Summary of Judgment

1. Introduction

The matter concerned an application for judicial review of administrative action in the context of public procurement. The applicant, Fidelity Security Services (Pty) Ltd (“Fidelity”), approached the Gauteng Division of the High Court, Johannesburg, seeking to review and set aside a procurement decision taken by the first respondent, Transnet SOC Limited (“Transnet”), to award Tender No. HOAC-HO-55168 to the second respondent, Sinqobile Equestrian Security Services (Pty) Ltd (“Sinqobile”). Two other entities featured as respondents: Hlanganani Protection Services (Pty) Ltd (third respondent) and Take Note IT (Pty) Ltd (fourth respondent).

The proceedings followed Fidelity’s unsuccessful participation in the tender process. Fidelity was disqualified at the technical evaluation stage for failing to meet a stated minimum technical functionality threshold of 80%. After being notified of its disqualification on 1 September 2025, Fidelity instituted review proceedings on 3 October 2025.

The dispute concerned the lawfulness, rationality, and procedural fairness of Transnet’s procurement process for a significant security-services contract, valued at over R300 million, for the provision of network security services for Transnet’s rail infrastructure in the central corridor for a 12-month period. The application was heard as one of urgency, and the court considered the papers, the Rule 53 record referred to in the judgment, written argument, and oral submissions.

2. Material Facts

Transnet invited bids on 12 August 2025 for the relevant security contract, fixing the closing date for submissions at 15 August 2025, resulting in an advertisement/response period of three days. Despite this compressed time period, the request for proposals specified a bid validity period of 180 business days, expiring on 24 April 2026.

Four bids were received. At the administrative compliance stage, Take Note IT (Pty) Ltd was disqualified. The remaining bidders, including Fidelity, Sinqobile, and Hlanganani Protection Services (Pty) Ltd, advanced to the technical evaluation stage. The technical stage contained a mandatory minimum threshold of 80%.

The technical evaluation included multiple criteria, and the judgment highlighted the weighting of two criteria in particular, namely the “Transitional Plan” and the “Community Engagement Plan”, each weighted at 20%. Fidelity obtained an overall technical score of 66.67% and was disqualified for falling below the 80% threshold. The evaluators’ notes recorded, in substance, that Fidelity’s plan did not adequately address a 15-day takeover plan, including recruitment and community engagement requirements.

Sinqobile scored 90% and was recommended as the preferred bidder. The tender was awarded to Sinqobile.

The record before the court included, in relation to Sinqobile, a Private Security Sector Provident Fund Employer Status Confirmation Letter reflecting an outstanding late-payment interest amount of R 8,487,666.13, coupled with a warning that failures (including failures to submit contribution schedules) would result in a non-compliant status. The judgment treated this as material regulatory information in the procurement context and noted that the record did not show it being considered in Transnet’s assessment of Sinqobile.

A further factual feature, treated as significant in the court’s assessment of the evaluation process, was Transnet’s admitted post-disqualification re-evaluation of Fidelity’s bid after Fidelity requested a meeting, which resulted in Fidelity’s score increasing from 66.67% to 71.67%, without a transparent explanation for the revision.

3. Legal Issues

The central legal questions concerned whether Transnet’s procurement process and resultant award decision were lawful, rational, and procedurally fair under the constitutional and statutory framework governing public procurement and administrative action.

A primary issue was whether Transnet’s three-day advertising period complied with Treasury Regulation 16A6.3(c), which provides for a minimum 21-day advertising period, subject to an exception for urgent cases as determined by the accounting officer or accounting authority. This issue was largely one of law and legality, turning on compliance with a binding regulatory requirement and whether the preconditions for any departure were established on the record.

Further issues concerned the application of law to fact and review standards under the Promotion of Administrative Justice Act 3 of 2000 (PAJA). These included whether Fidelity’s disqualification for failure to meet the technical threshold was irrational due to an alleged failure to consider material parts of its bid (including its asserted ability to deploy within 24 hours), and whether the evaluation and adjudication were affected by procedural unfairness and unequal treatment, including an alleged failure to consider material regulatory non-compliance reflected in Sinqobile’s provident fund status documentation.

Finally, having found reviewable irregularities, the court had to determine an appropriate remedy, which involved an evaluative assessment under section 8 of PAJA and section 172(1)(b) of the Constitution, including whether to grant more intrusive relief (such as repayment of profits) or to remit the matter for a lawful process.

4. Court’s Reasoning

The court located Transnet’s procurement obligations within section 217 of the Constitution, which requires that procurement systems be fair, equitable, transparent, competitive, and cost-effective, and held that this constitutional standard is given effect through the Public Finance Management Act 1 of 1999 (PFMA), the Treasury Regulations issued under it, and PAJA. It treated the decision to award the tender as administrative action reviewable under PAJA.

In addressing process fairness and compliance, the court relied on the principle articulated in AllPay Consolidated Investment Holdings (Pty) Ltd v Chief Executive Officer of the South African Social Security Agency that the fairness of the process cannot be divorced from the outcome, and that once a ground of review is established the impugned decision must be declared unlawful. The court treated procedural requirements in procurement as serving to secure equal treatment and to prevent distortions caused by misconduct or skewed processes.

On the advertising period, the court held that Transnet’s three-day period was a fundamental irregularity and inconsistent with the constitutional imperatives of transparency and competitiveness for a contract of this scale and complexity. It approached Treasury Regulation 16A6.3(c) as binding rather than aspirational, and accepted compliance with its minimum requirements as a jurisdictional prerequisite to a lawful tender process.

Transnet sought to justify the shortened timeline by reliance on its internal Procurement Manual for Activities Directed at Revenue Generation, contending that a limited bidders’ mechanism permitted a shorter response period. The court rejected this defence on the basis that an internal policy cannot override a binding Treasury Regulation. It further held that, even on Transnet’s own manual, the record did not establish compliance with the manual’s preconditions for the shortened period, as there was no demonstrated approval or justification meeting the regulatory and internal policy requirements, and no evidence that the accounting officer had made the urgency determination contemplated by the Treasury Regulation.

The court also assessed whether the compressed timeline was supportable on the facts. It considered the tender’s stated 180-business-day validity period to be inconsistent with a genuine emergency requiring an expedited procurement. The court reasoned that an urgent procurement would ordinarily be structured to facilitate a swift award and handover, whereas the lengthy validity period indicated that Transnet anticipated a drawn-out process. The court further noted that Transnet’s attempt, in a supplementary affidavit, to justify urgency by reference to termination of a previous service provider did not, without more, justify deviation from mandatory procurement timeframes and instead suggested a planning issue. The court concluded that the three-day window was not established as an urgent departure justified within the regulatory framework and, on the probabilities as assessed by the court, appeared designed to limit competition, rendering the process constitutionally defective from inception.

Independently of the advertisement defect, the court found the disqualification of Fidelity to be irrational and procedurally unfair on the record. It framed rationality as requiring a rational connection between the decision and the purpose for which the power was conferred. The court held that evaluators’ recorded reasons for marking Fidelity down, particularly concerning the 15-day takeover plan and recruitment aspects, were contradicted by Fidelity’s “Business Continuity and Transitional Plan,” which expressly stated an ability to deploy within 24 hours and set out a detailed startup execution plan. The court regarded the evaluators’ contrary note as demonstrating a failure to consider relevant material, which it treated as falling within section 6(2)(e)(iii) of PAJA.

The court was not persuaded by Transnet’s response characterising Fidelity’s plan as “materially deficient” without engaging substantively with the detailed content relied upon by Fidelity. The court characterised this not as an impermissible judicial substitution for technical judgment, but as a case where the record supported the inference that the evaluators did not properly consider the evidence placed before them.

The court considered the post-disqualification score change from 66.67% to 71.67% (following Fidelity’s request for engagement) as reinforcing the conclusion that the evaluation was not transparently or properly undertaken. The revision was treated as an indicator that the original evaluation was not stable and that relevant material may have been overlooked initially, supporting an inference of arbitrariness or inadequate application of mind.

On the award to Sinqobile, the court held that the process’s irrationality was compounded by Transnet’s apparent failure to consider material regulatory information reflected in Sinqobile’s provident fund documentation, which recorded substantial late-payment interest and indicated non-compliance risks. The court regarded this as relevant to operational sustainability and regulatory discipline for a labour-intensive security contract, and it held that the record did not demonstrate that Transnet considered this information as part of its assessment. In the court’s view, ignoring such information while applying strict disqualification to Fidelity supported a conclusion that the process was not equal, fair, or rational.

Taken cumulatively, the court found that the irregularities were profound: the procurement was unlawful due to non-compliance with Treasury Regulation 16A6.3(c), and it was substantively irrational due to the failure to consider relevant material concerning Fidelity’s bid and the unequal treatment in respect of Sinqobile. The court held that Fidelity established multiple grounds of review under section 6(2) of PAJA, and that under section 172(1)(a) of the Constitution the impugned decisions had to be declared unlawful and set aside.

In fashioning a remedy, the court applied section 8 of PAJA and section 172(1)(b) of the Constitution. It considered Fidelity’s primary request for disgorgement of profits as a severe remedy and referred to AllPay Consolidated Investment Holdings (Pty) Ltd v Chief Executive Officer, SASSA (AllPay II) for the proposition that disgorgement may be just and equitable in appropriate cases, but is not automatic and depends on circumstances including public interest, blameworthiness, and service disruption. On the facts as presented, the court reasoned that the contract concerned essential security services, was likely nearing completion, and that a disgorgement order could be disruptive and could penalise Sinqobile for Transnet’s failures, especially absent evidence that Sinqobile was complicit in the unlawfulness.

The court therefore preferred remission as a just and equitable course, ordering that the tender be conducted de novo in compliance with the Constitution, PFMA, and applicable Treasury Regulations, including compliance with the 21-day advertising requirement.

On costs, the court held that Fidelity had been substantially successful and applied the general rule that costs follow the result. It additionally referred to the constitutional litigation costs principle in Biowatch Trust v Registrar, Genetic Resources, awarding costs against Transnet, including the costs of senior counsel.

5. Outcome and Relief

The court upheld the review and granted relief in Fidelity’s favour. It condoned Fidelity’s non-compliance with forms and service requirements and heard the matter as urgent in terms of Uniform Rule 6(12).

It reviewed and set aside Transnet’s decision to disqualify Fidelity’s bid and to award Tender No. HOAC-HO-55168 to Sinqobile. It further declared that Transnet’s process in advertising and adjudicating the tender, in contravention of Treasury Regulation 16A6.3(c) issued under the Public Finance Management Act 1 of 1999, was unlawful and invalid.

The matter was remitted to Transnet to conduct the tender process de novo in accordance with the Constitution, the PFMA, and all applicable Treasury Regulations. Transnet was ordered to pay Fidelity’s costs of the application, including the costs of senior counsel.

Cases Cited

AllPay Consolidated Investment Holdings (Pty) Ltd v Chief Executive Officer of the South African Social Security Agency [2013] ZACC 42.

AllPay Consolidated Investment Holdings (Pty) Ltd v Chief Executive Officer, SASSA (AllPay II) [2014] ZACC 12.

Biowatch Trust v Registrar, Genetic Resources [2009] ZACC 14.

Legislation Cited

Constitution of the Republic of South Africa, 1996 (section 217; section 172(1)(a); section 172(1)(b)).

Public Finance Management Act 1 of 1999.

Promotion of Administrative Justice Act 3 of 2000 (section 6(2); section 6(2)(e)(iii); section 8).

Rules of Court Cited

Uniform Rule 6(12).

Uniform Rule 53 (referred to in relation to the record).

Held

The High Court held that Transnet’s tender process was unlawful and invalid due to non-compliance with Treasury Regulation 16A6.3(c), because the tender was advertised for only three days and Transnet did not establish a lawful basis for the regulatory exception applicable to urgent cases.

The court further held that Fidelity’s disqualification for failing to meet the technical threshold was irrational and procedurally unfair on the record, because the evaluation failed to properly consider material parts of Fidelity’s bid addressing the takeover and deployment requirements, and because the subsequent unexplained score revision supported the inference of inadequate application of mind.

The court also held that the process was irrational and unfairly administered in relation to the successful bidder, because material regulatory information reflecting Sinqobile’s provident fund compliance concerns was not shown to have been considered in the adjudication.

As a consequence, the court reviewed and set aside the disqualification and award decisions, declared the process unlawful and invalid, remitted the matter for a de novo tender process, and ordered Transnet to pay costs including senior counsel.

LEGAL PRINCIPLES

Public procurement by an organ of state must comply with section 217 of the Constitution, requiring a procurement system that is fair, equitable, transparent, competitive, and cost-effective, and this standard is operationalised through the PFMA, Treasury Regulations, and PAJA.

A tender award constitutes administrative action reviewable under PAJA, and once a ground of review is established, the unlawfulness of the process cannot be insulated by the outcome; procedural compliance is integral to substantive fairness in procurement decision-making as applied through the AllPay principles.

Treasury Regulation 16A6.3(c) is binding and not merely directory; compliance with its minimum advertising period is treated as a prerequisite for lawful procurement, and an organ of state bears the burden of demonstrating that the preconditions for any permitted deviation (including a properly determined urgency) have been met on the record.

Rationality review requires that a decision bear a rational connection to its purpose and that decision-makers properly consider relevant material before them. A failure to consider relevant considerations constitutes a reviewable irregularity under section 6(2)(e)(iii) of PAJA as applied by the court to the tender evaluation record.

Remedial discretion following review is exercised under section 8 of PAJA and section 172(1)(b) of the Constitution by selecting relief that is just and equitable in the circumstances. Disgorgement of profits is not an automatic consequence of setting aside an unlawful procurement; it requires a context-sensitive assessment including public interest, disruption, and blameworthiness, as considered with reference to AllPay II.

In constitutional and public procurement litigation, costs generally follow the result, and where a litigant successfully vindicates constitutional standards against the state, the costs approach aligns with the principle articulated in Biowatch Trust v Registrar, Genetic Resources, as applied by the court in awarding costs against Transnet.