IN THE HIGH COURT OF SOUTH AFRICA
[EASTERN CAPE DIVISION, MTHATHA]
Case No: CA 26/2025
In the matter between:
INGQUZA HILL LOCAL MUNICIPALITY Appellant
(First Respondent in the Court a quo)
and
PHARAOHS CONSTRUCTION JV KUZOBALULA First Respondent
(Applicant in the Court a quo)
MAONA CHIA JV Second Respondent
(Second Respondent in the Court a quo)
______________________________________________________________________
JUDGMENT
______________________________________________________________________
DAWOOD J
Introduction
[1] The appellant (The Municipality), with the leave of the court a quo, appeals
against the judgment of the court a quo wherein the following orders were made: -
“1. The decision of the 1st respondent to withdraw the bid is hereby set aside,
2. The first respondent is hereby directed to discontinue any tendering and subsequent
processes initiated in substitution for the bid,
3. The 1 st respondent is hereby directed to im plement the recommendation of the Bid
Evaluation Committee to award the contract for the construction of new municipal offices
in LUSIKISIKI (Ref No: ILHM/117/2022 -roads) to the applicant and concluding the
required Service Level Agreement with the applica nt within 20 (twenty) days of the
service of the order; and
4. The first respondent is hereby ordered to pay the costs of this application.”
Brief background facts
[2] The first respondent (Pharaohs Construction) brought an application to review
the decision of the appellant (The Municipality) and sought the following relief in the
Notice of Motion:
“ 1. THAT the decision of the Municipality to award the Bid for the construction of new
municipal offices in Lusikisiki (Ref no: ILHM /117/ 2022 -23 / road s) (“the Bid”) to the
Second Respondent be and is hereby set aside;
2. THAT the decision of the Municipality to withdraw the Bid be and is hereby set aside;
3. THAT the Municipality be and is hereby directed to discontinue the tendering process
initiated in substitution for the Bid;
4. THAT the Municipality be and is hereby directed to implement the recommendations of
its Bid Adjudication Committee with regard to the Bid by awarding the contract for the
construction of new municipal offices in Lusikisiki ( Ref no: ILHM / 2022 -23 / roads) to
Pharaohs Construction and concluding the required Service Level Agreement with
Pharaohs Construction within 10 (ten) days of the order.
5. THAT the costs of this application, including the costs of Part A, are to be paid by the
Municipality …”
[3] Bid No IHLM/117/2022 – 2023/Roads (the Bid) was published in the Daily
Dispatch Newspaper on the 6 April 2023 by the Municipality for the construction of new
municipal offices in Lusikisiki.
[4] Pharaohs Construction pleaded inter alia as follows: -
(a) The bid process followed the standard process in that bidders were required to
meet certain requirements. The bidders which met those requirements were then
scored for functionality and then scored for price and preference.
(b) Only bidders who had complied with the compulsory requirements were eligible
to be scored for functionality.
(c) Only bidders registered with the Construction Industry Development Board
(“CIDB”) for an 8GB or higher class of construction work were eligible to have
their tenders evaluated.
(d) In the second stage bidders were scored for functionality.
(e) In the third stage bids were scored on price and preference. In broad terms the
Preferential Procurement Policy Framework Act (“the PPPFA”) has established a
preferential procurement policy framework which provides for a preference point
system in which points are allocated for specific goals and for price. The bidder
which achieved the highest score of the combined points is appointed as the
successful bidder.
(f) In this cas e, the 90/10 preference point system was applied as the value of the
contract exceeded R50 million. That is, a maximum of 10 points was allocated for
specific goals and then the lowest acceptable tender would score the maximum
of 90 points for price. Other “acceptable tenders” would score fewer points
calculated in accordance with the prescribed formula.
(g) The closing date for the submission of bids was 23 May 2023 and 14 bids were
received.
(h) The tender validity period was a period of 90 days which was extende d and
further extended to 6 October 2023.
(i) The Bid Evaluation Committee (BEC) recommended Pharaohs Construction as
the preferred bidder and disqualified the second respondent, Maona Chia JV
(Chia) as being non-compliant.
(j) The Bid Adjudication Committee (BAC) took the view that the requirement for 5
years of audited statements was unlawful since the supply chain regulations from
National Treasury required such tender to insist on 3 years audited statements.
The BAC’s recommendation was that in light of the irregularity the tender must be
cancelled and re-advertised with the correct requirements.
(k) The Bid was awarded to Chia even though it had not met the bid requirements,
had not achieved functionality, and had been disqualified by the municipality’s
BEC.
(l) The award of the tender and the purported withdrawal was unlawful and irregular
and should be set aside.
(m)The municipality’s practice was to publish notices in the Daily Dispatch
Newspaper which it did with the notice to bid on 6 April 2023, but the bid award
was advertised in the Ikhwezi Newspaper, which is published in Kokstad,
KwaZulu Natal and not in the Eastern Cape where the municipality is located.
(n) The notice was not published on the municipality’s website.
(o) The enquiries they made revealed that the lead p artner of JV was reflected as
suspended from the CIBD and only had a grading of 7GB and the second
member was not registered with CIBD and accordingly any award to it would be
irregular. It fell to be disqualified since it did not comply with the CIBD
regulations. Pharaohs Construction had achieved the highest points and should
have been appointed as the preferred bidder.
(p) The Municipality had improperly not awarded the bid to it and had unlawfully
awarded the bid to Chia.
[5] The Municipality in its answer ing affidavit deposed to by the Municipal Manager
submitted inter alia: -
(a) That the BEC re -convened to consider the recommendation of the BAC after
obtaining advice from the Provincial Treasury regarding the way forward and the
Provincial Treasury also reco mmended that the tender be cancelled and be re -
advertised.
(b) The BEC thereafter stood by its earlier recommendation of Pharaohs
Construction.
(c) The BAC recommended to the Municipal Manager that he should rather cancel
the tender process and re-advertise the same.
(d) The Municipal Manager stated that in terms of Municipal Systems delegation the
BAC does not make the final award instead he as the accounting officer was at
liberty to look at the recommendations and make a fresh decision which is based
on neither of the recommendations placed before him.
(e) The Municipal Manager examined the tenders afresh and upon substituting the
5-year requirement with a 3 -year requirement, Chia would have been the most
compliant based on price and functionality.
(f) The Municipal Manager started two processes concurrently, firstly he issued a
notice of intention to award the tender to Chia and secondly, he sought internal
legal advice as to whether the 3 -year requirement was in effect a material
irregularity. He received objections and on e specifically raised the issue of the 5 -
year audited financial statements and the internal advice also stated that the
requirement for 5 -year financial statements was contrary to the supply chain
regulations and was a material irregularity. He accordingly decided to withdraw
the tender prior to awarding the same.
(g) The notice of intention to award is not an award and was a test to see if bidders
felt prejudiced by the 5 -year requirement. There was nothing irrational about his
decision and it was not a final award. He received objections and one of the
bidders raised the 5 -year audited statements. This was one of the motivating
bidders raised the 5 -year audited statements. This was one of the motivating
factors for him to take a decision to withdraw the tender prior to awarding of the
same. On 20 October 2023 he wrote to all the bidders and advised them of his
decision to cancel the tender process as well as his intention to issue an updated
tender advertisement.
[6] Pharoahs Construction in its replying affidavit pleaded inter alia: -
(a) That the award of the tender and the purporte d withdrawal are unlawful and
irregular and should be set aside.
(b) Chia was not a compliant bidder, but the bid process was manipulated to ensure
that Chia was awarded the tender and its decision to withdraw the tender was
based on reliance on defunct regula tions and without giving compliant bidders
the opportunity to be heard.
(c) Pharaohs Construction reiterated that Chia was not compliant in that the bid
required the CIDB at 8GB or higher. Chia was suspended and has a 7GB level
and neither partner had a CIDB grading of 8GB or higher with them having a
grading of 7GB and 2GB. The MBD8 forms must be signed by both partners but
this form was only signed by one partner. Chia should have been disqualified on
that basis as well.
Issue for determination
[7] Despite numerous issues being raised in the notice of appeal the Municipality
elected to focus exclusively on the tender validity period. The municipality conceded
that, if it is not successful on this point, that the decision of the court a quo should stand.
Pharaohs Construction equally conceded that if this point is decided against it, that it
would not be entitled to the relief it was granted. The issue for determination which will
be dispositive of the matter is accordingly whether or not the tender validi ty period was
extended beyond the 6 October 2023.
Submissions by the parties
[8] The appellants submitted as follows:-
(a) The tender validity period was last extended to 06 October 2023.
(b) The court a quo found that as at that date the award had not been awa rded to
any party.
(c) There were objections to the notice of intention to award the tender, including an
objection by Pharaohs Construction.
(d) Pharaohs Construction in its papers stated that ‘if no appeal/objection is lodged,
or if it is dismissed, then the mun icipality must proceed to award the bid as
advertised’.
(e) The award occurs after resolution of the objections.
(f) The concept of tender validity is central to the public procurement process. It is
meant to ensure transparency, fairness and compliance with s 21 7 of the
Constitution. Section 217 of the Constitution mandates that public procurement
must, amongst other considerations, be competitive, fair and transparent.
(g) Where, for whatever reason, the administrative processes concerned in the
evaluation and adjudication of a tender are not completed within the initial tender
validity period, the procuring entity may require bidders to agree to extend the
lifespan of their offers due to the procuring entity’s intention to extend the bid
validity period.
(h) Where such a request is made, bidders will be afforded the opportunity to select
one of two options, being to i) accept, or ii) reject the request for extension of the
tender validity period.
(i) In Telkom SA,1 the court ruled that once a tender's validity period has expired
before an extension, the process is considered complete. No further negotiations
or extensions can be made thereafter. This judgment highlights the finality of the
1Telkom SA v Merid Training (Pty) Ltd and Others; Bihati Solutions (Pty) Ltd v Telkom SA Limited and
others [2011] ZAGPPHC 1 (Telkom SA).
tender validity period and stresses that once it lapses, the procurement process
must start afresh. Any attempts to alter or extend the terms without mutual
agreement could lead to legal invalidation. In this regard, Southwood J held that:
‘The question to be decided is whether the procedure followed by the applicant and the six
respondents after 12 April 2008 (when the validity period of the proposal expired) was in
compliance with section 217 of the Constitution. In my view it was not. As soon as the
validity period of the proposals had expired without the applicant awarding a t ender the
tender process was complete ─ albeit unsuccessfully ─ and the applicant was no longer
free to negotiate with the respondents as if they were simply attempting to enter into a
contract. The process was no longer transparent, equitable or competiti ve. All the
tenderers were entitled to expect the applicant to apply its own procedure and either
award or not award a tender within the validity period of the proposals. If it failed to award
a tender within the validity period of the proposals it receive d it had to offer all interested
parties a further opportunity to tender. Negotiations with some tenderers to extend the
period of validity lacked transparency and was not equitable or competitive.2
(j) In SAAB Grintek3 the State Information Technology Agency (“SITA”), published a
request for bids (“RFB”) on behalf of the South African Police Service (“SAPS”) in
respect of the procurement of Integrated Mobile Vehicle Data Command and Control
Solution. In terms of the RFB , the tender validity period was 90 days starting from
the closing date for the tender, being 4 October 2010. SAAB Grintek Defence (Pty)
Ltd (“SAAB”) submitted a bid and was shortlisted as a potential supplier of the
tender. On 2 February 2011, SITA advise d SAAB that the validity of its bid had
expired on 4 January 2011 and requested SAAB to extend the validity of its bid by 90
expired on 4 January 2011 and requested SAAB to extend the validity of its bid by 90
days to which SAAB agreed. SITA subsequently requested further extensions of the
bid from SAAB, which SAAB granted. The Technical E valuation Team and the
Recommendation Committee recommended that the tender be awarded to SAAB.
However, on 8 August 2012 the SAPS informed SAAB that it had cancelled the
tender in a letter addressed to SITA on 28 May 2012.
2 Ibid, para 14.
3 SAAB Grintek Defence (Pty) Ltd v South African Police Service and Others (25286/2013) [2015]
ZAGPPHC 1 (16 January 2015) (SAAB Grintek).
(i) SAAB sought an order against th e respondents to review and set aside the
decision of the SAPS to cancel the tender and to review and set aside the
decision of SITA not to award the tender to SAAB. The respondents argued that
the bid expired 90 days after the submission closing date, unless it was timeously
extended by agreement. The first extension only came 30 days after the bid had
expired and, since the RFB did not provide for the revival of an expired bid,
everything that had transpired after 4 January 2011 was ultra vires because there
was no valid bid.
(ii) The court found that since the RFB did not provide any basis for bids to be
revived once they had expired and did not provide for extensions to be granted
retrospectively once the validity period of the bid had expired, and no ex tension had
taken place before its expiry there was no valid bid in existence and an award could
not be made. Because the SAPS and SITA are organs of the State, it is required in
terms of section 217 of the Constitution, when they contract for goods and se rvices,
to do so in accordance with a system that is “fair, equitable, transparent, competitive
and cost effective”.
(ii) In Joubert Galpin Searle Inc ,4 the court reaffirmed that once the bid validity period
expires, the tender process is closed, and a new pr ocess must be initiated if no
decision has been made during the original validity period. The court emphasized
that allowing a process to continue beyond the bid validity period without a proper
extension undermines the fairness and transparency of the procurement system.
(iii) The Searle judgment further underscores the significance of adhering to deadlines
within the procurement process. Plasket J, who took the view that the judgment in
Telkom SA was ‘essentially on all fours with Searle observed:
‘[68] As wit h this case, what had to be decided, according to Southwood J, was “the legal
consequence of a failure by a public body to accept, within the stipulated validity period for
consequence of a failure by a public body to accept, within the stipulated validity period for
the (tender) proposals, any of the proposals received.” In deciding this issue, Sou thwood J’s
4 Joubert Galpin Searle Inc & Others v Road Accident Fund (3191/2013) [2014] ZAECPEHC 19; [2014] 2
All SA 604 (ECP); 2014 (4) SA 148 (ECP) (25 March 2014) (Searle).
starting point was four inter -related propositions. They are that: (a) the decision to award a
tender is an administrative action and PAJA therefore applies; (b) generally speaking, once
a contract has been entered into following the award of a tender, the law of contract applies;
(c) but a contract entered into contrary to prescribed tender processes is invalid; and (d)
consequently, “even if no contract is entered into, all steps taken in accordance with a
process which does not comply with the prescribed tender process are also invalid.”
...
[70] I am in agreement with Southwood J for the reasons given by him. As a result, it is my
view that, in this case, once the tender validity period had expired on or about 20
November 2012, the tender process had been completed, albeit unsuccessfully.’
(iv) In Takubiza,5 the court ruled that an extension of the bid validity period must be
communicated within the original validity timeframe. Failure to request or notify
bidders of an extension before the validity period expires renders the process
invalid. This judgment re inforced the principles of fairness and transparency by
stating that any actions outside the validity period would violate procurement
regulations.
(v) Mr Bodlani accordingly argued that the findings of the Court a quo, that ‘the notice of
intention to award the tender was effective so that beyond 6 October 2023 the tender would
not have been withdrawn at will or the procurement process came to an end,’ 6 and that ‘the
notice of award interrupted the period of validity of the tender, it having been made on the
date the tender would have expired’7 – are not sustainable in law.
(vi) He argued that once it was found that beyond 06 October 2023 there was no tender
to award, it follows that:
(a) there was, in law, no decision to withdraw a tender;
5 City of Ekurhuleni Metropolitan Municipality v Takubiza Trading & Projects CC and Others (846/2021)
[2022] ZASCA 82; 2023 (1) SA 44 (SCA) (3 June 2022).
[2022] ZASCA 82; 2023 (1) SA 44 (SCA) (3 June 2022).
6 Judgment – para 51 Vol 4, p 321 (lines 17 – 20).
7 Judgment – para 51 Vol 4, p 321 (lines 22 – 24).
(b) the Municipality was correct, whatever its reasons, in deciding to restart the
tender process;
(c) there was no recommendation of the BEC, in law, still viable to give or be given
effect to; and
(d) no tender still to award to Pharaohs Construction.
[9] Mr Schaup on behalf of Pharaohs Construction submitted inter alia as follows:-
(a) Pharaohs Construction, in its affidavit, alleged that the tender validity period had
been extended to 6 October 2023.
(b) The Municipality admitted this allegation in its answering affidavit.
(c) At no stage did the Municipality allege that there was any expiry of the tender
validity period.
(d) It is accordingly common cause, on the papers, that the tender validity had been
extended until 6 October 2023 and it is therefore not open to the Munic ipality to
contend otherwise.
(e) With regard to the contention by the Municipality that the notice of intention to
award is not ‘a decision’ which interrupted the expiry of tender validity, he argued
that:
(i) A ‘decision ’qualifies as ‘administrative action’(in terms of its definition in
PAJA) if:
(a) it is of an administrative nature;
(b) it is taken by an organ of state;
(c) such organ of state exercises public power or performing a public function;
(d) the decision is taken in terms of any legislation or an empowering
provision;
(e) the decision adversely affects right;
(f) the decision has a direct, external legal effect; and does not fall under any
of the listed exclusions.
(ii) that the notice of intention to award the tender to Chia satisfies the above
requisites and accordingly constitutes 'administrative action’.
(iii) It is trite that the tender validity period is interrupted by a decision made within
the period of tender validity.
(iv) A decision to award a tender, publicly announced, is a final decision within the
meaning of the functus officio doctrine (even though a municipality may alter
its decision pursuant to an appeal in terms of section 62 of the Local
Government: Municipal Systems Act, 32 of 2000).
(v) A distinction which the Municipality wishes to draw between a publicly
announced decision to award a tender and a notice of intention to award is
more imaginary than real and is without substance for the following reasons:
(a) There exists no legal authority for such a distinction to be drawn.
(b) On the contrary, and app lying the reasoning in Trencon, tender validity is
interrupted once a decision-maker performs an act that might result in legal
challenges that will inevitably run longer than the tender validity period.
(c) The distinction contended for by the Municipality ho lds no practical effect in
that, in both instances, unsuccessful bidders would be entitled to mount a
challenge which was exactly what was contemplated by the publication,
namely to test whether the bidders felt prejudiced thereby inviting
challenges based on prejudice.
(d) The publication of the notice of intention to award would, at the very least,
have created a legitimate expectation in the mind of the second respondent
and it was therefore not open to the Municipality to withdraw the notice
without following fair procedure.
(e) The publication on 6 October 2023 accordingly interrupted the period of
tender validity.
Findings
[10] It is common cause that the tender was extended until 6 October 2023. An
intention to award was published within that period, the firs t respondent claiming that
that interrupted the period of tender validity. The Municipality, however, could not make
any award at the time it expressed its intention to award. Such a decision could only be
any award at the time it expressed its intention to award. Such a decision could only be
taken after the period for objections had lapsed o r after considering any objections that
-
were lodged. The intention to award never became an award in this case. There were
objections and ultimately the tender was withdrawn. There was no award made on the 6
October 2023. The tender validity period expired , and the tender process was
completed as at that date, albeit unsuccessfully.
[11] The bid could not be revived once it had expired, the bid came to an end on the 6
October 2023. Even if an award had been made after the expiration of the objection
period it would have been invalid and unlawful and of no force and effect. The decision
would have been made after the validity period of the bid had expired. There was no
evidence that the bid was extended beyond 6 October 2023, or that there was a request
to the bidders to agree to the extension of the lifespan of their bids due to the procuring
entity's intention to extend the bid validity period. There was nothing in Pharaohs
Construction papers to suggest that any such request was made nor was there any
contention by the Municipality that it had requested an extension beyond the 6 October
2023.
[12] In Trencon8 it was held:
“[80] This case is distinguishable from Telkom and Joubert. The IDC awarded the tender within
the validity period. In those cases, there was no award. Consequently, a substitution order here
would not require the tender validity period to be extended becau se this period is held in
abeyance pending the finalization of the matter. [81] This must be so. Once an award has been
challenged, the litigation process will inevitably run longer than the 120 -day tender validity
period … “
[13] In Takubiza9 Ponnan JA held inter alia:
“[13] … as was held by the High Court, the validity period is indeed one of, the fundamental
rules of the game, being the period within which the process should be finalized. To extend the
tender validity period, the consent of all the par ticipants to the tender process is required.
8 Trencon Construction (Pty) Limited v Industrial Development Corporation of South Africa Limited and
Another (CCT198/14) [2015] ZACC 22; 2015 (5) SA 245 (CC); 2015 (10) BCLR 199 (CC) (26 June 2015).
9 City of Ekurhuleni Metropolitan Municipality v Takubiza Trading & Projects CC and Others (846/2021)
[2022] ZASCA 82; 2023 (1) SA 44 (SCA) (3 June 2022).
Unless there is a timeous request and favourable response from all the tenderers prior to the
expiry of the tender, the tender comes to an end. …[15] It goes without saying that a tender
process cannot be open -ended. Certainty has to be the cornerstone. I can thus conceive of no
reason why the principle so firmly established in Telkom SA and Searle does not find application
here. It follows that the appeal must fail.”
[14] Pharoahs Construction’s argument unfort unately finds no application in this
matter as there has to be an actual award within the validity period applying the
principle enunciated in Trencon, for the validity period to be extended. There was no
award in this case and accordingly no extension of the validity period. The process was
not finalised by the publication of the intention to award. It could only be finalised by the
actual award, which would constitute the decision.
[15] In considering the issue of costs, my view is that costs should follo w the results.
The Municipal Manager was not at liberty to simply ignore the recommendations of both
the BEC and the BAC and unilaterally making a decision to award the tender to a non -
compliant tenderer without even checking if it met the grading requirem ent. His action of
advertising in a different newspaper his intention to award, from the notification of the
tender, publishing in another province also raises alarm bells. He was obliged to
motivate his deviation from the BEC and BAC’s recommendations whi ch he failed to do
so.
[13] Pharoahs Construction has raised many more troubling aspects in the manner
this tender was handled particularly by the municipality manager who attempted to
defend the undefendable. Their launch of the application was based on legitimate
concerns. The Municipality further ought to have raised the tender validity period as a
defence in their papers, despite it being a defence available to them at any stage since
defence in their papers, despite it being a defence available to them at any stage since
it is a point of law. Pharoahs Construction’s approach to the matter may have been
different if it was raised timeously by the Municipality in its answering papers. It is inter
alia for these reasons that in the exercise of my discretion I propose to make no order
as to costs.
Order
[14] The appeal is upheld with no order as to costs.
[15] The decision of the court a quo is set aside and replaced with the following order:
The application is dismissed with no order as to costs.
_________________________
FBA DAWOOD
JUDGE OF THE HIGH COURT
I agree:
________________________
L R BRAUNS
JUDGE OF THE HIGH COURT (Acting)
I agree:
________________________
N CENGANI-MBAKAZA
JUDGE OF THE HIGH COURT (Acting)
APPEARANCES
For the Appellant: Adv Bodlani SC with Adv Maswazi, instructed by
Jolwana Mgidlana Inc. No. 19 Park Road, Mthatha
For the 1st Respondent: Adv Schaup, instructed by c/o Smith Tabata Inc, 34
Stanford Terrance, Mthatha
Date of hearing: 04 August 2025
Date of delivery of judgment: 06 November 2025