Allpay Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer of the South African Social Security Agency and Others (CCT 48/13) [2013] ZACC 42; 2014 (1) SA 604 (CC); 2014 (1) BCLR 1 (CC) (29 November 2013)

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[2013] ZACC 42
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Allpay Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer of the South African Social Security Agency and Others (CCT 48/13) [2013] ZACC 42; 2014 (1) SA 604 (CC); 2014 (1) BCLR 1 (CC) (29 November 2013)

CONSTITUTIONAL COURT OF
SOUTH AFRICA
Case CCT 48/13
[2013] ZACC 42
In the matter between:
ALLPAY CONSOLIDATED
INVESTMENT HOLDINGS (PTY)
LTD

First Applicant
ALLPAY FREE STATE (PTY)
LTD

Second Applicant
ALLPAY WESTERN CAPE (PTY)
LTD

Third Applicant
ALLPAY GAUTENG (PTY)
LTD

Fourth Applicant
ALLPAY EASTERN CAPE (PTY)
LTD

Fifth Applicant
ALLPAY KWA-ZULU NATAL (PTY)
LTD

Sixth Applicant
ALLPAY MPUMALANGA (PTY)
LTD

Seventh Applicant
ALLPAY LIMPOPO (PTY)
LTD

Eighth Applicant
ALLPAY NORTH WEST (PTY)
LTD

Ninth Applicant
ALLPAY NORTHERN CAPE (PTY)
LTD

Tenth Applicant
MICAWBER 851 (PTY)
LTD

Eleventh Applicant
MICAWBER 852 (PTY)
LTD

Twelfth Applicant
MICAWBER 853 (PTY)
LTD

Thirteenth Applicant
MICAWBER 854 (PTY)
LTD

Fourteenth Applicant
and
CHIEF EXECUTIVE
OFFICER OF THE
SOUTH AFRICAN
SOCIAL SECURITY AGENCY

First Respondent
SOUTH AFRICAN
SOCIAL SECURITY AGENCY

Second Respondent
CASH PAYMASTER
SERVICES (PTY) LTD

Third Respondent
EZIDLUBHEDU
INVESTMENT HOLDINGS (PTY) LTD

Fourth Respondent
FLASH SAVINGS AND
CREDIT COOPERATIVE

Fifth Respondent
ENLIGHTENED
SECURITY FORCE (PTY) LTD

Sixth Respondent
MOBA COMM (PTY)
LTD

Seventh Respondent
EMPILWENI PAYOUT
SERVICES (PTY) LTD

Eighth Respondent
PENSION MANAGEMENT
(PTY) LTD

Ninth Respondent
MASINGITA
FINANCIAL SERVICES (PTY) LTD

Tenth Respondent
SOUTH AFRICAN POST
OFFICE

Eleventh Respondent
ROMAN PROTECTION
SOLUTIONS CC

Twelfth Respondent
UBANK
LIMITED

Thirteenth Respondent
AFRICAN
RENAISSANCE INVESTMENT
MANAGEMENT (PTY)
LTD

Fourteenth Respondent
STANDARD BANK
GROUP LTD

Fifteenth Respondent
NEW SOLUTIONS
(PTY)
LTD

Sixteenth Respondent
ITHALA
LTD

Seventeenth Respondent
KTS TECHNOLOGY
SOLUTIONS CONSORTIUM

Eighteenth Respondent
and
CORRUPTION
WATCH

First Amicus Curiae
CENTRE FOR CHILD
LAW

Second Amicus Curiae
Heard on: 10 September 2013
Decided on: 29 November 2013
JUDGMENT
FRONEMAN J (Mogoeng CJ, Moseneke DCJ,
Cameron J, Jafta J, Madlanga J, Mhlantla AJ, Nkabinde J,
Skweyiya J, Van der Westhuizen
J and Zondo J concurring):
Introduction
[1]  For many people in this
country the payment of social grants by the state provides the only
hope of ever living in the
material conditions that the
Constitution’s values of dignity, freedom and equality
promise.  About 15 million people
depend on the payment of these
social grants.  They are vulnerable people, living at the
margins of affluence in our society.
[2]  The dispute in this case turns
on whether the award of a tender by the South African Social Security
Agency
[1]
(SASSA) to Cash Paymaster Services (Pty) Ltd
[2]
(Cash Paymaster), for the countrywide payment of social grants
to beneficiaries, was constitutionally valid.  An unsuccessful

tenderer, AllPay Consolidated Investment Holdings (Pty) Ltd
[3]
(AllPay), contends that it was not.  It brought a review
application in the North Gauteng High Court, Pretoria (High Court)

for the setting aside of the tender award.  The High Court
declared the tender process invalid, but declined to set the award

aside because of the practical upheaval this would have involved.
[3]  AllPay appealed to the Supreme
Court of Appeal against the refusal to set the award aside, while
Cash Paymaster cross-appealed
the declaratory order granted by the
High Court.  The Supreme Court of Appeal upheld the
cross-appeal, and dismissed AllPay’s
appeal.  Aggrieved by
this, AllPay now seeks leave to appeal to this Court against the
adverse orders made by the Supreme
Court of Appeal.
Leave to appeal
[4]  It is as well to get the old
chestnut of leave to appeal out of the way immediately.
Procurement disputes about
the proper interpretation and application
of section 217 of the Constitution
[4]
raise constitutional matters.
[5]
The outcome of this case is a matter of national importance and
public interest.  It is because procurement so palpably

implicates socio-economic rights that the public has an interest in
its being conducted in a fair, equitable, transparent, competitive

and cost-effective manner.  Here the right of access to social
security for people who are unable to support themselves,
[6]
particularly children,
[7]
is implicated.  Procurement policy under section 217 also
involves the protection and advancement of persons or categories
of
persons disadvantaged by past unfair discrimination.  The public
interest in the fairness of that vital aspect of the economic

transformation of our country is also clear.  There are
reasonable prospects of success.  Leave must be granted.
Issues
[5]  AllPay relied on a number of
alleged irregularities in the tender process.  The Supreme Court
of Appeal, in the end,
found that there were no unlawful
irregularities, but also commented in general terms on the proper
approach to matters of this
kind.
[8]
Both its findings on the irregularities and its general approach were
criticised in argument before us.  AllPay also
sought leave to
introduce further evidence before us, which it attempted and failed
to introduce before the Supreme Court of Appeal.
[6]
Initially, it is necessary to examine the following:
(a)
The alleged irregularities in the procurement process.
(b)
The proper legal approach to the existence and
legal effect of proven
irregularities.
(c)
The application of this approach to the facts.
[7]  The remaining issues will be
dealt with in the light of the conclusions reached on these three
aspects.
Factual
background
[8]  SASSA was established to unify
the fragmented provincial systems under a single, national authority
for the payment of
social grants.
[9]
When SASSA inherited its responsibilities, there were serious flaws
in the methods of payment.  Many grants were paid
in cash by
contracted service providers who had to transport large sums to
various payment points.  This resulted in serious
security
risks.  Deficiencies in the system caused duplication of
payments.  Fraudulent conduct was widespread, including
claims
being submitted by persons who were not entitled to grants or on
behalf of beneficiaries who were deceased.  The existing

contracts with service providers were scheduled to come to an end on
31 March 2012.
There was some time
pressure to ensure that a national system could become operational.
[9]  On 15 and 17 April 2011, SASSA
published an invitation to tender (Request for Proposals), calling on
bidders to present
proposals to pay social grants on SASSA’s
behalf.  The Request for Proposals sought solutions to several
issues, but
it was directed primarily at finding a payment solution
that was convenient for recipients and limited the risk of theft and
fraud.
At several points in the Request for Proposals, SASSA
made it clear that a solution involving biometric
[10]
verification – an effective means of avoiding fraud –
would be given preference.
[10]
The process for accepting bids was as follows:
(a)
Bidders were invited to submit bids for any number
of provinces.
(b)
Once the bids had been submitted, there would be
a compulsory
briefing session, where questions of clarification or queries
concerning the requirements of the Request for Proposals
were to be
addressed.  The briefing procedure envisaged that bidders would
submit written questions by a specified date and
that clarifying
responses would be provided at the briefing session.
(c)
The bids were to be evaluated by a Bid Evaluation
Committee and
awarded by a Bid Adjudication Committee.  A Supply Chain
Management Circular
[11]
(Circular) indicated how the committees were to be constituted, and
how their functions were to be performed.
(d)
The bids were to be evaluated in two stages.
At the first
stage, bids would be assessed on the merit of the technical solutions
offered to fulfil the requirements of the tender.
Solutions
that crossed a substantial threshold - scoring a minimum of 70%
– would be reconsidered after a further oral
presentation on
functionality.
(e)
Bidders whose solutions maintained a minimum score
of 70% after the
oral presentation would proceed to the second stage, where they would
be evaluated on financial and preference-point
merit.
[11]
Following the Request for Proposals, SASSA held a bid clarification
meeting on 12
May 2011.  On 19 May 2011 SASSA provided written
responses to certain of the questions posed by bidders.
[12]
On 10 June 2011, SASSA issued a document (Bidders Notice 2), which it
said was a
final clarification regarding frequently asked questions.
On the same day AllPay wrote to SASSA requesting an extension of
the
closing date for bid submissions.  On 13 June 2011,
SASSA extended the closing date for bid submissions from
15 June 2011
to 27 June 2011.
[13]
Out of 21 bids received, only AllPay and Cash Paymaster met the
initial 70% scoring
threshold.
AllPay
received a 70.42% score and Cash Paymaster 79.79%.
On
7 October 2011 both parties made oral presentations.  These
presentations were still part of the first stage
of the functionality
assessment.  After these presentations AllPay’s score fell
to 58.68% and Cash Paymaster’s
score rose to 82.44%.  The
effect of this was that AllPay did not qualify for the next round –
the assessment on finances
and preference points.
[14]
Satisfied with Cash Paymaster’s proposal on its financial and
preference-point
merits, the Bid Evaluation Committee recommended to
the Bid Adjudication Committee that Cash Paymaster be awarded the
contract
for all nine provinces.  The Bid Adjudication Committee
accepted the recommendation and forwarded it to the Chief Executive

Officer of SASSA,
[12]
who awarded the tender to Cash Paymaster on 17 January 2012.
On 3 February 2012 SASSA concluded the contract with

Cash Paymaster to provide services for payment of social grants
over a period of five years for all nine provinces.
Cash
Paymaster commenced its service on 1 April 2012.  This
litigation then ensued.
Consequences of alleged
irregularities
[15]
As in the Supreme Court of Appeal, the debate about the alleged
irregularities centred
on the following:
(a)
The requirement of separate bids for the nine
provinces.
(b)
The composition of the Bid Evaluation Committee.
(c)
The attendance of members when the Bid Adjudication
Committee made
its final decision.
(d)
The assessment of the functionality of the black
economic empowerment
component of Cash Paymaster.
(e)
The nature and effect of Bidders Notice 2.
[16]
Although the Supreme Court of Appeal eventually decided the matter on
the ground
that there were no unlawful irregularities in the
procurement process, AllPay and Corruption Watch
[13]
contend that certain passages in its judgment lend themselves to an
interpretation that impermissibly endorses a relaxed approach
to the
procedural requirements of public procurement tenders.
[17]
The Supreme Court of Appeal stated that the public interest dictates
that a procurement
process should not be invalidated for minor,
inconsequential flaws:
“There will be few cases of any
moment in which flaws in the process of public procurement cannot be
found, particularly where
it is scrutinised intensely with the
objective of doing so.
But a fair process does not demand
perfection and not every flaw is fatal.
It was submitted
that the process of procurement has a value in itself, which must
lead to invalidity if the process is flawed irrespective
of whether
the flaw has consequences. . . .  I have pointed out that the
public interest has a role to play in cases of this
kind.
It
would be gravely prejudicial to the public interest if the law was to
invalidate public contracts for inconsequential irregularities
.”
[14]
(Emphasis added.)
[18]
It also held that, in spite of the alleged procedural irregularities,
the facts point
to the inescapable conclusion that SASSA considered
the technical solution offered by Cash Paymaster to be
materially superior
to that of AllPay according to a key criterion of
the Request for Proposals:
“The [Cash Paymaster] solution was
able to biometrically verify that every payment of a grant was made
to an authentic beneficiary,
at the time it was made, irrespective of
the method of payment.  The AllPay solution was not able to do
that.  AllPay
was able to biometrically verify cash payments,
but was able to verify the authenticity of beneficiaries paid
electronically only
once a year.”
[15]
On this approach, regardless of whether
the process was flawed, it is apparent that Cash Paymaster won the
tender because its solution
met all the requirements of the Request
for Proposals and addressed all of SASSA’s concerns, whereas
the AllPay solution
did not.
[16]
[19]
AllPay argues that the Supreme Court of Appeal’s analysis was
flawed.
On the approach of the Supreme Court of Appeal, an
inconsequential irregularity is an irregularity which, despite its
existence,
would not affect the final outcome of the award.  On
this approach, an irregularity is inconsequential when, on a
hindsight
assessment of the process, the successful bidder would
likely still have been successful despite the presence of the
irregularity.
This focus on an
inconsequential irregularity
is a different enquiry from that commonly used where the courts look
at
immaterial irregularities
.
[20]
All the irregularities relied upon by AllPay relate to alleged
non-compliance with
the requirements SASSA itself set for the
tender.  The Supreme Court of Appeal rejected some of them on
the basis that the
requirements did not have the force of law and
that, consequently, legal invalidity did not flow from
non-compliance.
[17]
This approach was supported by SASSA and Cash Paymaster in argument
before us.
[21]
The Supreme Court of Appeal also held that the procurement process
did not require
SASSA to investigate whether the assertion made by
Cash Paymaster, that its black economic empowerment partners would
manage approximately
75% of the projects, was correct.
Proper legal approach
[22]
This judgment holds that:
(a)
The suggestion that “inconsequential irregularities”
are
of no moment conflates the test for irregularities and their import;
hence an assessment of the fairness and lawfulness of
the procurement
process must be independent of the outcome of the tender process.
(b)
The materiality of compliance with legal requirements
depends on the
extent to which the purpose of the requirements is attained.
(c)
The constitutional and legislative procurement
framework entails
supply chain management prescripts that are legally binding.
(d)
The fairness and lawfulness of the procurement
process must be
assessed in terms of the provisions of the Promotion of
Administrative Justice Act
[18]
(PAJA).
(e)
Black economic empowerment generally requires substantive

participation in the management and running of any enterprise.
(f)
The remedy stage is where appropriate consideration
must be given to
the public interest in the consequences of setting the procurement
process aside.
(a)        Fairness and lawfulness
independent of result
[23]
To the extent that the judgment of the Supreme of Court of Appeal may
be interpreted
as suggesting that the public interest in procurement
matters requires greater caution in finding that grounds for judicial
review
exist in a given matter, that misapprehension must be
dispelled.  So too the notion that even if proven irregularities
exist,
the inevitability of a certain outcome is a factor that should
be considered in determining the validity of administrative action.
[24]
This approach to irregularities seems detrimental to important
aspects of the procurement
process.  First, it undermines the
role procedural requirements play in ensuring even treatment of all
bidders.  Second,
it overlooks that the purpose of a fair
process is to ensure the best outcome; the two cannot be severed.
On the approach
of the Supreme Court of Appeal, procedural
requirements are not considered on their own merits, but instead
through the lens of
the final outcome.  This conflates the
different and separate questions of unlawfulness and remedy.  If
the process leading
to the bid’s success was compromised, it
cannot be known with certainty what course the process might have
taken had procedural
requirements been properly observed.
[25]
Once a ground of review under PAJA has been established there is no
room for shying
away from it.  Section 172(1)(a) of the
Constitution requires the decision to be declared unlawful.  The
consequences
of the declaration of unlawfulness must then be dealt
with in a just and equitable order under section 172(1)(b).
[19]
Section 8 of PAJA gives detailed legislative content to the
Constitution’s “just and equitable” remedy.
[20]
[26]
This clear distinction, between the constitutional invalidity of
administrative action
and the just and equitable remedy that may
follow from it, was not part of our pre-constitutional common-law
review.  The
result was that procedure and merit were sometimes
intertwined, especially in cases where the irregularity flowed from
an error
of law.
[21]
This was not, however, a general rule and did not necessarily apply
where procedural fairness was compromised.
[22]
Even under the common law the possible blurring of the distinction
between procedure and merit raised concerns that the two
should be
not be confused:
“Procedural objections are often
raised by unmeritorious parties.  Judges may then be tempted to
refuse relief on the
ground that a fair hearing could have made no
difference to the result.  But in principle it is vital that the
procedure and
the merit should be kept strictly apart, since
otherwise the merits may be prejudged unfairly.”
[23]
[27]
There is a further consideration.  As Corruption Watch
explained, with reference
to international authority and
experience,
[24]
deviations from fair process may themselves all too often be symptoms
of corruption or malfeasance in the process.  In other
words, an
unfair process may betoken a deliberately skewed process.  Hence
insistence on compliance with process formalities
has a three-fold
purpose: (a) it ensures fairness to participants in the bid process;
(b) it enhances the likelihood of efficiency
and optimality in the
outcome; and (c) it serves as a guardian against a process skewed by
corrupt influences.
(b)
Materiality
[28]
Under the Constitution there is no reason to conflate procedure and
merit.
The proper approach is to establish, factually, whether
an irregularity occurred.  Then the irregularity must be legally
evaluated
to determine whether it amounts to a ground of review under
PAJA.  This legal evaluation must, where appropriate, take into

account the materiality of any deviance from legal requirements, by
linking the question of compliance to the purpose of the provision,

before concluding that a review ground under PAJA has been
established.
[29]
Once that is done, the potential practical difficulties that may flow
from declaring
the administrative action constitutionally invalid
must be dealt with under the just and equitable remedies provided for
by the
Constitution and PAJA.  Indeed, it may often be
inequitable to require the re-running of the flawed tender process if
it can
be confidently predicted that the result will be the same.
[25]
[30]
Assessing the materiality of compliance with legal requirements in
our administrative
law is, fortunately, an exercise unencumbered by
excessive formality.  It was not always so.  Formal
distinctions were
drawn between “mandatory” or
“peremptory” provisions on the one hand and “directory”
ones on
the other, the former needing strict compliance on pain of
non-validity, and the latter only substantial compliance or even
non-compliance.
[26]
That strict mechanical approach has been discarded.
[27]
Although a number of factors need to be considered in this kind of
enquiry, the central element is to link the question of
compliance to
the purpose of the provision.  In this Court O’Regan J
succinctly put the question in
ACDP v Electoral Commission
as
being “whether what the applicant did constituted compliance
with the statutory provisions viewed in the light of their

purpose”.
[28]
This is not the same as asking whether compliance with the provisions
will lead to a different result.
(c)        Procurement framework
legality
[31]
In
Steenkamp
, Moseneke DCJ stated:
“Section 217 of the Constitution
is the source of the powers and function of a government tender
board.  It lays down
that an organ of State in any of the three
spheres of government, if authorised by law may contract for goods
and services on behalf
of government.  However, the tendering
system it devises must be fair, equitable, transparent, competitive
and cost-effective.
This requirement must be understood
together with the constitutional precepts on administrative justice
in section 33 and the basic
values governing public administration in
section 195(1).”
[29]
(Footnotes omitted.)
In
Millennium Waste
the Supreme
Court of Appeal (per Jafta JA) elaborated:
“The . . . Constitution lays down
minimum requirements for a valid tender process and contracts entered
into following an
award of tender to a successful tenderer
(section 217).  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
that the provisions of [PAJA] apply
to the process.”
[30]
(Footnotes omitted.)
[32]
The starting point for an evaluation of the proper approach to an
assessment of the
constitutional validity of outcomes under the state
procurement process is thus section 217 of the Constitution:
“(1)      When an organ of state in
the national, provincial or local sphere of government, or any
other
institution identified in national legislation, contracts for goods
or services, it must do so in accordance with a system
which is fair,
equitable, transparent, competitive and cost-effective.
(2)        Subsection (1) does not
prevent the organs of state or institutions referred to in
that
subsection from implementing a procurement policy providing for―
(a)
categories of preference in the allocation of contracts; and
(b)        the protection or
advancement of persons, or categories of persons, disadvantaged
by
unfair discrimination.
(3)        National legislation
must prescribe a framework within which the policy referred
to in
subsection (2) must be implemented.”
[33]
The national legislation prescribing the framework within which
procurement policy
must be implemented is the Preferential
Procurement Policy Framework Act
[31]
(Procurement Act).  The Public Finance Management Act
[32]
is also relevant.
[34]
An “acceptable tender” under the Procurement Act is any
“tender
which, in all respects, complies with the
specifications and conditions of tender as set out in the tender
document”.
[33]
The Preferential Procurement Regulations
[34]
(Procurement Regulations) define a tender as “a written offer
in a prescribed or stipulated form in response to an invitation
by an
organ of state for the provision of services, works or goods, through
price quotations, advertised competitive tendering
processes or
proposals”.
[35]
[35]
An organ of state must indicate in the invitation to submit a tender:
(a)
if that tender will be evaluated on functionality;
(b)
that the evaluation criteria for measuring functionality
are
objective;
(c)
the evaluation criteria, weight of each criterion,
applicable values
and minimum qualifying score for functionality;
(d)
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
(e)
that tenders that have achieved the minimum qualification
score for
functionality must be evaluated further in terms of the applicable
prescribed point systems.
[36]
[36]
The object of the Public Finance Management Act is to “secure
transparency,
accountability and sound management of the revenue,
expenditure, assets and liabilities of the institutions” to
which it
applies, SASSA being one of them.  Section
51(1)(a)(iii) provides that an accounting authority for a public
entity must ensure
and maintain “an appropriate procurement and
provisioning system which is fair, equitable, transparent,
competitive and cost-effective”.
[37]
The Treasury Regulations issued pursuant to section 76 of the Public
Finance Management
Act require the development and implementation of
an effective and efficient supply chain management system for the
acquisition
of goods and services that must be fair, equitable,
transparent, competitive and cost-effective.
[37]
In the case of procurement through a bidding process the supply chain
management system must provide for the adjudication
of bids through a
bid adjudication committee; the establishment, composition and
functioning of bid specification, evaluation and
adjudication
committees; the selection of bid adjudication members; bidding
procedures; and the approval of bid evaluation and/or
adjudication
committee recommendations.
[38]
The accounting officer or accounting authority must ensure that the
bid documentation and the general conditions of contract
are in
accordance with the instructions of the National Treasury,
[39]
and that the bid documentation includes evaluation and adjudication
criteria, including criteria prescribed by the Procurement
Act and
the Broad-Based Black Economic Empowerment Act
[40]
(Empowerment Act).
[41]
[38]
SASSA issued the Circular establishing a Bid Specification Committee,
a Bid Evaluation
Committee and a Bid Adjudication Committee and their
competencies in terms of regulation 16A6.2.  It also issued the
Request
for Proposals in compliance with its legal obligations under
the constitutional and legislative procurement framework.  There

is no dispute that it did so in a legally proper manner.  The
Circular and the Request for Proposals, read together with the

constitutional and legislative procurement provisions, thus
constituted the legally binding and enforceable framework within
which
tenders had to be submitted, evaluated and awarded.
[42]
This was made clear in the Request for Proposals.  It expressly
stated that the Constitution, the Procurement Act, the
Social
Assistance Act,
[43]
the South African Social Security Agency Act
[44]
and the Public Finance Management Act would apply during the
adjudication of the bids.  The Request for Proposals, all the

appended documentation and the proposal in response thereto, read
together, formed the basis for the formal contract “to
be
negotiated and finalised between SASSA and the Successful Bidder/s to
whom SASSA awards the contract in whole or in part.”
[45]
[39]
In
Firechem
[46]
Schutz JA, dealing with a situation where the award of a tender
outside the applicable legal framework arose, stated:
“One of the requirements . . . is
that the body adjudging tenders be presented with comparable offers
in order that its members
should be able to compare.  Another is
that a tender should speak for itself.  Its real import may not
be tucked away,
apart from its terms.  Yet another requirement
is that competitors should be treated equally, in the sense that they
should
all be entitled to tender for the same thing.
Competitiveness is not served by only one or some of the tenderers
knowing
what is the true subject of tender. . . .
That would deprive the public of the benefit of an open competitive

process.”
[47]
In
Steenkamp
this Court stated
that tender processes require “strict and equal compliance by
all competing tenderers on the closing day
for submission of
tenders.”
[48]
[40]
Compliance with the requirements for a valid tender process,
issued in accordance
with the constitutional and legislative
procurement framework, is thus legally required.  These
requirements are not merely
internal prescripts that SASSA may
disregard at whim.
[49]
To hold otherwise would undermine the demands of equal treatment,
transparency and efficiency under the Constitution.
[50]
Once a particular administrative process is prescribed by law, it is
subject to the norms of procedural fairness codified
in PAJA.
Deviations from the procedure will be assessed in terms of those
norms of procedural fairness.  That does not
mean that
administrators may never depart from the system put into place or
that deviations will necessarily result in procedural
unfairness.
But it does mean that, where administrators depart from procedures,
the basis for doing so will have to be reasonable
and justifiable,
and the process of change must be procedurally fair.
[51]
(d)
Procurement
framework and PAJA
[41]
This Court has stated that a cause of action for the judicial review
of administrative
action now ordinarily arises from the provisions of
PAJA and not directly from the right to just administrative action in
section
33 of the Constitution.
[52]
The grounds for judicial review under PAJA are contained in section
6, which reads in relevant part:
“(1)      Any person may institute
proceedings in a court or a tribunal for the judicial review
of an
administrative action.
(2)        A court or tribunal has
the power to judicially review an administrative action if―
(a)
the administrator who took it―
(i)
was not authorised to do so by the empowering provision;
(ii)        acted under a
delegation of power which was not authorised by the empowering
provision;
or
(iii)
was biased or reasonably suspected of bias;
(b)        a mandatory and
material procedure or condition prescribed by an empowering provision

was not complied with;
(c)
the action was procedurally unfair;
(d)
the action was materially influenced by an error of law;
(e)
the action was taken―
(i)
for a reason not authorised by the empowering provision;
(ii)
for an ulterior purpose or motive;
(iii)
because irrelevant considerations were taken into account or relevant
considerations were not
considered;
(iv)
because of the unauthorised or unwarranted dictates of another person
or body;
(v)
in bad faith; or
(vi)
arbitrarily or capriciously;
(f)
the action itself―
(i)         contravenes a law
or is not authorised by the empowering provision; or
(ii)
is not rationally connected to―
(aa)
the purpose for which it was taken;
(bb)
the purpose of the empowering provision;
(cc)
the information before the administrator; or
(dd)
the reasons given for it by the administrator;
(g)
the action concerned consists of a failure to take a decision;
(h)        the exercise of the
power or the performance of the function authorised by the empowering

provision, in pursuance of which the administrative action was
purportedly taken, is so unreasonable that no reasonable person
could
have so exercised the power or performed the function; or
(i)
the action is otherwise unconstitutional or unlawful.”
[42]
It is apparent from section 6 that unfairness in the outcome or
result of an administrative
decision is not, apart from the
unreasonableness ground,
[53]
a ground for judicial review of administrative action.  That is
nothing new.  The section gives legislative expression
to the
fundamental right to administrative action “that is lawful,
reasonable and procedurally fair” under section
33 of the
Constitution.  It is a long-held principle of our administrative
law that the primary focus in scrutinising administrative
action is
on the fairness of the process, not the substantive correctness of
the outcome.
[43]
The legislative framework for procurement policy under section 217 of
the Constitution
does not seek to give exclusive content to that
section, nor does it grant jurisdictional competence to decide
matters under it
to a specialist institution.
[54]
The framework thus provides the context within which judicial review
of state procurement decisions under PAJA review grounds
must be
assessed.
[55]
The requirements of a constitutionally fair, equitable, transparent,
competitive and cost-effective procurement system will
thus inform,
enrich and give particular content to the applicable grounds of
review under PAJA in a given case.  The facts
of each case will
determine what any shortfall in the requirements of the procurement
system – unfairness, inequity, lack
of transparency, lack of
competitiveness or cost-inefficiency – may lead to: procedural
unfairness, irrationality, unreasonableness
or any other review
ground under PAJA.
[44]
Doing this kind of exercise is no different from any other assessment
to determine
whether administrative action is valid under PAJA.
In challenging the validity of administrative action an aggrieved
party
may rely on any number of alleged irregularities in the
administrative process.  These alleged irregularities are
presented
as evidence to establish that any one or more of the
grounds of review under PAJA may exist.  The judicial task is to
assess
whether this evidence justifies the conclusion that any one or
more of the review grounds do in fact exist.
[45]
Section 217 of the Constitution, the Procurement Act and the Public
Finance Management
Act
[56]
provide the constitutional and legislative framework within which
administrative action may be taken in the procurement process.

The lens for judicial review of these actions, as with other
administrative action, is found in PAJA.  The central focus of

this enquiry is not whether the decision was correct, but whether the
process is reviewable on the grounds set out in PAJA.
There is
no magic in the procurement process that requires a different
approach.  Alleged irregularities may differ from case
to case,
but they will still be assessed under the same grounds of review in
PAJA.  If a court finds that there are valid
grounds for review,
it is obliged to enter into an enquiry with a view to formulating a
just and equitable remedy.  That enquiry
must entail weighing
all relevant factors, after the objective grounds for review have
been established.
(e)        Black economic
empowerment
[46]
The transformation that our Constitution requires includes economic
redress.
In the context of the past exclusion of black people
from access to mineral resources Mogoeng CJ stated in
Agri SA
:
[57]
“[B]y design, the MPRDA is meant
to broaden access to business opportunities in the mining industry
for all, especially previously
disadvantaged people.  It is not
only about the promotion of equitable access, but also about job
creation, the advancement
of the social and economic welfare of all
our people, the promotion of economic growth and the development of
our mineral and petroleum
resources for the common good of all South
Africans.”
[58]
[47]
Economic redress for previously disadvantaged people also lies at the
heart of our
constitutional and legislative procurement framework.
Section 217(2) provides for categories of preference in the
allocation
of contracts and the protection or advancement of persons,
or categories of persons, disadvantaged by unfair discrimination.

Section 217(3) provides for the means to effect this, in the
form of national legislation that must prescribe a framework
within
which the policy must be implemented.
[48]
The Procurement Act provides that an organ of state must determine
its preferential
procurement policy within a preference-point system
for specific goals, which may include “contracting with
persons, or categories
of persons, historically disadvantaged by
unfair discrimination on the basis of race, gender or
disability”.
[59]
The Procurement Regulations provide more detail on the evaluation for
functionality
[60]
and the price-preference system.
[61]
In relation to the latter it sets out how points should be awarded to
a tenderer for attaining a Broad-Based Black Economic
Empowerment
(B BBEE) status level of contributor.
[62]
B-BBEE status level means the status level acquired in terms of the
provisions of the Empowerment Act.
[49]
The definition of broad-based black economic empowerment under the
Empowerment Act
indicates an intention not merely to afford inclusion
or redistribution, but to involve black people in management and
control
of businesses, and to facilitate skills development.
“Broad-based black economic empowerment” means―
“the economic empowerment of all
black people including women, workers, youth, people with
disabilities and people living
in rural areas through diverse but
integrated socio-economic strategies that include, but are not
limited to:
increasing the number of black people that manage, own
and control enterprises and productive assets
; facilitating
ownership and management of enterprises and productive assets by
communities, workers, cooperatives and other collective
enterprises;
human resource and skills development; achieving equitable
representation in all occupational categories and levels
in the
workforce; preferential procurement; and investment in enterprises
that are owned or managed by black people”.
[63]
(Emphasis added.)
[50]
The objectives of the Empowerment Act similarly place an emphasis on
management,
control and skills development.  They state:
“The objectives of this Act are to
facilitate broad-based black economic empowerment by―
(a)          promoting
economic transformation in order to
enable meaningful
participation of black people in the economy
;
(b)          achieving a
substantial change in the racial composition of ownership and
management structures
and in the skilled occupations of existing
and new enterprises;
(c)          increasing
the extent to which communities, workers, cooperatives and
other
collective enterprises own and manage existing and new enterprises
and increasing their access to economic activities, infrastructure

and skills training;
(d)          increasing
the extent to which black women own and manage existing and
new
enterprises, and increasing their access to economic activities,
infrastructure and skills training;
(e)          promoting
investment programmes that lead to broad-based and meaningful

participation in the economy by black people in order to achieve
sustainable development and general prosperity;
(f)          empowering
rural and local communities by enabling access to economic

activities, land, infrastructure, ownership and skills; and
(g)          promoting
access to finance for black economic empowerment.”
[64]
(Emphasis added.)
[51]
Various Codes of Good Practice have also been issued under the
Empowerment Act.
These include measures and scores of
management control and of skills development.
[65]
The Empowerment Act and the regulations make it clear that broad and
sustainable involvement by black people is required,
and that the
development and transfer of the necessary skills are an integral part
of such transformation.
[66]
[52]
The Request for Proposals echoed this emphasis on substantive
participation by historically
disadvantaged people in the management
and control of the successful tenderer.  It provided that
preference points for historically
disadvantaged individuals “are
calculated on their percentage shareholding in a business, provided
that they are actively
involved in and exercise control over the
enterprise”.
[67]
Equity ownership was defined as “the percentage ownership and
control, exercised by individuals in an enterprise”
[68]
and is equated to the percentage of an enterprise which is owned by
historically disadvantaged individuals “who are actively

involved in the management and daily business operations of the
enterprise and exercise control over the enterprise, commensurate

with their degree of ownership”.
[69]
Where individuals “are not actively involved in the management
and daily business operations and do not exercise control
over the
enterprise commensurate with their degree of ownership, equity
ownership may not be claimed”.
[70]
[53]
In
Viking Pony
[71]
this Court, in relation to a specific complaint, held:
“The complaint is that the
historically disadvantaged individuals neither exercised control over
the tendering enterprise
nor were they actively involved in its
management, to the extent commensurate with their degree of
ownership.  The converse
is the requirement for awarding
preference points in terms of regulation 13.  It follows
from this regulation that it
is not enough merely to have the
historically disadvantaged individuals holding the majority shares in
a tendering enterprise.
The exercise of control and the
managerial power actually wielded by the historically disadvantaged
individuals, in proportion to
their shareholding, are what matter.
”
[72]
(Emphasis added.)
[54]
The Court further held that an investigation into “[w]hat
happens behind the
scenes matters the most when the shareholding is
said to be a façade”.
[73]
Does this mean that an investigation into the propriety of
empowerment credentials becomes necessary only after a complaint
has
been lodged, and that there was no obligation on SASSA to ensure that
the empowerment credentials of the prospective tenderers
were
investigated and confirmed before the award was finally made?  I
think not, for the reasons that follow.
[55]
Substantive empowerment, not mere formal compliance, is what
matters.
[74]
It makes a mockery of true empowerment if two opposite ends of the
spectrum are allowed to be passed off as compliance with
the
substantive demands of empowerment.  The one is a
misrepresentation that historically disadvantaged people are in
control
and exercising managerial power even when that is not the
case.  That amounts to exploitation.  The other is to
misrepresent
that people who hold political power necessarily also
possess managerial and business skills.  Neither situation
advances
the kind of economic empowerment that the Procurement and
Empowerment Acts envisage.  Both employ charades.
(f)         Approach to remedy
[56]
Once a finding of invalidity under PAJA review grounds is made, the
affected decision
or conduct must be declared unlawful and a just and
equitable order must be made.  It is at this stage that the
possible inevitability
of a similar outcome, if the decision is
retaken, may be one of the factors that will have to be considered.
Any contract
that flows from the constitutional and statutory
procurement framework is concluded not on the state entity’s
behalf, but
on the public’s behalf.  The interests of
those most closely associated with the benefits of that contract must
be given
due weight.  Here it will be the imperative interests
of grant beneficiaries and particularly child grant recipients in an

uninterrupted grant system that will play a major role.  The
rights or expectations of an unsuccessful bidder will have to
be
assessed in that context.
Application
of law to the facts
[57]
In accordance with the approach set out above it is now necessary to
consider whether
the evidence on record establishes the factual
existence of any irregularities and, if so, whether the materiality
of the irregularities
justifies the legal conclusion that any of the
grounds for review under PAJA exist.
[58]
The materiality of irregularities is determined primarily by
assessing whether the
purposes the tender requirements serve have
been substantively achieved.  One of the main objects of SASSA,
in establishing
a new system for the payment of social grants, was to
ensure proof of life of beneficiaries as an integral part of the
payment
process and to reduce fraud, corruption and leakage at the
point of payment.  The verification requirements, whether
preferential
or mandatory, were thus an important part of the Request
for Proposals.  This important overall purpose of the Request
for
Proposals must be kept in mind when assessing whether any
non-compliance with its particular provisions was material.  It
is also necessary, however, to emphasise the particular nature of the
process.  The first stage, that of functionality, determined
who
would be able to proceed to the second stage, that of assessment on
price.  Disqualification at the first stage meant
that there was
no possibility for a bidder who may have scored better on price in
the second stage to be considered at all.
[59]
Before moving on it is necessary, briefly, to refer to an argument
raised by SASSA,
namely that PAJA’s procedural fairness
provisions are not implicated because it has not been shown that
AllPay’s rights
or legitimate expectations have been materially
and adversely affected by the conduct in relation to each of the
irregularities.
[75]
That assertion is not correct.
[60]
First, tenderers have a right to a fair tender process, irrespective
of whether they
are ultimately awarded the tender.
[76]
Second, the subject matter of the review is the decision to award the
contract to Cash Paymaster, not each decision along
the way in the
process.  Third, the “no effect” argument wrongly
seeks to splinter the process in asserting that
AllPay’s rights
were not affected.  The decision to exclude AllPay from the
second, pricing stage certainly affected
its rights and legitimate
expectations.  Because of its exclusion we are not in a position
to know what the outcome of the
pricing stage would have been; it is
mere speculation.  Fourth, in
Grey’s Marine
[77]
it was stated, with reference to the phrase “adversely affect
the rights of any person” in section 1 of PAJA,
[78]
that what “was probably intended [was] rather to convey that
administrative action is action
that has the capacity to affect
legal rights
.”
[79]
Irregularities in the process, which may also affect the fairness of
the outcome, certainly have the capacity to affect legal
rights.
[80]
(a)        Separate bids
[61]
The special conditions for submitting proposals in the Request for
Proposals stipulated
that bidders could submit proposals in respect
of one or more provinces, but that each bid per province had to be
submitted separately.
This simple requirement was even
illustrated: “For example, if bidding for two Provinces, submit
two separate proposals”.
[81]
SASSA reserved the right to disqualify any bidder who failed to
submit all mandatory documents specified in the Request for

Proposals.  Cash Paymaster, which bid for all nine provinces,
did not submit nine separate sets of documents.
[62]
In terms of the Request for Proposals, the failure “to submit
all mandatory
documents specified in the [Request for Proposals]”
was one of the bases for disqualifying any bidder.  What one is
left with is non-compliance with what the Request for Proposals
regarded as mandatory.  This means that a mandatory condition

prescribed by an empowering provision was not complied with, which is
a ground for review under section 6(2)(b) of PAJA.
But the
sub-section also requires that the non-compliance must be of a
material nature.  The purpose of separate bids for
the provinces
was surely to enable SASSA to assess whether the bidder would be able
to provide the necessary services in each of
the provinces for which
it bid.  This purpose was attained.  The irregularity was
not material.  No ground for review
under PAJA exists.
(b)        Bid Evaluation Committee
composition
[63]
In terms of the Circular the Bid Evaluation Committee had to consist
of at least
five officials, one of whom should be a Supply Chain
Management Practitioner.  The Bid Evaluation Committee, however,
consisted
of only four members, without a Supply Chain Management
Practitioner.
[64]
The Bid Evaluation Committee formed an integral part of the process
of deciding to
whom to award the tender.  Without its evaluation
and recommendation the Bid Adjudication Committee would not have been
able
to do its work.  Its composition was prescribed in the
Circular in terms of the Treasury Regulations.  A Supply Chain

Management Practitioner “should” have been appointed in
terms of the Circular.  SASSA states that a practitioner
was
available to advise the Bid Evaluation Committee on technical
aspects.  That was indeed so.  There is no suggestion
that
the Supply Chain Management Practitioner did not perform this role
and function.  However, because of his expertise,
he may have
voted differently on material issues before the Committee, had he
been fully part of it.  While it is speculative
to say that his
vote would not have made any difference, given the non mandatory
nature of the Circular’s prescription
(“should”),
it is not possible to find a review ground under section 6(2)(a)(i)
of PAJA.
(c)        Non-attendance of Bid
Adjudication Committee member
[65]
The non-attendance by a member of the Bid Adjudication Committee at
one of the final
adjudication meetings was fully explained in the
papers.  There was a quorum for the meeting and the concerns of
the member
who could not attend were taken into consideration.
No irregularity occurred.
(d)        No proper empowerment
assessment
[66]
Section 16A6.3(b) of the Treasury Regulations provides that bid
documentation must
include evaluation and adjudication criteria
prescribed in terms of the Procurement Act and the Empowerment Act.
The Request
for Proposals included a preference certificate that
served as a claim form for historically disadvantaged individual
preference
points as well as a summary for preference points claimed
for attainment of other specified goals.  It indicated that
responsive
tenders would be evaluated using a system which awards
points on the basis of the tendered price and equity ownership.
The
points system and equity ownership operated on the explicit
premise of active management and control of the enterprise.
[82]
In the event of a contract being awarded as a result of points
claimed for equity ownership, the contractor could have been
required
to furnish documentary proof that the claims were correct.
[67]
On the papers AllPay brought a challenge against the failure of SASSA
to assess the
ability of Cash Paymaster’s black economic
empowerment partners to perform the tender.  In considering the
matter, the
Supreme Court of Appeal dismissed the argument and found
that evaluation of the bid was SASSA’s prerogative.  It
found
that it was permissible for SASSA to cover this requirement by
imposing appropriate contractual consequences on Cash Paymaster.

But this does not address the point.  By looking only at whether
there was a general obligation to investigate the capabilities
of a
bidding consortium’s partners, the analysis falls short of
considering the crucial role reserved for transformation
in the
procurement process.
[68]
The Procurement Act provides that an organ of state must determine
its preferential
procurement policy within a preference-point system
for specific goals, which may include “contracting with
persons, or categories
of persons, historically disadvantaged by
unfair discrimination on the basis of race, gender or
disability”.
[83]
The handling of the tender process by SASSA made this a nullity, in
that the black economic empowerment preference points
– which
were to be assessed in the second stage – played no actual role
in the decision because by that stage there
was no competitor.
An investigation into the propriety of empowerment credentials does
not become necessary only after a
complaint has been lodged.
There was an obligation on SASSA to ensure that the empowerment
credentials of the prospective
tenderers were investigated and
confirmed before the award was finally made.  That obligation
became even more crucial when
there were no other competitors left in
the second stage.  There is then an even greater obligation for
the tender administrator
to confirm the empowerment credentials of
the winning bidder.
[69]
Cash Paymaster claimed that its equity partners would manage and
execute over 74%
of the tender.  Its tender did not substantiate
this.  All it did was to provide particulars of the management
capabilities
of its workforce, which included previously
disadvantaged people.  On the face of the information provided
by Cash Paymaster
in its tender it was not possible to determine
whether its claimed empowerment credentials were up to scratch or
not.
[70]
Despite this failure, SASSA did not call on Cash Paymaster to
substantiate its claimed
empowerment credentials, presumably because
by that stage the preference points could not have affected the
outcome.  This
effectively made the consideration of empowerment
an empty shell, where preference points were calculated as a
formality but where
the true goal of empowerment requirements was
never given effect to.
[71]
AllPay’s attack on the irrationality of SASSA’s failure
to consider Cash
Paymaster’s empowerment partners’
ability to manage almost three-quarters of the venture was not
primarily based on
this perspective of the substantive purpose of
empowerment.  It was a more generalised argument, based on the
irrationality
of awarding a tender when the tenderer’s own
assertions about its ability to implement the tender are not
assessed.
This irrationality argument gains further crucial
traction when the Constitution’s substantive transformative
imperatives
are brought to the forefront.
[72]
Given the central and fundamental importance of substantive
empowerment under the
Constitution and the Procurement and
Empowerment Acts, SASSA’s failure to ensure that the claimed
empowerment credentials
were objectively confirmed was fatally
defective.  It is difficult to think of a more fundamentally
mandatory and material
condition prescribed by the constitutional and
legislative procurement framework than objectively determined
empowerment credentials.
[84]
The failure to make that objective determination fell afoul of
section 6(2)(b) of PAJA (non-compliance with a mandatory and
material
condition) and section 6(2)(e)(iii) (failure to consider a relevant
consideration).
(e) Bidders Notice 2
[73]
There are a number of provisions in the Request for Proposals that
relate to biometric
verification of the identity of grant
beneficiaries, both in the enrolment process and in the payment
process.  Biometric
verification was mandatory for registration
or enrolment purposes.
[85]
The requirement for verification at payment was couched in less
strict terms.  In the “Scope of Work” section,
the
Request for Proposals provided that payment services of social grants
“must be secured,
preferably
, Biometric based.
[The Bidder’s proposal] should provide detail on the measures
that the Bidder/s will put in place
to ensure that the right person
is paid the correct amount.”
[86]
The Request for Proposals provided that “[a]ny amendments of
any nature made to this [Request for Proposals] shall
be notified to
all Bidder/s and shall only be of force and effect if it is in
writing, signed by the Accounting Officer or his
delegated
representative and added to this [Request for Proposals] as an
addendum.”
[87]
[74]
On 10 June 2011 SASSA issued Bidders Notice 2.
[88]
Its stated purpose was to give final clarity on frequently asked
questions, after which “no additional questions [would]
be
answered.”  The notice reiterated that a one-to-many
biometric search had to be conducted at the time of registration.

In addition, it provided:
“In order to ensure that the right
Beneficiary receives the right amount at the right time,
Biometric
verification must be performed
when a Beneficiary receives his
Grant regardless of the Payment Methodology”.  (Emphasis
added.)
[75]
AllPay argued that Bidders Notice 2 amended one of the bid
requirements in a manner
not sanctioned by the Request for Proposals,
and that the ambiguity and confusion surrounding the requirement of
biometric verification
at the payment stage was exacerbated by the
content of Bidders Notice 2.  SASSA and Cash Paymaster countered
that AllPay’s
confusion was its own fault, because verification
was required at the time of the payment into a beneficiary’s
account and
not at the time the money was withdrawn from the
account.  In any event, they submitted, biometric verification
at the time
of payment was always the preferential mode and Bidders
Notice 2 did not change anything material in relation to that
requirement.
[76]
It is true that AllPay understood the initial preference for
biometric verification
at the payment stage to relate to actual
payment in the hands of a beneficiary and that it did not consider
biometric verification
by way of fingerprints to be possible at
payments from ATMs.  In this regard, it appears that AllPay
might have subjectively
misread what was stated.  But it was not
alone in that.  The minutes of the Bid Evaluation Committee
meetings show that
this was an issue that also concerned members of
the Bid Evaluation Committee.
[89]
The Bid Evaluation Committee’s initial assessment on
functionality was based on the criteria set out in the Request
for
Proposals.
[90]
That functionality assessment gave AllPay a score of more than 70%,
which would have qualified it to enter the next stage
of assessment
based on price and preference points.  After the oral
presentation, AllPay’s scores were reduced to below
the minimum
and it fell out of further consideration.  The crucial question
is whether the change from the preferential requirement
of biometric
verification at payment to the mandatory requirement articulated in
Bidders Notice 2 had anything to do with the change
in scores.
[77]
There is little doubt that the change influenced the scoring.
The minutes record
that AllPay could not comply with the mandatory
requirement of biometric payment verification and that this was a
major reason
for the downward adjustment in its functionality
score.
[91]
In contrast, Cash Paymaster assured the Bid Evaluation Committee that
it could provide biometric verification in the form
of voice
identification.
[92]
Its score improved.  The doubt and uncertainty that surrounded
the effect of the change from preferential biometric
payment
verification, as stated in the Request for Proposals, to mandatory
biometric verification in terms of Bidders Notice 2
did not, however,
end there.  It was raised again later in the process by the Bid
Adjudication Committee.
[93]
[78]
Even if one disregards AllPay’s possible subjective misreading
that biometric
verification had to take place at the payment stage,
the following has, objectively, been established:
(a)
The Request for Proposals required biometric
verification as a
preferential mode at the payment stage.  Bidders Notice 2
changed that to a mandatory requirement.
The change was not
done in accordance with the Request for Proposals, nor was its import
adequately explained.
(b)
The initial functional assessment was done in terms
of the
requirements set in the Request for Proposals.
[94]
Both AllPay and Cash Paymaster received more than the 70% minimum
score on this assessment.
(c)
At various stages during the evaluation and adjudication
of the bids,
certain members of the Bid Evaluation and Adjudication Committees and
their advisors expressed confusion about whether
a preferential or
mandatory standard of verification was required for biometric
verification at the payment stage.
(d)
The mandatory requirement of biometric verification
in terms of
Bidders Notice 2 was raised during the oral presentations of both
AllPay and Cash Paymaster.  AllPay indicated
that it could not
comply with Bidders Notice 2.  Cash Paymaster indicated
that it could do so by way of biometric voice
verification.
(e)
After these oral representations AllPay’s
score was lowered to
below the necessary 70% threshold, whilst Cash Paymaster’s
score passed the threshold.
(f)
The biometric verification accepted by SASSA
in relation to
verification at the payment stage was that of voice identification,
not primarily fingerprint identification as
originally defined and
required in the Request for Proposals.
(g)
Because of its exclusion at the functionality stage,
no comparison of
the competitiveness of AllPay’s and Cash Paymaster’s bids
was made regarding price.
[79]
All these factors created vagueness and uncertainty about the nature
and importance
of the verification requirements in relation to
payments.  They were highly material.
[80]
This gives rise to two crucial, interrelated questions.  Both
have a direct
bearing on the objective clarity of the evaluation
criteria and thus, the fairness of the process.  The first
question is
whether it was clear to bidders that their bids would be
evaluated on the basis of the mandatory requirement of biometric
testing
under Bidders Notice 2 or the preference for biometric
testing under the Request for Proposals.  The second question is
whether
it was clear when and where biometric testing was sought.
That is, could bidders appreciate that beneficiaries’
identities
would have to be biometrically verified annually, at the
time of enrolment (for example in a government office); at the time
of
monthly payment; or whenever the beneficiary withdrew the funds
(at an ATM or another point of sale device)?  Confusion over
the
second question appears to have given rise to confusion over which
form of biometric verification was acceptable.
[95]
[81]
The answer to each question has a bearing on the answer to the
other.  For instance,
if biometric verification were only a
preference, other more cost-effective means of securing payment might
ultimately have won
the day.  If verification were sought at
payment points, neither fingerprint nor voice recognition would have
been feasible.
If it were mandatory only at the time of
enrolment, or at the time of monthly payment, it might have been
feasible in one form
or another for several bidders.
[96]
Thus, a lack of clarity regarding which criteria would be applied in
the evaluation of bids – those in the Request
for Proposals or
those in Bidders Notice 2 – could cause confusion on all of
these questions.
[82]
Cash Paymaster addressed both of these questions in its argument in
this Court.
It argued, first, that in view of the express terms
of the Request for Proposals, AllPay could not have been, or could
not reasonably
have been, under any misapprehension about the need
for their bid to offer a solution which ensured that before payment
there had
to be verification of the recipient of the payment.
Second, it argued that the Request for Proposals’ requirement
of
when and where biometric verification was sought was clear all
along: SASSA sought identity verification monthly, at the time of

every payment into the beneficiaries’ bank accounts.  This
last point was hammered home several times in oral submissions
by
Cash Paymaster’s counsel, who argued that AllPay’s
confusion about when and where biometric verification was required

was the result of its own misreading of the Request for Proposals’
terms, and not the result of any ambiguity in its language.
[83]
Notwithstanding the vigour of Cash Paymaster’s arguments on
these points, the
record of the evaluation process says otherwise.
At various stages during the evaluation and adjudication of the bids,
certain
members of the Bid Evaluation and Adjudication Committees and
their technical advisors expressed confusion over both of the above

questions.
[97]
[84]
Given the reservations of the tender evaluators and their own
requests for clarification
on how bids were to be evaluated and the
meaning of the Bidders Notice 2 requirements, it can hardly be
maintained that AllPay’s
confusion was wholly subjective and
self-induced.
[85]
Cash Paymaster claimed that the switch from evaluation according to
the terms of
the Request for Proposals to those of Bidders Notice 2
was irrelevant, because biometric verification was preferred all
along,
and that AllPay’s attempt to argue otherwise is a
hindsight argument that ignores the facts.  This argument found
favour
in the Supreme Court of Appeal.
[98]
But it is contradicted by the actual scoring process.  When
bidders were scored on the basis of the Request for Proposals,
AllPay
received a score of 70.42%.  When it was scored on the basis of
Bidders Notice 2, it received only 58.68%.  There
is thus little
doubt that the changes in the bases of evaluation influenced the
scoring.  Where AllPay’s solution, which
did not include
monthly biometric verification, was previously acceptable, it
suddenly became unacceptable.  As noted by the
members of the
Bid Evaluation Committee, the effect of this change was substantial.
It reduced the number of viable bids
to one, rendering the process
entirely uncompetitive and obviating any true, comparative
consideration of cost-effectiveness.
[86]
The Bid Evaluation and Adjudication Committees were unsure about the
proper effect
of Bidders Notice 2 right up to the end of the
process.  The effect was to knock AllPay out of contention
altogether at the
functionality stage.  Without any competitor
in the financial and preference-point stage, the process became
entirely uncompetitive.
[87]
Vagueness and uncertainty are grounds for review under section
6(2)(i) of PAJA.
[99]
Certainty in legislation and administrative action has been linked to
the rule of law.  In
New Clicks
, this Court made the
connection between the two and clarified where vagueness would fall
as a ground for review in PAJA:
“It seems to have been assumed by
the parties, and in my view correctly so, that vagueness is a ground
for review under PAJA.
Although vagueness is not specifically
mentioned in PAJA as a ground for review, it is within the purview of
section 6(2)(i) which
includes as a ground for review, administrative
action that is otherwise ‘unconstitutional or unlawful’.
This
Court has held that the doctrine of vagueness is based on the
rule of law which is a foundational value of our Constitution.

In
Affordable Medicines
this Court explained the doctrine in
the following terms:
‘[L]aws must be written in a clear
and accessible manner.  What is required is reasonable certainty
and not perfect lucidity.
The doctrine of vagueness does not
require absolute certainty of laws.  The law must indicate with
reasonable certainty to
those who are bound by it what is required of
them so that they may regulate their conduct accordingly’.”
[100]
(Footnotes omitted.)
[88]
There is another, related concern with the clarity of administrative
action: vagueness
can render a procurement process, or an
administrative action, procedurally unfair under section 6(2)(c) of
PAJA.
[101]
After all, an element of procedural fairness – which applies to
the decision-making process – is that persons
are entitled to
know the case they must meet.
[89]
Section 3(2)(b)(i) and (ii) of PAJA reads in part:
“In order to give effect to the
right to procedurally fair administrative action, an administrator .
. .  must give―
(i)         adequate notice
of the nature and purpose of the proposed administrative action;

[and]
(ii)        a reasonable
opportunity to make representations”.
[102]
[90]
In the context of a tender process, the tender documents give notice
of the proposed
administrative action, while the responding bids in
effect constitute representations before the decision is made.
[103]
Adequate notice would require sufficient information to enable
prospective tenderers to make bids that cover all the requirements

expected for the successful award of the tender.
[104]
[91]
Given the confusion over the requirements of the tender on the part
of both bidders
and members of the Bid Evaluation Committee, the
notice given by the tender documents in this case was inadequate.
It did
not specify with sufficient clarity what was required of
bidders.  The requirements of section 3(2)(b) of PAJA were thus
also
not met.
[92]
The purpose of a tender is not to reward bidders who are clever
enough to decipher
unclear directions.  It is to elicit the best
solution through a process that is fair, equitable, transparent,
cost-effective
and competitive.
[105]
Because of the uncertainty caused by the wording of the Request for
Proposals and Bidders Notice 2, that purpose was not
achieved in this
case.
[93]
For all these reasons the decision to award the tender to Cash
Paymaster is constitutionally
invalid.
Remaining issues
(a)        New evidence
[94]
AllPay sought to introduce new evidence before us, as it did
after the hearing
but before delivery of judgment in the Supreme
Court of Appeal.
[106]
The only difference was that we also had the benefit of an affidavit
by Mr Tsalamandris,
[107]
in which he disavowed any imputation of irregularity or wrongdoing in
the procurement process.  The evidence sought to be
introduced
fails the test of being so crucial that, if accepted, it would likely
change the outcome of the matter.
[108]
It remains hearsay evidence and introduces no new independent
evidence of major irregularities.  Counsel for AllPay
was
constrained to concede that the new evidence’s worth was that
it provided an explanation for the apparently disjointed

irregularities.  That is an insufficient basis for introducing
the evidence.  There was some suggestion in written argument
by
Corruption Watch that the requirements for the admission of new
evidence at a late stage should be relaxed in procurement cases
in
order properly to combat corruption.  The answer is that no
material evidence of corruption is sought to be admitted here.
(b)        SASSA’s duty
to investigate
[95]
Corruption Watch made submissions on the duty of state organs to
investigate, independently
and proactively, any possible
irregularities in the procurement process.
[109]
SASSA accepted that it had that obligation, but asserted that it had
done all it could in that regard.  It is not possible
or prudent
for us to assess and pronounce on this collateral issue, effectively
as a court of first instance.
Remedy
[96]
The national system for the payment of social grants has been in
operation for some
20 months now.  SASSA and Cash Paymaster
assert that it is running smoothly and efficiently and that setting
the tender aside
would cause great disruption.  The Centre for
Child Law
[110]
made submissions in relation to the appropriate remedy in order to
protect the rights of child grant beneficiaries.  Part
of the
submissions dealt with the constitutional obligation 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.  Our order will thus contain
directions requiring
further submissions and a hearing on the issue of a just and
equitable remedy before a final decision is made.
Costs
[97]
Whatever remedy eventually follows, AllPay has been substantially
successful in having
the award of the tender declared invalid.
It is entitled to costs.
Order
[98]
The following order is made:
1.
Leave to appeal is granted.
2.         The appeal
succeeds and the order of the Supreme Court of Appeal is set aside.
3.         It is declared
that the award of the tender to Cash Paymaster (the third respondent)

to provide services for payment of social grants over a period of
five years for all nine provinces is constitutionally invalid.
4.         The declaration of
invalidity is suspended pending determination of a just and
equitable
remedy.
5.         The parties and
the amici curiae are directed to furnish factual information
on
affidavit, as well as further written submissions, on the following
aspects:
5.1
The time and steps necessary, and the costs likely to be incurred, in
the initiation
and completion of a new tender process for a national
social grant payment system.
5.2
The time and steps necessary, and the costs likely to be incurred, in
the implementation
of a new system after the tender process is
completed.
5.3
The just and equitable arrangements that should be made for the
continued operation
of the payment of social grants until a new
system is implemented.
5.4
Cost implications for:
5.4.1
the third
respondent if a new tender process is ordered and implemented, and
how these costs could be ameliorated or offset; and
5.4.2      the state
if a new tender process is ordered and implemented, and how these
costs could be ameliorated.
5.5
What would be in the public interest when determining a just and
equitable remedy.
5.6
Data and statistics on the implementation of the tender to date.
5.7
Whether the third respondent is under a public duty or is
constitutionally or
otherwise obliged to assist in the transitional
arrangements.
5.8
Whether there is any other remedy available to the applicant to
protect or enforce
its private interests in the event that a new
tender process is not ordered.
5.9
Any other information considered relevant.
6.        The parties and the
amici must comply with the directions in paragraph 5 above by
not
later than Thursday, 30 January 2014.
7.        The matter is set down
for further hearing on Tuesday, 11 February 2014.
8.        The grant of a just and
equitable remedy is reserved pending the further hearing on
Tuesday,
11 February 2014.
9.        The first, second and
third respondents are ordered to pay the applicants’ costs,

including the costs of three counsel, in the High Court, the Supreme
Court of Appeal and in this Court.
[99]
For the Applicants:
Advocate G Marcus SC, Advocate D
Unterhalter SC, Advocate M Du Plessis, Advocate C Steinberg and
Advocate A Coutsoudis instructed
by Nortons Inc.
For the First and Second
Respondents:
Advocate
S
Cilliers SC, Advocate M Mostert and Advocate A Higgs i
nstructed
by the State Attorney.
For the Third Respondent:
Advocate T
Beckerling SC, Advocate R Strydom SC, Advocate N Ferreira and
Advocate J Bleazard i
nstructed by Smit Sewgoolam Inc.
For the First Amicus
Curiae:
Advocate S Budlender, Advocate M
Townsend and Advocate L Kelly instructed by Van Hulsteyns Attorneys.
For the Second Amicus
Curiae:
Advocate T Ngcukaitobi and Advocate M
Bishop instructed by the Legal Resources Centre.
[1]
The second respondent.
[2]
The third respondent.
[3]
The applicant, in different legal capacities, as cited above in the
header.
[4]
The provisions of section 217 are set out in [32] below.
[5]
Steenkamp NO v Provincial Tender Board
,
Eastern Cape
[2006]
ZACC 16
;
2007 (3) SA 121
(CC);
2007 (3) BCLR 300
(CC) (
Steenkamp
)
at paras 20-3.
[6]
Section 27(1)(c) of the Constitution provides: “[E]veryone has
the right to have access to social security, including,
if they are
unable to support themselves and their dependants, appropriate
social assistance.”
[7]
Section 28(1)(c) of the Constitution provides: “Every child
has the rightto basic nutrition, shelter, basic health care
services
and social services”.
[8]
AllPay Consolidated Investment Holdings (Pty)
Ltd and Others v Chief Executive Officer, South African Social
Security Agency,
and Others
[2013] ZASCA 29
;
2013 (4) SA 557
(SCA) (Supreme Court of Appeal judgment) at para 96.
[9]
SASSA was established in terms of the
South African Social Security
Agency Act 9 of 2004
.
[10]
The Request for Proposals defines
biometric
as “the means by which a person is uniquely identified by
evaluating one or more distinguishable biological trait[s]
based
primarily on ten (10) fingerprints”.
[11]
Circular 10 of 2008 published on 29 September 2008.This circular was
circulated in compliance with
regulation 16A6.2
of Treasury
Regulation R 225 published in
Government
Gazette
27388 of 15 March 2005
(Treasury Regulations).
[12]
The first respondent.
[13]
Corruption Watch, the first amicus curiae (friend of the court), is
an independent, non-profit civil society organisation that
seeks to
promote transparency and accountability to protect beneficiaries of
public goods and services.  It also seeks to
fight corruption
and the abuse of public funds.
[14]
Supreme Court of Appeal judgment above n 8
at
para 21.  See also para 96: “It seems to me that it would
be most prejudicial to the public interest if
inconsequential
irregularities
alone were to be capable of invalidating the contract.”
(Emphasis added.)
[15]
Id at para 44.
[16]
Id at para 46.
[17]
Id at paras 50-3 (multiple bids); at paras
54-64 (non-compliance with Bid Evaluation Committee and Bid
Adjudication Committee
requirements); at paras 65-6 (black economic
empowerment  requirements); at paras 67-85 (Bidders Notice 2);
and at paras
86-95 (scoring of bids).
[18]
3 of 2000.
[19]
Bengwenyama Minerals (Pty) Ltd and Others v
Genorah Resources (Pty) Ltd and Others
[2010] ZACC 26
;
2011 (4) SA 113
(CC);
2011 (3) BCLR 229
(CC)
(
Bengwenyama
) at
paras 81-3.  See also
Minister of Health
and Another v New Clicks South Africa (Pty) Ltd and Others
[2005] ZACC 14
;
2006 (2) SA 311
(CC);
2006 (8) BCLR 872
(CC) (
New
Clicks
) at para 19 and
De Lange
v Smuts NO and Others
[1998] ZACC 6
;
1998
(3) SA 785
(CC);
1998 (7) BCLR 779
(CC) at para 104.
[20]
Section 8(1) of PAJA provides:
“
The court or
tribunal, in proceedings for judicial review in terms of section
6(1), may grant any order that is just and equitable,
including
orders―
(a)
directing the
administrator
―
(i)
to give reasons; or
(ii)
to act in the manner the court or tribunal requires;
(b)
prohibiting the administrator from acting in a particular manner;
(c)
setting aside the
administrative
action
and―
(i)
remitting the matter for reconsideration by the administrator,
with
or without directions; or
(ii)
in exceptional cases―
(aa)
substituting or varying the administrative action or correcting a
defect
resulting from the administrative action; or
(bb)
directing the administrator or any other party to the proceedings to
pay
compensation;
(d)
declaring the rights of the parties in respect of any matter to

which the administrative action relates;
(e)
granting a temporary interdict or other temporary relief; or
(f)
as to costs.”
[21]
See
City of Johannesburg Metropolitan
Municipality v Gauteng Development Tribunal and Others
[2010] ZACC 11
;
2010 (6) SA 182
(CC);
2010 (9) BCLR 859
(CC);
South
African Veterinary Council and Another v Veterinary Defence
Association
[2003] ZASCA 27
;
2003 (4) SA 546
(SCA); and
Hira and Another v Booysen and
Another
[1992] ZASCA 112; 1992 (4) SA 69
(AD).
[22]
Logbro Properties CC v Bedderson NO
[2002] ZASCA 135
;
2003 (2) SA 460
(SCA) (
Logbro
)
at paras 24-5 and
Administrator, Transvaal,
and Others v Zenzile
[1990] ZASCA 108
;
1991
(1) SA 21
(AD) at 37C-F.
[23]
Wade
Administrative Law
6 ed (Oxford University Press, New York
1988) at 533-4.  The remarks are as applicable to our law as
they are to English
law.
[24]
Transparency International
Handbook on
Curbing Corruption in Public Procurement
(Transparency International, Berlin 2006).
[25]
Millennium Waste Management (Pty) Ltd v
Chairperson of the Tender Board: Limpopo Province and Others
[2007] ZASCA 165
;
2008 (2) SA 481
(SCA) (
Millennium
Waste
) at paras 28-32.
[26]
Hoexter
Administrative Law in South Africa
2 ed (Juta and Co Ltd, Cape Town 2012) at 48-50 and 292-5.
[27]
Compare
Maharaj and Others v Rampersad
1964
(4) SA 466
(AD).  See also
Weenen
Transitional Local Council v Van Dyk
[1990]
ZASCA 108
;
2002 (4) SA 653
(SCA) at para 13.
[28]
African Christian Democratic Party v
Electoral Commission
[2006] ZACC 1
;
2006 (3)
SA 305
(CC);
2006 (5) BCLR 579
(CC) (
ACDP v
Electoral Commission
) at para 25.
[29]
Steenkamp
above n 5
at para 33.
[30]
Millennium Waste
above note 25 at para 4.
[31]
5 of 2000.
[32]
1 of 1999.
[33]
Section 1(i) of the Procurement Act.
[34]
R502, published in
Government Gazette
34350 of 8 June 2011, issued in terms of section 5 of the
Procurement Act.
[35]
Id regulation 1(s).
[36]
Id regulation 4.
[37]
Regulation 16A3.1 and 16A3.2(a) of the Treasury Regulations.
[38]
Id regulation 16A6.2.
[39]
Id regulation 16A6.3(a).
[40]
53 of 2003.
[41]
Regulation 16A6.3(b) of the Treasury Regulations.
[42]
Chief Executive Officer of the South African
Social Security Agency NO and Others v Cash Paymaster Services
(Pty) Ltd
[2011]
ZASCA 13
;
2012 (1) SA 216
(SCA) (
SASSA v CPS
)
at para 15.
[43]
13 of 2004.
[44]
9 of 2004.
[45]
Request for Proposals at clause 13.1.
[46]
Premier, Free State, and Others v Firechem
Free State (Pty) Ltd
[2000] ZASCA 28
;
2000
(4) SA 413
(SCA) (
Firechem
).
[47]
Id at para 30.
[48]
Steenkamp
above n 5
at para 60.
[49]
SASSA v CPS
above n
44.
[50]
Bolton
The Law of Government Procurement in
South Africa
(LexisNexis Butterworths, Cape
Town 2007) at 57:
“
One of the primary
reasons for the express inclusion of the five principles in section
217(1) of the Constitution is to safeguard
the integrity of the
government procurement process.  The inclusion of the
principles, in addition to ensuring the prudent
use of public
resources, is also aimed at preventing corruption.”
See also
R (on the
application of the Law Society) v Legal Services Commission; Dexter
Montague & Partners (a firm) v Legal Services
Commission
[2008] All ER 148
(CA) at paras 42-3.  Currie
The Promotion
of Administrative Justice Act: A Commentary
(Siber Ink,
Johannesburg 2007) at 113-4 says the following with regard to
section 3(5) of PAJA, which allows an administrator
discretion to
follow procedures that are “fair but different” from the
ones mandated in section 3(2):
“
Only procedures in
empowering provisions can qualify as fair but different.  An
empowering provision is defined as ‘a
law, rule of common law,
customary law, or an agreement, instrument or other document in
terms of which an administrative action
was purportedly taken.’
Some empowering materials – such as internal department
circulars – are not generally
publicly accessible.  At
least for the purposes of the fair but different provision, it is
submitted that an empowering
provision can only qualify as ‘fair’
if it is itself publicly accessible.  A law that is not
publicly accessible
cannot provide publicly known and thus fair
procedures.”
[51]
Compare section 3(4) of PAJA and
Member of
the Executive Council, Department of Education, Gauteng and Others v
Governing Body of Rivonia and Others
[2013]
ZACC 34
;
2013 (6) SA 582
(CC) at para 49(c).
[52]
Mazibuko and Others v
City of Johannesburg and Others
[2009] ZACC 28
;
2010 (4) SA 1
(CC);
2010 (3) BCLR 239
(CC) at para
73;
New Clicks
above n 19
at paras 95-7;
and
Bato Star
Fishing (Pty) Ltd v Minister of Environmental Affairs and Others
[2004] ZACC 15
;
2004 (4) SA 490
(CC);
2004 (7) BCLR 687
(CC) at paras 25-6.
[53]
Section 6(2)(h) of PAJA.
[54]
In this regard it differs from the
Labour Relations Act 66 of 1995
.
In
Gcaba v Minister for Safety and Security
and Others
[2009] ZACC 26
;
2010 (1) SA 238
(CC);
2010 (1) BCLR 35
(CC) at para 65, this Court held that these
factors placed state employment decisions outside the ambit of the
provisions of
PAJA.
[55]
Bolton “Public Procurement Systems in South Africa: The Main
Characteristics” (2007-2008) 37 Pub. Cont. L.J. 781
at 782-3.
See also
SASSA v CPS
above n 44 at para 18
.
[56]
This also includes other relevant legislation referred to in these
Acts.
[57]
Agri SA v Minister for Minerals and Energy
[2013] ZACC 9
;
2013 (4) SA 1
(CC);
2013 (7)
BCLR 727
(CC) (
Agri SA
).
[58]
Id at para 61.
[59]
Section 2(1)(a)-(d) of the Procurement Act.
[60]
Id section 4.
[61]
Id sections 5 and 6.
[62]
For works above R1 million see section 6(2)-(4).  Section 1(d)
of the Procurement Act defines a B BBEE status level
as “the
B-BBEE status received by a measured entity based on its overall
performance using the relevant scorecard contained
in the Codes of
Good Practice on Black Economic Empowerment, issued in terms of
section 9(1) of the [Empowerment Act]”.
[63]
Section 1 of the
Empowerment
Act.
[64]
Section 2 of the
Empowerment
Act.
[65]
Codes of Good Practice on Broad Based Black Economic Empowerment
promulgated in GN 1106, published in
Government
Gazette
33857 of 10 December 2010.
[66]
Id at para 5.21 which sets out the principles of B-BBEE transactions
as follows:
“
5.21.1     B-BBEE ownership
initiatives should be aimed at promoting the productive and
sustainable participation
of Black companies and Black people in
each sector of the economy;
5.21.2       Ownership
will be particularly encouraged if it adds value to the companies
involved
and includes meaningful participation in management and
control”.  (Emphasis added.)
[67]
Clause 6.1 of the Request for Proposals.
[68]
Id clause 2.9.
[69]
Id clause 3.1.
[70]
Id clause 3.2.
[71]
Viking Pony Africa Pumps (Pty) Ltd t/a Tricom
Africa v Hidro-Tech Systems (Pty) Ltd and Another
[2010] ZACC 21
;
2011 (1) SA 327
(CC);
2011 (2) BCLR 207
(CC) (
Viking
Pony
).
[72]
Id at para 46.
[73]
Id at para 47.
[74]
Id at para 46.
[75]
Section 3(1) of PAJA provides:
“
Administrative
action which materially and adversely affects the rights or
legitimate expectations of any person must be procedurally
fair.”
[76]
Logbro
above n 22 at
para 20.
[77]
Grey’s Marine Hout Bay (Pty) Ltd and
Others v Minister of Public Works and Others
[2005] ZASCA 43
; 2005 (6) SA 313 (SCA) (
Grey’s
Marine
).
[78]
Section 1(i)(b) of PAJA defines administrative action as―
“
any
decision taken, or any failure to take a decision, by a natural or
juristic person, other than an organ of state, when exercising
a
public power or performing a public function in terms of an
empowering provision, which adversely affects the rights of any

person and which has a direct, external legal effect.”
[79]
Grey’s Marine
above n 80 at para 23.  (Emphasis added.)
[80]
Joseph and Others v City of Johannesburg and
Others
[2009] ZACC 30
;
2010 (4) SA 55
(CC)
2010 (3) BCLR 212
(CC); at para 27.
[81]
Request for Proposals at clause 3.7.
[82]
See [52] above.
[83]
Section 2(1)(a)-(d) of the Procurement Act.
[84]
Compare
Bengwenyama
above
n 19 at paras 72-4;
Walele v City of Cape
Town and Others
[2008] ZACC 11
;
2008 (6) SA
129
(CC);
2008 (11) BCLR 1067
(CC) at para 72; and
Minister
of Law and Order v Hurley and Another
1986
(3) SA 568
(AD) at 577H-578F.
[85]
See above n 10 for the definition of biometric according to the
Request for Proposals.
[86]
Clause 3.3 of Section C “Scope of Work”, in the Request
for Proposals.  (Emphasis added.)
[87]
Clause 14.6 of Section B “Conditions for Acceptance” in
the Request for Proposals.
[88]
Though Bidders Notice 2 is dated 6 June 2011, AllPay says it did not
receive it until 10 June 2011.
[89]
Minutes of the Bid Evaluation Committee meeting, 31 August 2011 at
para 4.4-4.6 and handwritten notes taken at the Bid Evaluation

Committee meeting, 5 October 2011.
[90]
Minutes of the Bid Evaluation Committee meeting, 31 August 2011 at
para 4.6.1.
[91]
Minutes of the Bid Evaluation Committee meeting, 7 October 2011 at
para 2.1.1 and 2.4 and Minutes of the Bid Evaluation Committee

meeting, 19 October 2011 at para 2.1.
[92]
Minutes of Cash Paymaster’s presentation to the Bid Evaluation
Committee, 7 October 2011 at para 4.
[93]
Preparations for Bid Adjudication Committee Meeting: Key Issues for
Discussion at para 3.2 and 3.4.
[94]
Addendum to the Bid Evaluation Committee Report, 25 November 2011 at
para 3.2.5-6 and Minutes of the Bid Evaluation Committee
meeting, 31
August 2011 at para 4.6.1.
[95]
See the handwritten notes to the Minutes of the Bid Evaluation
Committee meeting, 31 August 2011, showing  that biometric

testing was equated with fingerprinting, and para 4.5.2.1 of the
official Minutes, which states, “[b]iometric standards
–
the supporting documents issued with the Bid specification provide
for a specific standard requiring fingerprints to
be captured of all
beneficiaries.”
[96]
AllPay alleges that, had the specifications been clear that
verification was sought monthly, at the time SASSA paid the grants

into bank accounts, it could have offered voice-recognition
verification as a solution.  It says the fact that it offered

this solution for annual enrolment demonstrates it had the capacity
to do so.  It was only at withdrawal points that it
was unable
to provide this solution.
[97]
The key evidence of this confusion appears in the Minutes of the Bid
Evaluation Committee meeting, 31 August 2011.
In those
minutes, we see confusion about “conflicting messages arising
from the Bid specification document and Bidders
Notice 2”.
There is confusion about the Request for Proposals requiring only a
“payment solution” and
Bidders Notice 2 requiring
“biometric verification”.  There is confusion about
whether biometric verification
was required at ATMs and point of
sale devices – which might have resulted in bidders
withdrawing.  And there is confusion
over whether proof of life
was required annually or at the time of every payment, as stipulated
in Bidders Notice 2.
This confusion is further
demonstrated by evidence that appears elsewhere in the record –
specifically, in  handwritten
notes from the Bid Evaluation
Committee meeting,5 October 2011, where members of the Committee
expressed confusion about the
where and when of biometric
verification (whether it applied only to annual enrolment, was a
requirement or was flexible); in
handwritten notes from the Bid
Evaluation Committee meeting, 31 August 2011, where Bid Evaluation
Committee members said that
the requirement of Bidders Notice 2
favoured one bidder and excluded 20 others; and in a 14 November
2011 memorandum, where legal
advisors to the Bid Adjudication
Committee said that, because proof of life biometric confirmation
went to the heart of the specification
and the final scoring given
to the two service providers, “proper analysis of the
intention, meaning and application of
[Bidders Notice 2] must be
conducted as a matter of urgency.”
[98]
Supreme Court of Appeal judgment above n 8 at paras 73-5.
[99]
Hoexter above n 26 at 332-4 and 356-7.
[100]
New Clicks
above
above n 19 at para 246.
[101]
Section 6(2)(c) of PAJA provides: “A court or tribunal has the
power to judicially review an administrative action if the
action
was procedurally unfair”.
[102]
Section 3 of PAJA in full reads:
“
(1)
Administrative action which materially and adversely affects the
rights or
legitimate expectations of any person must be procedurally
fair.
(2)
(a)
A
fair administrative procedure depends on the circumstances of each
case.
(b)
In order to give effect to the right to procedurally fair
administrative
action, an administrator, subject to subsection (4),
must give a person referred to in subsection (1)―
(i)
adequate notice of the nature and purpose of the proposed

administrative action;
(ii)
a reasonable opportunity to make representations;
(iii)
a clear statement of the administrative action;
(iv)
adequate notice of any right of review or internal appeal, where
applicable;
and
(v)
adequate notice of the right to request reasons in terms of section

5.
(3)
In order to give effect to the right to procedurally fair
administrative
action, an administrator may, in his or her or its
discretion, also give a person referred to in subsection (1) an
opportunity
to―
(a)
obtain assistance and, in serious or complex cases, legal
representation;
(b)
present and dispute information and arguments; and
(c)
appear in person.
(4)
(a)
If
it is reasonable and justifiable in the circumstances, an
administrator may depart from any of the requirements referred to
in
subsection (2).
(b)
In determining whether a departure as contemplated in paragraph
(a)
is reasonable and justifiable, an administrator must take into
account all relevant factors, including—
(i)
the objects of the empowering provision;
(ii)
the nature and purpose of, and the need to take, the administrative

action;
(iii)
the likely effect of the administrative action;
(iv)
the urgency of taking the administrative action or the urgency of
the
matter; and
(v)
the need to promote an efficient administration and good governance.
(5)
Where an administrator is empowered by any empowering provision
to
follow a procedure which is fair but different from the provisions
of subsection (2), the administrator may act in accordance
with that
different procedure.”
[103]
Quinot “Administrative
Law” (2010)
Annual
Survey of South African Law
41 at 63.
[104]
See Currie above n 52 at 105.  See also Baxter
Administrative
Law
(Juta and Co Ltd, Cape Town 1984) at
546.
[105]
See
Minister of Social Development and Others
v Phoenix Cash and Carry Pmb CC
[2007] ZASCA
26
;
[2007] 3 All SA 115
(SCA) at para 2:
“
[A] tender process
which depends on uncertain criteria lends itself to exclusion of
meritorious tenderers and is opposed to fairness
among tenderers,
and between tenderers and the public body which supposedly promotes
the public weal. . . .  [A] public
tender process should be so
interpreted and applied as to avoid both uncertainty and undue
reliance on form, bearing in mind
that the public interest is, after
giving due weight to preferential points, best served by the
selection of the tenderer who
is best qualified by price.”
See also
Firechem
above n 48 at para 30: “[A] tender should speak for itself.
Its real import should not be tucked away, apart from
its terms.”
[106]
Supreme Court of Appeal judgment above n 8 at para 6.
[107]
Mr Tsalamandris, a SASSA employee, was a member of the support team
for the tender evaluation and was responsible for taking
minutes at
meetings of the Bid Evaluation Committee.
[108]
Rail Commuters Action Group and Others v
Transnet Ltd t/a Metrorail and Others
[2004]
ZACC 20
;
2005 (2) SA 359
(CC);
2005 (4) BCLR 301
(CC) at paras 41-3;
Knox D’Arcy Ltd and Others v Jamieson
and Others
[1996] ZASCA 58
;
1996 (4) SA 348
(SCA) at 378; and
Colman v Dunbar
1933 AD 141
at 161-2.
[109]
Corruption Watch relies on regulation 16A9.1(b) of the Treasury
Regulations, as amended, which states that an accounting officer

must―
“
investigate
any allegations against an official or other role player of
corruption, improper conduct or failure to comply with
the supply
chain management system, and when justified―
(i)
take steps against such an official or other role player and
inform
the relevant treasury of such steps; and
(ii)
report any conduct that may constitute an offence to the South

African Police Service.”
The Regulations in terms
of the
Public Finance Management Act, 1999
Government Gazette
25767 of 5 December 2003: Framework For Supply Chain
Management similarly state in
regulation 9:
“
(1)
The accounting officer or accounting authority of an institution to
which
these regulations apply must―
(a)
take all reasonable steps to
prevent abuse of the supply chain
management system;
(b)
investigate any allegations
against an official or other role player
of corruption, improper conduct or failure to comply with the supply
chain management
system, and when justified―
(i)
take steps against such official or other role player and
inform the
relevant treasury of such steps; and
(ii)
report any conduct that may constitute an offence to the South

African Police Service”.
[110]
The second amicus curiae.