard, the MEC argued with reason that Tullis did not raise
vagueness of the tender specification as basis for the Court's finding that
the award should be reviewed and set aside.
[48) The MEC relied heavily on the judgment by Rogers J (as he was then) in
SMECSouth Africa fPty) Ltd v City of Cape Town and others: SMC
South Africa (Pty) Ltd v City of Cape Town and others,23 in which it was
22
23 correctly held that vagueness as a review ground concerning the decision
to issue tender invitations and their terms rather than with the decision
made. It is the BEC and BAC's function to evaluate the tenders in
accordance with the tender documents. Tullis never mounted an attack
against the tender specifications. It is not alleged that the tender
specifications by late procurement legislation are susceptible to judicial
2014 (1) SA 604 at 635 (87)
(8277/2021) ; 14097/2021 (2023] ZAWCHC 13 (23 Junie 2022)
33
review. To the contrary, Tullis' attack is against the fairness of the
procurement process preceding the decision. 24
[49] The aforementioned distinction between the vagueness of tender
specifications opposed to the fairness of the administrative process goes to
the heart of the matter. Tullis argues that the tender specifications are clear
that bids will be evaluated according to the 90/10 Procurement Preference
Points System. The tender specifications do not state, in accordance with
Regulation 5 of the Preferential Procurement Regulations, 2017, that the
tender will be evaluated on functionality and do not specify the evaluation
criteria of measuring functionality, the points for each criteria, or any sub
criteria and the minimum qualifying score for functionality. The process
followed by the BEC and, in particular, conducting reference site visits and
obtaining further information are undeniably related to functionality. In the
absence of clearly stated criteria with which tenderers must comply and
which the BEC members use in evaluating the offers, the process could be
rendered unjust. At issue is not the bid specificat ions, but rather the manner
in which the BEC and BAC evaluated the bids without clear objective criteria
and specifications. This has a further consequence that, in the absence of
expressly stated criteria, uncertainty arises regarding the value to be
attributed , if any, to deviations. This, in turn, further gives rise to the next
dispute to be decided.
24 SMEC at (91)
34
THE DIFFERENCE BETWEEN RESPONSIVE BIDS, DEVIATIONS, AND THE
STAGE AT WHICH THE FUNCTIONALITY INQUIRY WAS CONDUCTED
[50] In SMEC, the SEC found that SMEC's bid was non-responsive , because
SMEC had proposed material deviations from the advertised items. It was
thus not further evaluated on price and perfonnance points. The evaluation,
therefore, did not involve scoring for functionality but prescribed minimum
requirements relating to key personnel, support staff, and the like with which
bidders had to comply in order to be found responsive.25
[51] Tullis' bid was not in casu deemed to be non-responsive. It was not
disqualified along with the other two unsuccessful tenderers in the initial
evaluation stage. In the SMEC matter, the tender document stated
expressly a '1est for responsiveness " listing what Rogers J described as the
employers ' undertakings in the form of a series of injunctions .
[52] In the comparison thereto, the bid specifications in this matter provided in
the pre-amble that the bid would be evaluated on the bidders' proven ability
to provide the services, i.e. infrastructure, technical an~ operational
capacity as well as the 90/10 Preferential Procurement Points System, as
specified in the bid document.
25 Ibid at [5]
35
[53] Paragraph 5 of the preamble expressly refers in this regard to the attached
form marked "WCBD6. 1" that is incorporated in the tender specifications.
Form WCBD6.1 bears the heading "PREFERENCE POINTS CLAIM FORM
IN TERMS OF THE PREFERENTIAL PROCUREMENT REGULATIONS
2017 CODES OF GOOD PRACTICE". The form serves as a claim form for
preference points for Broad-Based Black Economic Empowerment (B
BBEE) Status Level of contribution. It does not contain objective criteria
regarding functionality . 26
(54] The preamble further states in paragraph 6 that the 'bid will be awarded
subject to the inspection of the premises by duly authorised representatives
of the Department. Subject to a visit to the manufacturers' premises (local
or overseas) by three (3) representatives of the Department ... '
[55] The procurement process is usually divided into two stages. The first is a
mandatory stage in which bids are adjudicated for responsiveness. The
MEC argues in this regard that Tullis' bid was unresponsive due to the 12
deviations, 11 of which were found to be material. However, Tullis was not
disqualified in the preliminary mandatory evaluation of the bids, as was the
case with the other two unsuccessful tenderers. There is no dispute that
both Tullis and Amlazi were evaluated in accordance with paragraph 6 of
the preamble to the invitation to bid. This was despite the fact that the tender
specifications stated that a bid will be awarded subject to the inspection to
26 Record, volume 10 of 19, pp 971 and further
36
be conducted as described aforesaid. The tender specifications did not
envisage a 3-stage evaluation process consisting of a mandatory
evaluation , the awarding of points for price and 8-BBEE and thirdly,
functionality .
[56] In SMEC, the Court draws a distinction between cases where the tenders
required functionality to be evaluated. Not all tenders need to invariably
require functionality to be scored. The Court held:
'The fact that functionality was not to be evaluated does not mean that functionality
in a more general sense was irrelevant. In order to ensure that competent services
would be supplied, the Tender Terms incorporated detailed eligibility requirements
for key personnel, support resources, and track record. If a particular bidder met
these requirements and scored the most points for price and preferential
procurement, residual functionality concerns could be addressed in the risk analysis
contemplated by clause C.3 .11.4, a component of which was the tenderer' s ability
to fulfil its obligations. m
[57] The relevant clause of the Tender Terms and SMEC differed vastly from
the bid's specifications in this matter. In SMEC, the relevant clause of the
Tender Terms provided that 'The conclusions drawn from this risk analysis
will be used by the Employer in determining the acceptability of the tender
offer ... '. In SMEC, the Tender Terms expressly reserved the right that the
employer only had to accept the tendered offer if it does not present material
risk and that the employer reserves the right to consider the mixed ranked
tenderer.
27 SMEC ebid at para [89)
37
[58] SMEC held correctly that function remains an overriding requirement of our
procurement law founded upon the requirements of the Constitution . This
does, however, not detract from competing constitutional obligations
regarding certainty, clarity, the rule of law and fair and open administrative
processes and procurement.
[59] The process used by the BEC and BAC fused the functionality assessment
regarding the acceptability of Tullis' tender with functionality as an
overriding requirement. The manner in which they dealt with Tullis' deviation
resulted in a subjective evaluation of the information gathered by the SEC
during the inspection in loco and other investigations. It is impossible to
determine the objection criteria used in this process, irrespective of whether
the conclusion reached was accurate. The process was not objective, open,
and fair.
[60] Even if the MEC and BAC's finding that Tullis' bid should have been held
nonresponsive or unacceptable at the first functionality enquiry is correct, it
does not enshrine the process with the constitutionally mandated
requirements of fairness and openness. In AIIPay, the Constitutional Court
held that a declaration of invalidity should follow once a reliable ground has
been established. The equitable remedy to be granted following such a
finding requires its own consideration.
THE JUST AND EQUITABLE REMEDY GRANTED BY THE COURT
38
[61] Once a finding of invalidity is made the effected decision or conduct must
be declared unlawful and a just and equitable order must be granted. At this
stage the inevitability of a similar outcome, if the decision is retaken, may
be one of the factors that will have to be considered. Contracts concluded
within the constitutional and statutory procurement framework are
concluded not on behalf of the state but in the public's interest. Accordingly,
those most closely associated with the benefits of a contract must be given
due weight. The Constitutional Court held in All Pay that the interest of grant
beneficiaries and, in particular, child grant recipients in an uninterrupted
grant system will play a more major role than the rights or expectations of
an unsuccessful bidder. 28
[62] In the exercise of the Court's remedial discretion, the nature of the
irregularity and the extent to which circumstances have changed during the
intervening period are determining factors. If the irregularity taints the entire
tender process, due to, for example, the tender criteria being vague, a fresh
tender process should be run. Should the irregularity relate to the manner
in which the decision was taken, there would normally be no reason why
the existing tenders cannot simply be reconsidered, unless circumstances
have changed, and it is no longer appropriate to award the contract based
on the original tender process.29
28
29 All Pay Consolidated v Chief Executive Officer, SASSA 2014 (1) SA 604 (CC) at [56)
Norland Construction (PtvJ Ltd v Chris Hani Development Agency rsoC} Limited
and another 2024 JDR 0298 (ECMA) at [25) to [28]
39
[63] It does not follow in all cases that, in deciding on a just and equitable remedy
despite the declaration of invalidity, the Court should set aside the contracts
concluded pursuant thereto. This is, however, a case-to-case-based
inquiry.30 In deciding if the order is just and equitable, it should be
considered if it resulted in fairness to all implicated parties and must account
for all the relevant facts and circumstances. In most instances, the Court
will not be in as good a position as the administrator to substitute its own
decision for that which forms the subject of the review. A further factor to be
considered in this regard is delay. The Constitutional Court, in Trencon
Construction ,31 held that "delay can cut both ways". The inappropriateness
of especially a substitution order may become evident with the passing of
time. However, delay occasioned by the litigation process should not easily
cloud a Court's decision in reaching a just and equitable remedy. The
Appeal Court should further ordinarily base its decision on the facts that
existed when the original decision was made.
[64) Nuku J held that the MEC did not disclose to the Court to what extent the
tender had been implemented. The omission to provide this information was
explained in argument by Ms Pillay SC on behalf of the MEC on the basis
that the relevant contracts and purchase orders were not yet in existence at
the time when the MEC's answering affidavit was prepared. Mr Maleka SC,
30
31 Loliwe cc trading as Vusumzi Environmental Serylces v City of Cape Town and
others, case number 3791/2012
Trencon Construction v Industrial Development Corporation 2015 (5) SA 245 (CC)
at [51)
40
however, correctly relied upon the principle that officials such as the MEC
may not be allowed to avoid their constitutional obligation to provide all the
necessary information that may be relevant to a Court in instances such as
this.32
[65] The Court a quo' s order to suspend the declaration of invalidity subject to
the re-adjudication of the tenders should, therefore, be judged against the
information available at the time. The relief granted can thus not be faulted.
[66] In light of the further evidence presented to the Court on appeal that was
admitted by agreement between the parties, it has become common cause
that Amlazi has successfully installed all three laundry lines. The MEC's
submission regarding irreparable financial prejudice and, more importantly,
the more than likely disruption of the province's public healthcare system
carries more weight than Tullis' rights. It would serve no purpose to
commence the procurement process afresh. The three washing lines are
installed, and there is no need to replace them in approximately the next 15
to 20 years. Tullis invited this Court to engage the issue of compensation ,
but this does not need to be dealt with since it was not ventilated in the
affidavits or claimed as a relief. In appropriate circumstances, a tenderer in
Tullis's position is entitled to recover its lost profits in terms of PAJA. Where
the state's misconduct is deliberate and dishonest and where substitution
or remittal is not a viable form of relief, circumstances may exceptionally
require compensatory relief to ensure a just and equitable result. The
32 Trencon ebid at [52]
41
appropriate avenue for a claim for compensation for loss sustained for a
breach of the precepts of administrative justice is PAJA33.
However, this is not the end of the inquiry into just and equitable relief. It is
common cause between the parties that Amlazi was awarded a 3-year
maintenance contract as part of the successful tender. Although the three
laundry lines have been installed, the maintenance contract is ongoing. The
Court had insufficient information before it to rule on the consequences of
a declaration of invalidity on the maintenance contract. The Appeal Court is
in a similar position. In Allpay,34Justice Froneman held, regarding the
appropriate remedy in that matter, that:'
... Part of the submissions dealt with the constitutional obligations that Cash
Paymaster may have to continue with the current system even if the tender award
is set aside, until a new system is in place. These considerations raise difficult
factual and legal issues. The information currently before us is outdated and
inadequate. It would be inappropriate to make a decision on a just and equitable
remedy in the absence of further information and argument on these issues.'
[67) It is alleged by Tullis that Amlazi is the sole supplier of Kenneglesser
machinery in South Africa and that the installation of the three laundry lines
entrenched Amlazi's right to the ensuing maintenance contract.35 While this
may be true, the new equipment must be supported and maintained under
a comprehensive maintenance contract. The average lifespan of some of
the equipment may be twenty-five years, and the initial maintenance
agreement was for five years. To this end, the Court below suspended its
33
34
35 Esorfrank i Pipelines (Pty) Limited v Mopani District Municipality 2023 (2) SA 31 (CC) at (54] to
[55)
Allpay Consolidated v Chief Executive Officer SASSA 2014 (1) SA 604 (CC)[96)
Par 38 of the MEC's supplementary affidavit on pp 152 in the application to produce further
evidence on appeal.
42
declaration of invalidity of the contract until the final conclusion of the
procurement process that was remitted to the MEC " ... in order to ensure the
continuous provision of service ... ". A case is not made out to interfere with the
remedy granted by the Court below. Litigation is a time-consuming process,
especially when a matter is appealed, and the appeal stands to be decided
upon the facts known to the court below at the time. 36 This court cannot
decide on the issue of compensation or order an enquiry into Tullis'
proclaimed losses under the current circumstances. This is a matter best
left undecided for another court.
DID THE MEC PRE-EMPT THE APPEAL?
[68] Tullis' argument that the MEC pre-empted the appeal by readvertising the
third line should be judged against the contextual background to the
application. At the time of the award, the provincial health system was in
dire need of acquiring a modernised laundry system. This need was of even
greater importance, given the ongoing COVID pandemic at the time. The
MEC was, therefore, faced with the proverbial Hobson's choice. She had
no real alternative but to readvertise the third laundry line. This in itself is
not definitive or a clear indication that the MEC does not take issue with the
judgment.
CONCLUSION
Trencon Construction v Industrial Development Corporation 2015 (5) SA 245 (CC} (51] and
[52}
43
[69] The appeal lies against the order of the Court and not its reasons. For the
reasons as set out aforesaid and, in particular, given the absence of
objective criteria against which functionality could be measured , the Court's
judgment cannot be faulted. The appeal stands to be dismissed and costs
on Scale C should follow the result. In the premises I propose the following
order:
1. The appeal is dismissed.
2. The appellant is ordered to pay the costs of the appeal on Scale C.
f( VAN DEN BERG AJ
I agree
NZIWENI J
I agree
and it is so ordered
ERASMUSJ
On behalf of appellant Adv K Pillay SC
The State Attorney
Shakirah Chothia
4th Floor, 22 Long Street
Cape Town
Ref: 17 4 7 /20/PS
Email: schothia@iustice.gov.za
Email: alschreuder @justice.gov.za
On behalf of first respondent Adv V Maleka SC
AdvT Scott
Smit Sewgoolam Incorporated
12 Avonwold Road, Cnr Jan Smuts Avenue
Saxonwold, Johannesburg
Ref: OCJ/LB/MA T38961
Email: tiaan@smitsew.co.za
Email: lene@smitsew.co.za
C/o Macgregor Stanford Kruger Inc
Per Karien Peens
Tel: (021) 421 3838
Level 5, Silo Square, V & A Waterfront
Cape Town
Ref: G Bossr/6
On behalf of second respondent Amlazi Equipment Service (Pty) Ltd 44
First Floor, The Office Block 2
Berg Rivier Business Park
Driebergen Street, Daljosaphat
Paarl, Cape Town
Email: dwr@amaJazLco.za
Email: acc@albrechtmachinery .co.za 45