Loliwe CC t/a Vusumzi Environmental Services v City of Cape Town and Others (3791/2012) [2012] ZAWCHC 162 (6 July 2012)

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[2012] ZAWCHC 162
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Loliwe CC t/a Vusumzi Environmental Services v City of Cape Town and Others (3791/2012) [2012] ZAWCHC 162 (6 July 2012)

Republic of South Africa
IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE HIGH COURT, CAPE TOWN)
Case
No: 3791/2012
Before: The Hon Mr Justice Binns-Ward
In
the matter between:
LOLIWE
CC t/a VUSUMZI ENVIRONMENTAL SERVICES
.
.......................................
Applicant
and
CITY
OF CAPE TOWN
............................................................................................
First
Respondent
CHAIRPERSON,
ADJUDICATION COMMITTEE
..................................
Second
Respondent
APPEAL
AUTHORITY, CITY OF CAPE TOWN
.................................................
Third
Respondent
SA
METAL (PTY) LTD t/a WASTE CONTROL
.......................................
Fourth
Respondent
WASTE
MART CC
.....................................................................................................
Fifth
Respondent
JUDGMENT

:
The
Honourable Justice A.G. Binns-Ward
FOR THE
APPLICANT

:           Adv. J.
NEWDIGATE SC
Adv.
P. FARLAM
Adv.
K. REYNOLDS
INSTRUCTED
BY

:           Edward
Nathan Sonnenbergs
FOR THE 1
st
,
2
nd
& 3
rd
RESPONDENT
:           Adv. M.
JANISCH
Adv.
M. O’SULLIVAN
INSTRUCTED
BY

:
FairbridgesArderne& Lawton
FOR THE 4
th
RESPONDENT
:
Adv. R.
GOODMAN SC
Adv.
A. DU TOIT
INSTRUCTED
BY

:
BernadtVukic Potash & Getz
FOR THE 5
th
RESPONDENT
:
Adv. J.
DE WAAL
INSTRUCTED
BY

:           Webber
Wentzel
DATE OF
HEARING

:           5JUNE
2012
DATE
OF JUDGMENT
:
6 JULY
2012
JUDGMENT DELIVERED: 6 JULY 2012
BINNS-WARD J:
The applicant has applied for the
review and setting aside of decisions by the municipality of the
City of Cape Town (the first
respondent
1
)
to award contracts to the fourth and fifth respondents,
respectively, for the removal of waste from properties within the

municipal area. The fourth respondent was awarded the contract in
respect of the area along the City’s Atlantic seaboard,

between Clifton and Hout Bay. The contract awarded to the fifth
respondent was in respect of an area in the eastern part of the

metropole. The award to the fourth respondent was the culmination of
a procurement process referred to by the parties, for convenience,

as ‘the Atlantic tender’; while that to the fifth
respondent manifested the outcome of ‘the Helderberg tender’.
Procurement of goods and services by organs of state is
regulated. The regulation of public procurement is founded
originally
in s 217 of the Constitution.
2
This requires that such procurement must occur in
accordance with a system which is fair, equitable, transparent,
competitive
and cost-effective. These requirements are qualified
only to the extent that organs of state are permitted to apply
preferential
procurement policies, directed mainly at redressing
historical inequities. Preferential procurement policy by organs of
state
is in turn regulated in terms of the Preferential Procurement
Policy Framework Act 5 of 2000 (‘the PPPFA’), which is

legislation of the nature contemplated in terms of s 217(3) of
the Constitution.
The PPPFA stipulates that for contracts of the
financial value involved in the current matter a 90:10 preference
point system
must be applied. This works on the basis that 90 points
fall to be awarded to the lowest acceptable tender by price, and 10
points
allocated to specific goals, such as contracting with
historically disadvantaged persons.
3
The framework also obliges organs of state to award a
contract to the tenderer who scores the highest number of points,
unless
objective criteria, in addition to any ‘specific goal’
for which points may be awarded,
4
justify the award to another tenderer.
5
An organ of state may award a contract only consequent
upon the acceptance of an ‘acceptable tender’, as
defined in
the PPPFA,
viz
.
‘
any tender which, in all respects,
complies with the specifications and conditions of tender as set out
in the tender document
’
.
6
The acceptance by an organ of state of a tender which
is not ‘acceptable’ within the meaning of the PPPFA is
therefore
an invalid act and falls to be set aside.
7
The question of the degree of compliance required for a
tender to be an ‘acceptable tender’, as defined, calls
for
the exercise of judgment. The test is materiality and
reasonableness. Not every slip of the pen, or inconsequential or
obvious
error in a bid will render the tender not acceptable.
8
Procurement by municipalities is further regulated
under the supply chain management provisions of the Local
Government: Municipal
Finance Management Act 53 of 2003 (‘the
MFMA’), together with the supply chain management regulations
made under
that statute (‘the SCM regulations’);
9
and, to the extent that it entails the employment of
external providers of municipal services, also by the Local
Government: Municipal
Systems Act, 32 of 2000 (‘the Systems
Act’). In accordance with the obligation imposed on it in
terms of ss 111
and 112 of the MFMA, the City of Cape Town has
adopted and implemented a supply chain management policy to achieve
compliance
with the requirements of s 217 of the Constitution.
10
The contracts in issue are ‘long term contracts’
within the meaning of the SCM regulations. The contract value also

exceeded R200 000. The City was thus obliged to procure the
services involved by means of a competitive bidding process.
11
As Pickard JP observed in
Cash
Paymaster Services (Pty) Ltd v Eastern Cape Province and others
1999
(1) SA 324
(Ck) at 350H, ‘The very essence of tender
procedures may well be described as a procedure intended to ensure
that government,
before it procures goods or services, or enters
into contracts for the procurement thereof, is assured that a proper
evaluation
is done of what is available, at what price and whether
or not that which is procured serves the purposes for which it is
intended’.
12
Some of the relevant parts of the
SCM regulations were described at some length in
Loghdey
v City of Cape Town
2010 (6) BCLR 591
(WCC). It has been convenient to draw quite heavily on what was said
there in that respect for the purpose of sketching part
of the
applicable statutory framework in the current case.
The SCM regulations
allow for
a municipality’s supply chain management system to provide for
a ‘committee system’ to deal with the
competitive
bidding process.
13
A committee system is required to comprise of at least three
committees; namely, a bid specification committee, a bid evaluation

committee and a bid adjudication committee.
14
In terms of its SCMP, the City had adopted a
committee system.
A bid specification committee must be composed of one
or more officials of the municipality, preferably including the
manager
responsible for the function involved. In terms of the
regulatory framework a bid evaluation committee is required to
evaluate
bids in accordance with (i) ‘the specifications
for a specific procurement’
15
and (ii) the applicable points system. In addition, the
evaluation committee must evaluate each bidder’s ability to

execute the contract.
16
In the current case the tender specifications set out certain
criteria to be applied ‘to determine tender compliance’.

These included –
Capacity in terms of staff, vehicles and equipment. The contractor
must be able to demonstrate that he/she has sufficient understanding

of the work to be able to calculate the resources needed, and also
show that he/she will be able to provide these resources within
of
(sic) the prescribed lead time after being awarded the tender
Financial viability. Offers must be such that they cover all costs
associated with providing any combination of the service scenarios

including capital investments, infrastructure, authorities and
approvals, royalties, operational expenses, calculated income,

market fluctuations, growth, CPIX, fuel, labour, and other
consumable increase (sic) etc., and can thus sustain operations for

the full tender period. A full breakdown of costs must be provided,
i.e. the pricing schedule and all its associated sheets e.g.

Conventional Collection alternative, (sic) Conventional or Wet
collection service in NON RESIDENTIAL and RESIDENTIAL, Dry
collection
service level in identified RESIDENTIAL areas etc.
As will become apparent, the evaluation of the financial
viability of the applicant’s bid, and more especially, ‘the

breakdown of costs’ aspect of it, is the critical question in
the current case insofar as the Atlantic tender is concerned.
The function of a bid adjudication committee, which
should be comprised primarily of officials from the department
requiring the
goods or services in issue,
17
is essentially to provide a final consideration by
senior management officials of the municipality, with the assistance
of a technical
expert in the relevant field, of the bid evaluation
committee’s recommendation before the relevant contract is
awarded.
It is evident that the bid adjudication committee will in
the ordinary course endorse the recommendations of the bid
evaluation
committee. This may be implied, I think, from the
provisions of SCM regulation 29(5),
18
and the special steps with which a municipality must
comply if it awards the contract to a tenderer other than the one
recommended
in the normal course of implementing the supply chain
management policy.
19
The SCM regulations require that bid
documentation must, amongst other matters, include evaluation and
adjudication criteria.
20
In addition to the evaluation criteria referred to earlier,
21
the bid documentation in the current
case stipulated that tenders which failed to score a minimum of 60
points for ‘functionality’
would be regarded as
‘non-responsive’ and would not be further evaluated.
The
City’s SCMP defined ‘
functionality
’
as ‘
the measure, according
to predetermined criteria, of the suitability of a proposal, design
or product or the use for which it
is intended, and may also include
a measure of the competency of a supplier
’
.
22
The scoring of a tender for
‘functionality’ was thus a qualifying exercise, and only
those tenders which attained
at least the minimum points required
for responsiveness in respect of ‘functionality’ would
then be evaluated for
compliance with the specifications and
conditions of the tender, and scored in terms of the points systems
applicable in terms
of the PPPFA. This approach to the evaluation of
bids was consonant in principle with the provisions of the City’s
SCMP.
23
The bid evaluation committee treated the applicant’s
tenders in respect of both the Atlantic and the Helderberg tenders

as non-responsive. The applicant’s bid in respect of the
Atlantic tender was so treated because of its failure to attain
the
required minimum number of points in respect of functionality.
It is well established that the award of a tender
contract by an organ of state constitutes ‘administrative
action’
within the meaning of the Promotion of Administrative
Justice Act 3 of 2000 (PAJA). The application for the review and
setting
aside of the award of the tender contracts is thus brought
in terms of s 6 of PAJA.
The Atlantic tender
It is convenient to deal with the
Atlantic tender first. The essence of the applicant’s
complaint was that the scoring of
its tender for functionality by
the bid evaluation committee was irrational and unreasonable in the
sense that it led to a decision
that a reasonable decision-maker
could not make.
24
(The applicant also sought to make
out a case that the City’s officials, in particular the
chairperson of the bid evaluation
committee, had been biased against
it, but – while not abandoned – that was not pursued in
oral argument.)
The way in which functionality would be scored was set
out at clause 7.6 of the tender document. There were four criteria,
which
were accorded weight in accordance with the table set out
below:
EVALUATION
AREA
POINTS
Vehicles
and Resources
40
Data
(Breakdown of cost)
40
Business
Plan
10
Experience
10
Total
:
100
There was a note at the end of clause 7.6 of the tender
document, which provided as follows: ‘
Note:
Please ensure that all relevant
information has been submitted with your tender submission to ensure
optimal scoring of Functionality
points
’
.
Clause 6.2 of the Tender Document provided ‘
Any
portion of the Tender Document not completed will be interpreted as
“not applicable”
.’ It seems
clear on a reading of the Tender Document as a whole that the ‘
Data
(Breakdown of cost)
’
component of the
functionality evaluation bore directly on the information to be
provided by a tenderer in terms of the ‘Breakdown
of
Provisional Costs’ tables in the pricing schedule section (i.e.
Part 4) of tender documents. The applicant did not complete
certain
items of the information requested in the breakdown of costs in
respect of the ‘conventional or wet collection’

component
25
of the waste removal contract. The information fell to
be provided upon a completion by the tenderer of table A1 in the bid
document.
It was the scoring of this ‘evaluation area’ of
the functionality test by the bid evaluation committee that lay at
the heart of the applicant’s complaint.
The ‘Breakdown of Provisional Costs’ table
invited the tenderer to provide a number of items of information.
The table,
as it was completed by the applicant (in table A1
26
),
read thus:
BREAKDOWN OF PROVISIONAL
COSTS – SEPARATE WET/DRY COLLECTION
TABLE A1
ATLANTIC
AREA: CONVENTIONAL or WET COLLECTION COMPONENT
UNIT
COST BASED ON THE PREFERRED VEHICLE TYPE
QUANTITIES
Lifts
per month 41564
Kg’s/Lift
Mass/Volume
restriction
11
tons
Tons/Week
130
Ton/Month
560
Number
of lifts per vehicle per day
1919
Number
of tones disposed of per vehicle per day
26
Number
of sessions per vehicle per day
2,5
Number
of vehicles required
1
Average
km travelled per vehicle per day
150
Vehicle
maintenance costs per km per day
6.50
Vehicle
fuel consumption in km/l per day
1.2
STRUCTURE
DATA
Number
of Operational Manager
1
Number
of Supervisors
1
Number
of Drivers per vehicle
1
Number
of Workers per vehicle
4
UNIT
COSTS
Costs
of a refuse collection vehicle with a lift logger
1588092.60
Cost
of vehicle licensing per year
32800.00
Diesel
cost/litre
10.50
Interest
rate
12.5%
Waste
Disposal cost/ton
232.00
LABOUR
COSTS
Cost
per Operational Manager
8000.00
Cost
per Supervisor
6500.00
Labour
cost per month per Driver
5500.00
Labour
cost per month per Worker
3250.00
MONTHLY
COSTS
Vehicle
capital costs
44113.66
Vehicle
licensing costs
5500.00
Vehicle
maintenance costs
42900.00
Vehicle
fuel costs
127281.00
Labour
costs
51000.00
Waste
disposal costs
130000.00
Overheads/miscellaneous/profit
59294.20
TOTAL
MONTHLY COST
Rate
per lift:
Conventional
or Wet service level (
To
be transferred to Price Schedule – Item A
11.06
From a pricing perspective the critical figure in the
costs breakdown table was the ‘rate per lift’ (the last
item
in the table). This is because the bid document stated that
‘[t]
he single unit rate should be
tendered for either Wet/dry or the Conventional collection service
level
and will be applicable to any
number of lifts.
It will also be
applicable if the number of service points and or lifts increases
through growth and extensions to the contract
’
.
(Bold font in the original.)
The items which the applicant failed to fill in on the
breakdown of provisional costs section of the tender document were
‘
Kg’s/Lift
’
and
‘
Total Monthly Cost
’
.
(A ‘lift’ in this context constitutes - at least in
respect of ‘wet waste’ - the content of a standard
240l
municipal waste bin - popularly called a ‘wheelie-bin’).
The anticipated number of kilograms of waste collected
per lift
would be relevant to determine how quickly the waste removal
vehicles to be employed by the tenderer would be filled
to capacity,
thus determining the frequency during the course of a day’s
removal activity at which the vehicle would be
required to travel
from the serviced area to a waste disposal site. Accordingly, the
information could bear in a relevant manner
on the number of
vehicles required to execute the anticipated 41564 lifts per month
and the number of staff required to be employed.
The result of an
evaluative extrapolation and analysis of the estimated costs of
labour and equipment against the tendered ‘rate
per lift’
could obviously provide an indication of the logistical and
financial viability of a tenderer’s bid.
The applicant failed to cross the functionality hurdle
because it was given a low score of just 10 points out of the
possible
40 in respect of ‘
Data
(Breakdown of cost)
’
. It scored quite
well in the three other ‘evaluation areas’.
27
In the result it was awarded a total of 55.5 points for
functionality.
The chairperson of the bid evaluation committee, who
was also involved in the bid specification, averred that the City’s
solid waste department had developed a spreadsheet to facilitate the
consistent scoring of the ‘
Data (Breakdown of cost)
’
part of the functionality evaluation. The spreadsheet was
‘populated’, so he averred in the City’s answering

affidavit, with information which enabled the internal coherence of
the information filled in by tenderers to be checked, and
also
facilitated the committee’s task in evaluating each bidder’s
ability to execute the contract in an efficient
and viable manner.
The deponent stated ‘
The idea is that the spreadsheet
should identify parts of the tender that are of questionable
validity, and thus help to ascertain
whether the tender is
operationally and functionally viable with reference to the service
to be provided.
’ The information provided in the City’s
answering affidavit did not, however, provide sufficient information
to enable
an understanding as to exactly how the spreadsheet tool
worked. As a result the only manner of objectively assessing it is
by
examining some of the results it produced; a matter to which I
shall come presently.
The data provided in respect of cost breakdown was
scored in eight categories by the bid evaluation committee using the
aforementioned
spreadsheet tool. Each of these categories was
allocated five points. A tenderer whose tender included sufficient
information
to enable certain items of the information supplied to
be cross checked for consistency was given the five points. If the
item
could not be cross-checked by reason of an absence of
information, or if the information provided highlighted
non-viability or
inconsistency, no points at all were awarded. Thus
in respect of each of the eight categories a tenderer would be
either awarded
five points, or none at all; there was no gradation
in the scoring. The categories for which points were allocated in
respect
of the ‘
Data (Breakdown of cost)
’
evaluation criterion are set out below in the tabular format in
which they were submitted to, and approved by the City’s

Director: Waste Management:
BREAKDOWN
OF DATA -
PRODUCTION
DATA
25PTS
Ton/month
5pts
Number
of sessions per vehicle per day
5pts
Number
of lifts per vehicle per day
5pts
Number
of vehicles require
5pts
Number
of tons disposed of per vehicle per day
5pts
STRUCTURE
DATE
0pts
Number
of Operational Manager
Number
of Supervisors
Number
of Drivers per vehicle
Number
of Workers per vehicle
UNIT
COSTS
5pts
Waste
disposal costs/ton
5pts
MONTHLY
COSTS
(10pts)
Waste
disposal costs
5pts
Overheads/supervision/profit
TOTAL
MONTHLY COSTS
Rate
per lift:
Conventional service level
(To be
transferred to Price
Schedule
– Item A)
5pts
The applicant scored poorly in respect of ‘Data’
for four reasons. The first was because of its failure, when
completing
the relevant part of the standard bid document, to
include an amount in respect of ‘kilograms per lift’ -
in other
words its failure to provide its estimate of the average
amount of wet waste in kilograms per wheelie-bin to be collected.
This
omission rendered it impossible for the committee, unless it
were to read in the missing information, to cross check a number of

other items in the costs breakdown section of the bid for internal
consistency and resulted in the applicant being given a number
of
nil scores. The second reason was because, with similar effect, the
applicant omitted to insert the total of its estimate
of the monthly
costs in providing the service. The third was that it mistakenly
indicated, for cost breakdown purposes, that
it would be using only
one vehicle to provide the service. (Elsewhere in its tender, the
applicant had indicated that it would
be using three vehicles, two
of which were already held in possession, the other to be acquired.)
The fourth reason, closely
connected to the third, was that the
applicant indicated that it would be able to effect 1919 lifts per
day. It was common ground
that this figure (which had demonstrably
been arrived at simply by dividing the number of lifts per month
required in terms of
the tender specifications
28
by the number of working days in the month
29
)
was beyond the limits of feasibility if only one vehicle were to be
employed, and that the bid evaluation committee could not
be faulted
for recognising as much. (It was not explained by the City how any
tenderer could score for indicating less than 2796
lifts per day,
being the number of lifts required to be removed on beat no.s
1.3.411, 1.3.412, 1.3.416 and 1.3.417 in Hout Bay
and Camps Bay
every Tuesday, according to the tender specifications. A lesser
figure could only be acceptable if it were treated
as indicative not
of the maximum daily removal capability of the tenderer expressed in
lifts, but only as the
average
daily number of lifts to be effected divided by the
number of vehicles employed as the City’s scoring criteria
seem to suggest,
but which the compilation of the table does not
specify. The fourth respondent indicated 959.9 lifts per day per
vehicle with
the use of two vehicles.
30
The manner in which the information was requested did
not make it clear whether an average figure, or a maximum capacity
figure
was the nature of information sought.)
It is also common cause that if the applicant had
filled in 13.5 kg,
31
being a figure arrived at by dividing its estimate of a
total monthly collection of 560 tons of wet waste by the number of
lifts
(41 564) provided by the City as being required in terms
of the contract in the block provided for kilograms per lift, or
if
it had completed the ‘total monthly cost’ block in the
tender form with a figure constituting the total of the
individual
‘monthly costs’ it had set out in its bid, it would have
scored well enough to qualify in respect of functionality.
The
applicant’s counsel argued that both these missing items of
information could have been extrapolated easily by applying
simple
arithmetic to the information that had been provided by the
applicant. As a matter of simple logic their argument cannot
be
gainsaid.
It was argued further on the applicant’s behalf
that a scoring system that disqualified the applicant simply because
its
omissions did not square with the spreadsheet template,
regardless of the fact that the missing information could readily
have
been read in using the data that the applicant had supplied,
was irrational and conducive to starkly unreasonable results. The

argument was that the system employed by the City in this respect
did not satisfy the requirements of s 217(1) of the

Constitution and its derivatives in the legislative framework
applicable specifically to municipalities.
The applicant’s counsel also argued that the
reference to a single vehicle in the data (costs breakdown) analysis
in the
applicant’s bid was an obvious error, and should have
been recognised as such by the bid evaluation committee from the

information provided (and scored – positively - for
functionality) elsewhere in the bid document to the effect that the
applicant would use three vehicles to carry out the contract work.
In similar vein they contended that the applicant’s given

figure of 1919 lifts per day should have been recognised by the bid
evaluation committee as being what the applicant could achieve
with
the use of more than one vehicle.
With regard to the injunction in clause 7.6 of the bid
document (quoted above
32
),
the applicant’s contention was that all the relevant
information had been included in its tender. And with regard to
the
caution in clause 6.2 (also quoted above
33
),
it was submitted that the two blocks not filled in the costs
breakdown table did not constitute a ‘portion’ of
the
tender in the sense meant by clause 2. A ‘portion’, so
the argument went, denoted a component section of the
bid document,
rather than an item within such a section.
In my view any system directed at compliance with the
requirements of s 217(1) of the Constitution would, in the
context
of an approach to scoring of the sort adopted by the bid
elevation committee in the current case, expressly disclose in the
standard
bid document that completion of each and every item in the
‘
Data (Breakdown in cost)
’
tables was required for scoring purposes. I do not
consider that the note at the end of clause 7.6 of the tender
document
34
served that purpose sufficiently. In the context of
information required, the ‘
Kg’s/lift
’
item could only be a figure related proportionately to
the total weight of the waste to be collected. It would not be
readily
apparent to a tenderer that giving the monthly total weight
of waste to be collected, even if estimated in an eminently
realistic
amount, would be an inadequate, indeed ineffectual, means
of showing a qualified and informed insight into the nature of the

work involved simply by reason of a failure also to divide the
weight of waste to be collected monthly by the given number of lifts

to be made monthly, thereby giving the same information twice in the
table, albeit in different ways. Nothing in the definition
of
‘functionality’ in the City’s SCMP would have
served to alert a tenderer that an arithmetical cross-check
of
kilograms per lift and monthly tonnage would be a critical factor in
scoring the provisional costs information provided by
the tenderers.
There was also nothing
objectively apparent in the request for information in the ‘Data’
tables to alert tenderers
to the premium placed by the bid
evaluation committee or the spreadsheet tool on the completion by
tenderers of the ‘
Kg/lift
’
item over the ‘
Tons/month
’
item in the tables.
The
non-disclosure in the bid document of the requirement that every
item on the table required completion for the purposes of
scoring,
even if the relevant information could readily be deduced from other
information provided by the tenderer elsewhere
in the table,
detracted materially, in my view, from the fairness and transparency
of the system used in the current matter.
The position is distinguishable from that which
obtained in
South African
Post Office Ltd v Chairperson, Western Cape Provincial Tender Board,
and others
supra,
35
a judgment relied upon by counsel
for the City, in which the non-disclosure by the procurement body of
the weighting to be attached
to identified evaluation criteria was
found to have been unexceptionable in the peculiar circumstances of
the case. In
SA
Post Office
the
complaint by the unsuccessful tenderer was that it had not been
informed that the weighting in the evaluation of price and
service,
being the criteria evaluated in the last phase of a four stage
evaluation process, would be equal; that is 50% of the
points that
could be scored would be allocated to each criterion. The
unsuccessful tenderer had complained that it was taken
by surprise
that price should have carried as high a weighting as service. In
the context of the evident importance of pricing
in any competitive
bidding process, the court was not surprisingly unimpressed by the
contention that the non-disclosure of the
weighting had been unfair
in the circumstances. Furthermore, in that case the court was
satisfied that the Tender Board’s
explanation for the
non-disclosure of the weighting confirmed the rationality of its
action.
The applicant contended that in the
context of the undisclosed importance of the provision by a tenderer
of the ‘
Kg/lift
’
data, it was treated unfairly by not
having been requested to provide it by way of clarification. The
City argued that to afford
the applicant the opportunity to complete
the item would be to give it an opportunity to supplement its
tender, or a second bite
at the cherry in a manner that would have
been unfair to the other participants in the tender. Moreover, so
argued the City,
the applicant should have appreciated from the
provisions of clause 6.2 of the tender document that any item not
filled in would
have been treated as ‘not applicable’.
The applicant’s counsel riposted that the manner
in which the scoring of this evaluation criterion was undertaken did
not
treat the item as inapplicable, it instead read in the kilograms
per lift as nil and, using the nil so supplied, disqualified the

monthly tonnage figure given by the applicant from any consideration
at all in the evaluation on the basis of its inconsistency
with nil
kilograms per lift notionally inserted. I do not find it necessary
to make a finding in respect of the contesting submissions
on the
clarification question. Suffice it to say by way of general
observation that I consider that the apparent eschewal as
a fixed
approach by the bid evaluation committee of its power to seek
clarification from tenderers is in conflict with the terms
of the
tender document and the objects of the legislation. An appropriately
formulated enquiry on a point of clarification (all
such enquiries
are required to be in writing and therefore on the record) should
not give rise to unfairness.
I agree, however, with the argument
advanced on the applicant’s behalf on the ‘not
applicable’ point. I also
agree with the submission by
Mr
Farlam
(who was led by Mr
Newdigate
SC) for the applicant that clause
6.2, on an ordinary reading, would appear to pertain to the
non-completion by a tenderer of
a discrete section (i.e. ‘
portion
’
)
of the tender document; and not, certainly in the context currently
under consideration, to an item such as ‘
Kg/lift
’
in table A1, where the apparently
relevant information was evident - or at least readily deducible -
from the data given by the
tenderer in respect of the item in the
very same table against ‘
Tons/month
’
.
The applicant’s counsel were
also able to demonstrate that the scoring system used for the ‘
Data
(Breakdown of cost)
’
part
of the functionality evaluation led to some rather bizarre results.
Thus, for example, the applicant scored nil points for
its tonnage
per month estimate in respect of wet waste notwithstanding that its
estimate in that respect (560 tons) was within
a narrow margin of
appreciation from that estimated by the successful tenderer (581
tons), and despite the fact that it might
have been assumed by the
City that, as the entity that had been rendering the service for the
previous three years, the applicant’s
estimate would in all
likelihood be based on what it was actually collecting.
36
On the other hand, a competing
tenderer, Interwaste (Pty) Ltd, which had estimated a wet waste
collection of 1039 tons per month,
which - in the context of the
tender being awarded to a party which had estimated 458 tons less –
appears to have been
way outside the realistic range, was awarded 5
points for its tons per month data, apparently simply because of the
correct arithmetical
correlation of its figure of ‘
tons
per month
’
with
the figure inserted by it against ‘
Kgs/lift
’
.
This lends cogency to the observation by
the applicant’s counsel that the scoring approach adopted by
the evaluation committee
was directed more at arithmetical
cross-checking than at determining functionality as defined in the
City’s SCMP. The result
was that tenderers could score points
for ‘functionality’ notwithstanding that the content of
the information supplied
by them indicated on its face that they had
materially misdirected themselves on the volume of waste to be
removed.
Another example of the logically inexplicable scoring
by the spreadsheet tool is afforded by its treatment of the
information
included in the tender by Tedcor Women in Waste (Pty)
Ltd. The amount inserted in respect of total monthly costs was
R633 948
in the Tedcor tender, which divided by the number of
lifts involved gave a rate per lift of R15,25, for which Tedcor was
scored
5 points, notwithstanding that the individual amounts given
by it under the items in ‘
Monthly
costs
’
actually totalled R316 974.
One could, of course, reason that the amount of R316 974 related to
monthly cost
per vehicle
,
but in order to do that one has to do the arithmetic by addition and
multiplication of the figures provided.
37
If the evaluation committee could do the arithmetic for
Tedcor, why could it not do so for the applicant? Moreover, even if
one
accepts (as I believe one should) that the R316 974 amount
provided by Tedcor was a monthly cost
per
vehicle
input (it had indicated that it
would be using two vehicles), it is then impossible on the
information provided by it in table
A1 to reconcile the given labour
costs of R30 386 per month with the information provided elsewhere
on Tedcor’s table A1
that each vehicle would be manned by a
driver costed at R5750 per month and four workers each costed at
R3110 per month, which
would give a total of R18190 per month per
vehicle in respect of labour costs.
In its supplementary founding affidavit the applicant
pointed out that the City applied the aggregate figure given by
tenderers
in table A1 under ‘
Total
Monthly Cost
’
mechanically in its
scoring of the ‘
Rate per lift
’
item and irrespective of whether the given ‘
Total
Monthly Cost
’
tallied arithmetically
with the seven individual monthly cost items appearing directly
above ‘total monthly cost’
in the table. The City’s
response in its answering affidavit was to aver that ‘
the
City applied consistent criteria to all tenderers, namely to insert
the “
Total Monthly Cost
”
figure as furnished regardless of whether that was
in fact an aggregate of the seven cost items. It is up to the
tenderer to ensure
that it does not make an arithmetical error and
that the City is in a position to assess its bid adequately
’
.
I agree with the contentions advanced by Mr
Farlam
that this is irrational.
‘
It is a requirement of the
rule of law that the exercise of public power by the Executive and
other functionaries should not be
arbitrary. Decisions must be
rationally related to the purpose for which the power was given,
otherwise they are in effect arbitrary
and inconsistent with this
requirement’.
38
Whether the exercise of
public power passes the rationality test in a given case is a matter
for determination on the objective
standard.
Bearing in mind that the total monthly cost divided by
number of lifts per month gives the rate per lift figure, which is
effectively
the tender price, the exercise undertaken by the City in
scoring for functionality did not test whether the rate per lift was
feasible in relation to the tender, whereas a disconnect between the
actual aggregate of the monthly costs items and the total
monthly
cost should serve as a warning that the tendered rate might not have
been premised on a sound costing analysis and thus
also as an
adverse indicator of the suitability of the proposal. Elsewhere in
its answering papers, the City in fact highlighted
the hazards of
contracting with tenderers whose tenders are not realistically
formulated. The positive scoring of a rate per
lift rate which does
not make sense in the context of the other data provided in the
table by the tenderer just does not bear
scrutiny. The pertinence of
such irrationality in the current context is that it could result in
the arbitrary exclusion from
consideration of tenderers whose
tenders reasonably deserved further evaluation, and the inclusion in
the process of tenderers
whose tenders could be said, objectively,
to be relatively more dubious. The irrationality rendered the entire
functionality
qualification process unfair and detracted from its
ability to properly satisfy the requirements of promoting
competitiveness
and achieving cost-effectiveness.
There is much to be said in the circumstances for
Mr
Newdigate
’
s
argument that the scoring process applied by the City abdicated the
intelligently evaluative function, which the regulatory
framework
demands of a bid evaluation committee, in favour of a rigid
mechanical process which, by reason of its design, gave
out
irrational results and determined matters such as the internal
consistency of tender information arbitrarily. I agree with
the
argument advanced by the applicant’s counsel that there was no
rational reason for the bid evaluation committee, applying
the
scoring method which it used, to score the applicant nil for the
information filled in for its rate per lift. There was no
reason why
the rate per lift given by the applicant could not be verified
arithmetically by adding up the monthly cost items
duly completed by
the applicant and dividing the result by number of lifts involved.
It would be apparent, were this simple exercise
undertaken, that the
rate per lift quoted by the applicant (R11,06) tallied exactly with
the result of the arithmetical exercise
just described.
The reason given on the committee’s behalf for
its failure to do the arithmetic does not bear up. The explanation
was that
by doing the arithmetic the committee might end up
favouring the applicant if it did it correctly because it might well
have
turned out that the applicant, if it had filled the figure in
itself, might have inserted an incorrect figure, and thereby created

an internal inconsistency. In this instance, however, the quoted
rate per lift tallied with the total of the monthly costs quoted

divided by given number of lifts and the issue of a relevant
inconsistency could therefore not arise. The applicable legislation

required the bid evaluation committee to undertake an evaluative
exercise. Its approach in respect of the scoring of the figure
given
by the applicant in respect of rate per lift was entirely
mechanical, and irreconcilable with the evaluative approach it
was
required to apply.
The applicant has thus established that its bid in the
Atlantic tender was excluded from consideration as a consequence of
an
unlawful process by the bid evaluation committee. It does not
follow, however, that its application for the review and setting

aside of the award of the contract to the fourth respondent must in
consequence thereof necessarily be upheld. As the applicant
is the
only one of the 12 unsuccessful tenderers which has challenged
the award of the tender contract, there would be no
point in the
circumstances of this case in setting aside the award if it were to
appear unlikely that upon the evaluation of
the applicant’s
tender its bid would qualify as an acceptable tender. To do so would
be to interfere in a situation where
it did not appear sufficiently
that the applicant had been prejudiced by the irregularity and in
which the point established
by the applicant would essentially be
moot in character, or of only academic interest; cf. e.g.
Jockey Club of South
Africa and Others v Feldman
1942
AD 340
at 359,
Rajah
and Rajah (Pty) Ltd and Others v Ventersdorp Municipality and Others
1961 (4) SA 402
(A) at 407E-408A and
Pepcor Retirement
Fund and Another v Financial Services Board and Another
2003 (6) SA 38
(SCA),
[2003] 3 All
SA 21
at paras 13 and 24
.
Even were mootness not in point in
such a context, there would in any event be the consideration that
judicial review is a discretionary
remedy: ‘a court that is
asked to set aside an invalid administrative act in proceedings for
judicial review has a discretion
whether to grant or to withhold the
remedy. It is that discretion that accords to judicial review its
essential and pivotal role
in administrative law, for it constitutes
the indispensable moderating tool for avoiding or minimizing
injustice when legality
and certainty collide’.
39
Tender cases are notoriously
problematic in the context of judicial review because, as here, by
the time the challenge is heard
and decided the impugned decision
has often been implemented; cf.
Moseme
Road Construction CC and Others v King Civil Engineering Contractors
(Pty) Ltd and Another
2010
(4) SA 359
(SCA),
[2010] 3 All SA 549.
40
In all matters in which
administrative action is judicially reviewed the court is enjoined
in terms of s 8(1) of PAJA to
make any order that is just and
equitable. This involves, as emphasised in
Millennium
Waste
supra,
41
at para 22, ‘a
process of striking a balance between the applicant’s
interests, on the one hand, and the interests
of the respondents, on
the other. It is impermissible for the court to confine itself..…to
the interests of the one side
only’. There is also the public
interest.
A number of factors fall to be taken into consideration
in this respect apart from the applicant’s interest in
enforcing
its right to having its unlawfully excluded tender
considered. In a judicial review context the principle of legality
is not
applied in a vacuum; cf.
Oudekraal
Estates (Pty) Ltd v City of Cape Town and Others
2004 (6) SA 222
(SCA);
[2004] 3 All
SA 1
, especially at para.s 36-38 and 46
.
The fourth respondent has incurred considerable expenditure in the
purchase of a specially adapted heavy duty vehicle for the
purpose
of carrying out the contract, and has already been engaged in doing
the work for several months. It has also taken on
staff for the
purpose and entered into contractual relationships with two small
black economic empowerment partners in respect
of the execution of
aspects of the contract work. Some of the staff laid off by the
applicant when it did not get the tender
have since been re-employed
in the context of the work currently being executed under the aegis
of the fourth respondent. The
service provided under the contract is
an essential one and if the tender award were to be set aside the
fourth respondent would
be under no obligation to continue with the
work in the period of three to four months, at a minimum, that would
be required
before a fresh tender process could be completed.
Although the fourth respondent has indicated its
willingness to continue with the work in the interim in such an
eventuality,
any such continuation would require to be regularised
in terms of an emergency contractual relationship to be entered into
between
itself and the City. (In my view the court is not able, as
suggested by counsel for the City and the fourth respondent, to
direct
the fourth respondent to continue with the contract work
pending the conclusion of a fresh tender process. The power in terms
of s 8 of PAJA to make any order that would be just and
equitable in the circumstances does not extend to making contracts

for the parties.) Moreover, the fourth respondent is an innocent
party in the proceedings, having been in no way complicit in,
or
party to the irregularity that has been identified. The price at
which the contract was awarded to the fourth respondent is
by all
indications a competitive one.
42
Thus, assuming mootness or lack of prejudice is not in
point, the less likely it might appear on the information before the
court
that an evaluation of the of the applicant’s bid would
result in the award properly being made to it rather than to the
fourth respondent, the less reason for the court to exercise its
discretion in favour of making the order that the applicant seeks

setting aside the award. A factor that weighs in this respect is
that the provisions of s 217 of the Constitution and the

derivative legislation described above are intended to operate at
least as much in the public interest as they are in the interest
of
persons tendering to obtain or supply goods and services from or to
organs of state.
The nature of the criticism directed by the applicant
at the scoring of the data section of the functionality test in the
tender
necessitated an investigation of the detail of the
information provided by the applicant and an assessment of the
difference
between its treatment in terms of the use of the
spreadsheet scoring tool used by the City and what should have
followed on an
application of the intelligently evaluative approach
which the applicant contended was required. That investigation
identified
what appeared to me to be anomalies in the data provided
by the applicant, which would, it seemed, have been apparent as
material
had the committee undertaken an evaluative assessment of
the costs breakdown data provided by the applicant in the manner
that
the SCM regulations and the arguments advanced by the
applicant’s counsel would demand.
The number of sessions per vehicle per day given by the
applicant – that is number of trips required between the
serviced
area and the waste disposal site (given as 2.5, which
applicant’s counsel explained was an average when I queried
how half
a trip could be a sensible answer) - is demonstrably merely
the arithmetical product of using one 11 ton capacity vehicle to

shift 560 tons of waste in a month (which according to the tender
conditions is taken to comprise 4.33 five day weeks); alternatively,

the arithmetical product of using a vehicle with a ‘mass/volume
restriction’ (i.e. capacity) of 11 tons to dispose
of 26 tons
in a day . It did not appear to tie in with the applicant’s
business plan, which appeared to imply that three
vehicles would be
employed for the removal of wet waste. And while on the subject of
the three vehicles, there was also a disparity
between the indicated
capacity of the vehicle to be acquired in the schedule to the
applicant’s tender document (schedule
14 ‘
Collection
vehicles available for the contract
’) and in the business
plan submitted with the tender. In the schedule the capacity of the
vehicle to be acquired is indicated
as 15m³, and in the
business plan as 12m³.
Furthermore, the so-called ‘
Structure Data
’,
which required of a tenderer to indicate the number of staff
entailed for the wet waste/conventional component of the
tender
contract, was completed by the applicant showing that there would be
one operational manager, one supervisor, one driver
per vehicle and
four workers per vehicle. Under ‘
Labour Costs
’,
an operational manager was costed at R8000, a supervisor at R6500, a
driver at R5500 and a worker at R3250. A correlation
of the
‘structure data’ with the ‘labour costs’
would arithmetically produce an amount of R33000 in respect
of
labour costs. The applicant, however, provided a figure of R51000 in
respect of labour costs. If two additional vehicles were
used, as
suggested in other parts of the tender documentation, one would
expect at least two additional drivers and eight additional
workers
to be involved. On the given data in respect of costing that would
add R37000 to the anticipated figure of R33000 mentioned
earlier,
giving a total of R70000 per month, rather than the amount of R51000
stated in the tender.
Under ‘unit costs’, the applicant stated an
amount of R32800 in respect of cost of vehicle licensing per year.
In
the context of the breakdown of provisional costs table, the data
given would on its face suggest that the licensing cost related
to a
single vehicle, but read in the context of the tender as a whole it
might well have been intended to relate to the licensing
cost of
three vehicles. Whichever reading is correct, the stated amount is
impossible to square with the amount of R5500 given
by the applicant
under ‘monthly vehicle licensing costs’.
These are not unimportant anomalies because they impact
on the calculation of the total monthly cost. As remarked earlier,
it
was the total monthly cost divided by the given number of monthly
lifts (fixed by the City in the amount of 41564) that resulted
in
the rate per lift. As also mentioned, the rate per lift, or single
unit rate, was the required manner of fixing the tendered
price. The
effect of these anomalies was therefore that the tendered price
appeared to be the product of data which is irreconcilable
because
of the inconsistently formulated information offered in support of
the applicant’s bid. It had the effect of artificially

lowering the ‘rate per lift’. The result was that the
applicant’s tendered price was made to look more competitive

than the required inputs would suggest it should have been.
Furthermore, an evidently understated tender price could also give

rise to reasonable concern by an evaluation committee as to the
feasibility or financial sustainability of the bid.
It also appeared to me when reading the applicant’s
bid document in the analytical manner enjoined by the argument of
the
applicant’s counsel, and in the manner that a bid
evaluation committee would be required by the applicable legislation

and the tender specifications to do, that the apparent incongruence
of the applicant’s quoted rate per lift with the supporting

information contained in its bid might, in terms of Note 5 to part 4
of the tender document (‘The Price Schedule’),
have
rendered the bid non-responsive or, to use the language of the
PPPFA, not ‘acceptable’. Note 5 provided ‘
The
rates submitted on the Pricing Schedule must correspond with the
Breakdown of Costs or the tender will be deemed non responsive.
’
Construed in a manner consistent with the achievement of the
requirements of s 217(1) of the Constitution, the

reconciliation of the rate on the pricing schedule with the
breakdown of costs would have to be assessed in the context of the

tender as a whole, and not just on the basis of the product of the
division of an incongruously computed total monthly costs
figure by
the number of monthly lifts involved as was the case in the
applicant’s bid in the Atlantic tender; see also
the
conditions for tender compliance quoted in para. Error:
Reference source not found, above.
The anomalies and discrepancies referred to were
apparent on a reading of the applicant’s bid document, which
was part of
the evidence before the court. They were not, however,
identified or traversed in the affidavits; nor, consequently, were
they
addressed in the parties’ oral submissions at the
hearing. I became astute to them in the course of preparing
judgment.
I considered that if there were any substance in them they
would be a material consideration in respect of weighing the issue
of prejudice, alternatively, in the exercise of the court’s
discretion in deciding upon an appropriate remedy in the context
of
the exclusion from consideration of the applicant’s bid on the
basis of the irrational scoring of the functionality
test.
I therefore caused a note to be addressed to the
parties in which attention was directed to the anomalies which my
consideration
of the bid document had identified and written
submissions were invited on the following questions (I quote
verbatim from the
note):
Assuming the anomalies or incongruences described above are correctly
identified as such (as to which submissions are invited),
how would
note 5 to part 4 fall to be applied in the circumstances (having
regard to s 2(1) of the PPPFA)?
In particular, does the note fall to be applied on a purely
arithmetical assessment of the information provided in the table, or

does it fall to be applied on an evaluation of the information
provided assessed in the context of a holistic consideration of
the
tenderer’s bid document, as the argument on behalf of the
applicant at the hearing suggested? And does its application
on
either basis carry with it the result that the applicant’s
tender had to be regarded as non responsive?
If the applicant’s tender fell to be regarded as non responsive
by reason of the application of note 5 to part 4, and assuming
that
the court were also to hold that the bid evaluation committee’s
scoring of the breakdown of costs criteria of the functionality

evaluation was irrational, what implications should such a conclusion
hold for the determination of the review?
In the supplementary written argument provided by the
applicant’s counsel in response to the note from the court it
was
submitted that note 5 to part 4 required no more of bidders than
that they correctly transcribe their tendered unit price (or ‘rates

per lift’) from the Breakdown of Provisional Costs tables to
the appropriate part of the price schedule. Thus a bidder
who gave
one rate per lift at the foot of table A1 (say, R10 per lift), but a
different rate in item A of the price schedule
(say, R9 per lift),
would be non-responsive. In support of that argument counsel placed
emphasis on the statement at the foot
of the table requiring the
rate per lift to be transferred to the pricing schedule.
43
The argument proceeded that note 5 thus did not imply
that for a bid to be responsive the rate given in the pricing
schedule had
to be arithmetically consistent with the individual
costing inputs to a bidder’s tendered rate, or with the
narrative information
provided by the bidder in substantiation of
the content of its tender. It was submitted that note 5 prescribed
consistency, but
only in the limited manner just described. It was
contended that table A1 had not been designed with the clarity and
precision
that would be necessary if arithmetical consistency
between all the numbers were required in order for a bid to cross
the basic
hurdle of responsiveness. The contention was illustrated
by the observation that it was, for example, unclear whether the
unit
cost item ‘
Cost of vehicle
licensing per year
’
is a single
licensing cost for all vehicles, or the licensing cost for one
vehicle.
The applicant’s counsel argued that their
construction of the bid document was supported by the fact that the
evaluation
process made separate provision for the evaluation of the
‘
Breakdown of Cost
’
data, under the heading of ‘
Functionality
Scoring
’
in clause 7.6, quoted above.
44
They submitted that the figures inserted by a bidder in
the breakdown of costs tables (for example table A1) accordingly
fell
to be evaluated only as part of the functionality scoring
exercise, and that it would serve no purpose for note 5 of part 4 to

require duplication of the process, but with the possible fatal
consequence of non-responsiveness in the event of an inconsistency,

instead of a scoring as part of the overall assessment of
functionality.
The applicant’s answer to the specific question
put in the court’s note as to whether note 5 to part 4
required a
purely arithmetical assessment, limited to the
information in table A1, or whether it required a more holistic
evaluation of
the content of the bids was therefore that neither
requirement pertained; all that was needed was a correspondence
between the
figure given in the tables for ‘rate per lift’
or ‘rate per 3,5kg dry waste’ in the breakdown of costs

tables and the ‘unit rates’ given in respect of items A,
B1 and B2 in the pricing schedule. The argument concluded
that
because the required correspondence was apparent on the applicant’s
bid document the bid did not fall to be treated
as non-responsive in
terms of note 5.
The City’s counsel construed the reference in
note 5 of part 4 of the tender to the ‘breakdown of costs’
in
table A1 as a reference to the breakdown read as a whole and not
just to the ‘rate per lift’. Accordingly, having regard

to the identified discrepancies, their contention was that had the
evaluation committee not excluded the applicant’s bid
as a
consequence of having scored it below the required minimum of 60
points for functionality, it would, had it detected the

discrepancies, have treated the bid as non-responsive in terms of
note 5. The City’s counsel also pointed out that note
5 speaks
only of a correspondence between the tendered unit rate and the
breakdown of costs and does not enjoin a consideration
of figures or
other information set out elsewhere in a tenderer’s bid.
The fourth respondent’s counsel argued that
although note 5 to part 4 of the tender document could be
interpreted in two
ways, it would make ‘eminent sense’
to construe the note to require the tendered unit rate to correspond
with the
information provided in the breakdown of costs read in the
context of the bid as a whole. In other words it would not be good
enough for a bidder merely to transpose its rate per lift figure if
the latter figure were not the product of, or consistent with
all of
the information supplied by the tenderer in substantiation of its
monthly costs. The fourth respondent’s counsel
contended that
in the applicant’s bid, the unit rate transferred from table
A1 did not correspond with the figures contained
in the body of the
‘
Breakdown of Costs
’
table because at least two of the figures under the
heading ‘
Monthly Costs
’
,
being the key inputs in the formula used to arrive at the rate per
lift, were inconsistent with other parts of the ‘
Breakdown
of Costs
’
table thereby resulting in
the rate itself being irreconcilable with parts of the ‘
Breakdown
of Costs
’
table. The fourth
respondent’s counsel argued that this was the case whether one
adopted a purely arithmetical assessment
of the information provided
in the table (one vehicle), or an evaluation of the information
provided assessed in the context
of a holistic consideration of the
applicant’s bid document (three vehicles
45
).
Their argument concluded therefore that on a proper application of
note 5 to part 4 that the applicant’s bid was not
an
acceptable tender.
It is evident from the tender compliance specifications
quoted in para. Error: Reference source not found, above, that
the
breakdown of costs given by a tenderer was intended to be a
material consideration; not just for the purposes of scoring the

functionality test, but also in the substantive evaluation of the
financial viability of the bid. Note 5 of part 4 of the bid document

falls to be construed with this in mind. The construction of the
note contended for by the applicant does not bear scrutiny,
or
indeed make business sense. The applicant’s construction would
also subvert the substance of the evaluative obligation
imposed on
the bid evaluation committee in terms of the SCM regulations; it
would detract from, rather than promote, the achievement
of the
objects of s 217 of the Constitution. In the circumstances the
construction contended for by the City is in substance
to be
preferred. I would not, however, accept the literalist limitation
which the City ascribed to the note. In my view, consistently
with
general principle, the bid document falls to be read as a whole, and
the content of the ‘breakdown of costs’
interpreted
contextually, rather than in isolation. Thus were it apparent from
the document read as a whole that the reference
to a single vehicle
being employed on the contract was a mistake and the number of
vehicles actually to be used was otherwise
clearly evident from the
content of other parts of the document, the mistake would be
appropriately accommodated in the evaluation
of the breakdown of
costs. One would, of course, expect in such a case that the monthly
costs would reflect the cost of the actual
number of vehicles to be
used.
The applicant’s counsel argued that there were in
fact no anomalies or inconsistencies in the information provided in
the
applicant’s bid. In this regard they qualified the
arguments put forward in response to the court’s note by
suggesting
that it was ‘difficult to deal with that issue
conclusively on the papers, as the issue was never raised by the
City, or
by [the fourth respondent], and thus [the applicant] was
never called upon to justify its monthly cost amounts in its
affidavits’.
In my view there is a twofold answer to the
qualification raised on the applicant’s behalf. The first is
that it is was
for the applicant to show the materiality of the
exclusion of its tender from consideration by the City - in other
words, that
its bid had been an ‘acceptable tender’
within the meaning of the PPPFA, and that the applicant had
therefore been
prejudiced by its exclusion. Secondly, the tender
document is a jural document which falls to be construed according
to the established
rules; cf.
KPMG
Chartered Accountants (SA) v Securefin Limited and another
2009 (4) SA 399
(SCA),
[2009] 2 All SA 523
, at
para.s 39-40. The construction of the bid documentation is a
matter of law. Evidence to determine its meaning is neither

required, nor permissible.
46
That the issue was not raised by the City is
contextually not surprising. The City’s approach to the review
application
was to seek to justify the exclusion of the tender on
the ground that it had failed to muster the minimum score required
in the
functionality test to qualify for consideration. The City
thus gave no consideration to how the bid should have been construed

or evaluated by the bid evaluation committee had it properly
considered the bid. That does not serve as a bar to the court’s

consideration of the document. Indeed, as observed earlier, the
contentions advanced in support of the applicant’s case
in
fact enjoined a consideration of the document.
Addressing the substance of the point regarding the
apparent inconsistencies in the applicant’s bid, the
applicant’s
counsel argued that the anomalies were apparent
rather than real and contended that this could be established with
reference
to the bid as a whole. With regard to the number of
vehicles to be used, they submitted that the applicant had
‘evidently
proceeded on the basis that two vehicles would be
engaged full-time on conventional door-to-door collection, and that
(as the
business plan indicates) the third vehicle to be purchased
would be a back-up vehicle, running when one of the other vehicles
could not. The costs to [the applicant] of providing the relevant
service, in relation to vehicle licensing and labour, were
determined accordingly’.
The argument proceeded: ‘The monthly cost figures
for labour and licensing thus do reconcile with the other relevant
information
in the table. The calculations are roughly as follows:
The monthly labour cost figure comprises, on that scenario, the
monthly
costs of one operational manager (R8 000), one
supervisor (R6 500), two drivers (2 x R5 500 = R11 000)
and
eight workers (8 x R3 250 = R26 000). The total is
R51 500, which when rounded down produces the figure of R51 000

inserted in table A1. The cost of vehicle licensing per year was
stated to be R32 800. For two vehicles, the amount is R65 600.

Spread over twelve months, the amount is R5 467. Rounded up,
that amount reaches the tendered amount of R5 500’.
In my judgment the argument does not withstand scrutiny
for a number of reasons. In the relevant part of the ‘business
plan’
submitted as part of its tender, the applicant stated:
‘
We would buy 1 x 12m³ compactor for
wet refuse collection as a back up to our two compactor trucks and
also to address a problem
we noticed while we were doing this
contract that trade need to serviced separately and early in the
morning because they generate
a lot of wet waste which leaks water
with unpleasant smell as result residents in households complains a
lot about this. It will
also address at lot of other problems created
by landfill closing times and it will reduce overtime cost which is
almost a daily
challenge in the area. It will be used in both Camps
Bay and Hout Bay but it is mostly needed for Camps Bay small streets
and cul-de-sac
roads at the top e.g. Kloof Street. We will continue
to use our two trucks for wet collection and hired truck until we
receive
our new truck in three month time.
’
It would appear from this that the third vehicle would
not be only ‘a back-up’, in the sense of one to be used
only
when one of the two vehicles already owned by the applicant was
out of action. There were to be three vehicles actually employed.
The
one that was to be acquired would be used to service areas in Camps
Bay and Hout Bay with special requirements, hence the reference,
for
example, to ‘
Camps Bay small streets and cul-de-sac roads at
the top e.g. Kloof Street
’. It is evident that it was
because of the recognised need, based on the applicant’s
previous experience, for a third
vehicle that the applicant indicated
that it would hire a vehicle pending the expected delivery of the
additional vehicle in three
months’ time.
The tender specifications provided for areas in both
Camps Bay and Hout Bay to be serviced on Mondays and Tuesdays and
other areas
in Hout Bay on Wednesdays, Thursdays and Fridays. The
specified number of daily lifts on Mondays and Tuesdays (2235 and
2796,
respectively) was materially higher than that specified for
Thursdays and Fridays (1102 and 1280, respectively). The statement

in the business plan that the acquisition and employment of the
third vehicle would ‘
also address at
(sic)
lot of other
problems created by landfill closing times and it will reduce
overtime cost which is almost a daily challenge in
the area
’
affords confirmation of the daily constraints and
challenges in the execution of the contract work which the
introduction of a
third vehicle was,
ex facie
the bid, intended to address. It is impossible to
accept that the introduction of a smaller third vehicle (whether it
be 12m³or
15m³) would reduce overtime costs if it were to
serve only as a stand-in, when needed, for a larger capacity (19m³)
one.
Moreover, on any approach, and even if, contrary to the
tenor of the ‘business plan’, the third vehicle were
indeed
intended to fulfil a purely ‘back-up’ function,
in the sense contended by the applicant’s counsel, it would
still have to be licensed. In other words, for the applicant’s
costing to read sensibly it would need to make provision
for the
licensing of three, not two, vehicles.
In the result I have concluded that were the
applicant’s bid to have been evaluated by the bid evaluation
committee, the
committee would have been bound, in terms of note 5
to part 4 of the bid document, to treat it as ‘non-responsive’.

Weighed together with the factors mentioned earlier, this leaves me
in no doubt that it would not be appropriate to set aside
the tender
award to the fourth respondent at the applicant’s instance.
Before moving on to deal with the application for the
review of the Helderberg tender, it is appropriate to deal briefly
with
the point raised in the applicant’s supplementary
argument about inconsistencies in the successful fourth respondent’s

bid, despite the fact that nothing had been made of these in the
applicant’s papers. It was evident that the salary of
a
supervisor in the indicated sum of R12 500 per month had been
omitted from the fourth respondent’s ‘
labour
costs
’
item under the information
supplied in respect of ‘Monthly Costs’ in table A1 of
its bid document. In my view nothing
turns on this. It would seem to
follow that the supervisor’s salary had been included in the
provision for ‘overheads’
or ‘miscellaneous’.
Any doubts that the bid evaluation committee might have entertained
in this regard could quite
legitimately have been addressed by an
appropriately formulated enquiry for clarification to the bidder.
47
The position is quite distinguishable from that of the
applicant’s bid, in which, on any approach, the indicated
costs do
not make sense because of the contradictory indications in
the bid as to the number of vehicles to be employed in the execution

of the contract. The applicant also pointed to a discrepancy in
table A1 of the fourth respondent’s bid concerning vehicle

licensing costs. The fourth respondent indicated that the annual
licensing cost per vehicle to be used in the contract would
be
R18 033.54. As the applicant’s counsel indicated in their
supplementary written argument, taking into account that
the fourth
respondent had indicated that it would use 2 vehicles to execute the
contract work, one would expect the amount in
respect of the
‘
Vehicle licensing costs
’
item under the ‘
Monthly
Costs
’
section of the table to be
R3 005.59.
48
The amount actually inserted in respect of the item
under ‘
Monthly Costs
’
was much higher: R8 197.57. In this regard also I
do not consider the discrepancy to be material. Unlike the position
with
respect of the applicant’s bid, the discrepancy did not
highlight an under-estimation of the tendered unit price. As touched

on earlier, in the course of dealing with the proper construction of
note 5 to part 4 of the tender document, the point is not
so much
the mere existence of discrepancies, but their effect on the tender,
evaluated in the context of a critical analysis
of its content read
as a whole.
The Helderberg Tender
The tenderers’ bids, as is usually the case, were
formulated in the form of offers open for acceptance by the City as
the
intending service procurer. Part 2 of the bid document
incorporated the so-called ‘Tender Offer’. It provided,
amongst
other matters, that the tenderer tendered ‘
to
supply all or any of the goods and/or render any of the services
described in the attached document to the City of Cape Town
(“CoCT”)
on terms and conditions stipulated in this tender document and in
accordance with the Specifications stipulated
in this tender
document at the prices reflected in the Form of Offer and
Acceptance/Price Schedule
’
. Part 3 of
the document, entitled ‘Form of Offer and Acceptance’
was formulated in such a manner as to enable a written
contract on
the terms and conditions of the bid to come into being upon the
counter-signature thereof by an authorised representative
of the
City. According to the tenor of part 3, by its signature of the Form
of Offer and Acceptance the City would signify its
acceptance of the
tenderer’s offer. Part 2 of the tender document reflected that
the tenderer’s offer would remain
‘valid’ for a
period of 120 days from the closing date of the tender. It is a
requirement of the City’s SCMP
that the period for which a bid
is to remain ‘valid and binding’ must be indicated in
the bid document.
49
The City had not determined to whom to award the tender
contract within the 120 day period for which the applicant’s
tender
was open for acceptance. However, consistently with clause
140 of the SCMP, two weeks before the expiry of the validity of the

applicant’s offer, the City had invited the applicant to
extend the period during which its offer was open for acceptance.

The managing member of the applicant averred that he had no
recollection of having received such an invitation. The documentary

evidence put in by the City supports its allegation that the
invitation was indeed sent, and on the basis of the
Plascon-Evans
rule
50
I am bound to accept its allegations in this regard for
the purpose of determining the application. The applicant, differing
in
this respect from its conduct in regard to its bid in the
Atlantic tender, did not extend its offer in the Helderberg tender.
In the result the applicant’s bid had lapsed before the City
had awarded the tender contract and by the time that the award
was
made was no longer open for acceptance.
51
In the circumstances I consider that it is irrelevant
that the bid evaluation committee had rejected the bid before it had
lapsed.
The bid adjudication committee could notionally have
overruled the evaluation committee’s recommendation and the
City’s
accounting officer could also notionally have required
the reconsideration of any recommendation by the adjudication
committee,
or indeed of the evaluation committee.
52
It was necessary in order for the applicant to keep its
legal interest in the award of the tender alive to have extended the
period
of the validity of its offer. In the context of it having
allowed its offer to lapse, the applicant’s complaint against
the treatment of its tender by the evaluation committee is moot. The
terms of the offer incorporated the provisions of the SCMP
by
reference. Clause 141 of the SCMP provided that tenderers who
failed to respond positively in writing and before the
expiry of the
original validity period to a written request to extend the validity
of their bids would not be considered further
in the bid evaluation
process. Inasmuch as the applicant sought to make something of the
conduct of the City in acting as if
the applicant’s bid
continued to be regarded as valid, I do not think this can avail it.
It would have been unfair to the
other tenderers for the City to
have deviated from the prescriptions of the SCMP in favour of the
applicant. The City therefore,
for that reason too, could not
competently have awarded the contract to the applicant after the
validity of its bid had expired.
In the circumstances the application for the review and
setting aside of the award of the Helderberg tender cannot succeed.
It
is therefore unnecessary to determine the merits of the
applicant’s complaint in that matter, or the points
in
limine
raised by the City and the fifth respondent predicated on
the failure by the applicant to avail of an internal appeal
(ostensibly
in terms of s 62 of the Systems Act) and the
alleged unreasonable delay by the applicant to institute the review
proceedings.
Orders
The review applications have been unsuccessful.
However, by reason of the fact that the applicant did establish that
the disqualification
of its bid in respect of the Atlantic tender
was unlawful I am disinclined to make a costs order in favour of the
City against
the applicant in respect of that leg of the
application. For the assistance of the taxing master I estimate that
about 60 percent
of the hearing was devoted to the Atlantic tender
part of the case. Otherwise there is no reason why costs should not
follow
the result.
The following orders are made:
It is declared that the disqualification of the
applicant’s bid from consideration in respect of the Atlantic
tender on
the basis of the bid evaluation committee’s scoring
of the functionality eligibility test was unlawful.
Notwithstanding the declaration made in terms of
paragraph 1, the applications for the review and setting aside of
the awards
of the tender contracts in the Atlantic and Helderberg
tenders are dismissed.
Save that in respect of the application for the review
and setting aside of the Atlantic tender there shall be no order as
to
costs as between the applicant and the first respondent, the
applicant shall otherwise be liable for the costs of suit of the
first, fourth and fifth respondents, including the costs of two
counsel where such were employed.
A.G. BINNS-WARD
Judge of the High Court
1
The
second and third respondents are functionaries of the first
respondent, whose only involvement in the matters germane to the

case was in the discharge of their responsibilities within the
City’s administration. In my view it was unnecessary for
them
to have been individually cited as respondent parties in these
proceedings. They played no separate role from the City in
the
proceedings.
2
217
Procurement
(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.
3
Section
2(1)(b)(i) of the PPPFA.
4
In
terms of s 2(1)(d) of the PPPFA.
5
Section
2(1)(f) of the PPPFA.
6
See
the definition of ‘acceptable tender’ in s 1 of the
PPPFA. .
7
Chairperson,
Standing Tender Committee v JFE Sapela Electronics (Pty) Ltd
2008 (2) SA 638
(SCA),
[2005] 4 All SA 487
, at 644B-E.
8
Millennium
Waste Management (Pty) Ltd v Chairperson, Tender Board: Limpopo
Province
2008 (2) SA 481
(SCA);
2008 (5) BCLR 508
;
[2008] 2 All
SA 145
at para 18-19.
9
See
s 112 of the MFMA. The pertinent regulations, being the
Municipal Supply Chain Management Regulations, were
published under
General Notice 868 in GG 27636, dated 30 May 2005 (‘the SCM
regulations’). The SCM regulations prescribe
the framework
with which a municipality’s supply chain management policy is
required to comply.
10
The
supply chain management policy (‘SCMP’) in place at the
relevant time was that approved by the City’s municipal

council on 27 March 2008, as amended by the council on
23 February 2011. That policy has subsequently been replaced
by
a policy adopted on 8 December 2011. All references to the SCMP
in this judgment are to the first mentioned policy.
11
See
reg. 12(1)(d) of the SCM regulations
12
See
also
South African Post Office Ltd v Chairperson, Western Cape
Provincial Tender Board, and others
2001 (2) SA 675
(C) at
685I-J.
13
See
reg. 26 of the SCM regulations.
14
See
reg 26 of the SCM regulations.
15
See
reg. 28(1)(a)(i) of the SCM regulations.
16
See
reg. 28(1)(b) of the SCM regulations.
17
See
reg. 28(2)(a) of the SCM regulations.
18
Regulation
29(5)
provides:
(5)(a)
If a bid adjudication committee decides to award a bid other than
the one recommended by the bid evaluation committee,
the bid
adjudication committee must prior to awarding the bid-
(i) check in respect of the preferred bidder whether that
bidder's municipal rates and taxes and municipal service charges are
not in arrears; and
(ii) notify the accounting officer.
(b)
The accounting officer may-
(i) after due consideration of the reasons for the deviation,
ratify or reject the decision of the bid adjudication committee

referred to in paragraph (a); and
(ii)
if the decision of the bid adjudication committee is rejected, refer
the decision of the adjudication committee back to that
committee
for reconsideration.
19
See
s 114
of the MFMA.
20
See
reg. 21 of the SCM regulations.
21
See
para. Error: Reference source not found, above.
22
See
cl. 1.27 of the SCMP.
23
See
clause 420 of the SCMP.
24
See
s 6(2)(h)
of PAJA 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
at para. 44.
25
See
note 26 for an explanation of ‘conventional or wet
collection’.
26
Tenderers
were invited to complete three such tables, each calling for similar
information. Table A1 was in respect of what was
termed
‘conventional or wet collection’ (‘conventional
collection’ referred to the collection of waste
deposited
indiscriminately in wheelie bins, whereas ‘wet collection’
related to non-recyclable and organic waste
deposited in wheelie
bins - dry waste being sorted and collected separately), table B1
was in respect of ‘dry collection’
(i.e. collection of
recyclable material) in clear plastic bags and table B2 in respect
of ‘dry collection’ in separate
wheelie bins to be
provided for that purpose by the City.
27
The
applicant was awarded 30 out of 40 for ‘vehicles and
resources’, 7.5 out of 10 for ‘business plan’
and
8 out of 10 for ‘experience’.
28
41
564 lifts.
29
An
extrapolation of the information in note 6 to schedule 4 of the bid
document allowed tenderers to calculate the number of working
days
in a month as 5 x 4.33; thus 1919 lifts per day is the product of
41564 lifts per month divided by (5 x 4.33).
30
The
fourth respondent’s total number of lifts per day was thus
within a margin of less than one of the number indicated
by the
applicant.
31
The
absolutely correct result of the arithmetical calculation would have
been 13,47 kg, but in the real world one would not expect
the
estimated average weight of waste per wheelie bin to be given with
such miniscule finiteness. Indeed, the applicant would
have
qualified to have its kg’s/lift estimate accepted as a valid
figure for scoring purposes if the figure given had been
within a
10% tolerance either side of 13,5 kg; in other words a figure of
anywhere between 13kg and 14 kg would have been acceptable
(see
para. 73 of the affidavit,
jurat
17 May 2012, of
PT
Magubane
, the chairperson of the bid evaluation committee).
32
See
para. [13], above.
33
See
para. [13], above.
34
See
para. [13], above.
35
Note 12.
36
That
the bid evaluation committee did not, when it chose to, close its
eyes to the significance of estimates given by tenderers
who were
the current service providers is demonstrated by the facts of the
Helderberg tender. In that matter the applicant’s
tender was
regarded as non-responsive - despite the fact that in that case the
applicant had completed both the ‘
Kg’s/lift
’
and ‘
Tons/month
’ items - because its ‘
Kg’s/lift
’
estimate was markedly less than that estimated by the then current
supplier in the latter’s competing tender. The
applicant’s
business plan submitted as part of its tender in respect of the
Atlantic tender reported that the applicant
had been collecting 800
tons per month and made it apparent that its estimate of 560 tons in
its tender for a new contract was
premised on the expectation that
that quantity of wet waste might be expected to decline as the
amount of recycled (or ‘dry’)
waste increased.
37
An
analysis of this aspect of the Tedcor tender highlights another
unsatisfactory and confusing feature of the compilation of
table A1
in the pro forma tender document compiled by the City. The table
invites tenderers to insert the information on the
basis of ‘
unit
cost based on the preferred vehicle type
’, which would
suggest that the words ‘per vehicle’ in some of the
questions were tautologous. The rate per
lift, however, can only be
sensibly reconciled with the information in the ‘
Breakdown
of costs
’ if it is an amount equal to the product of the
aggregate of the monthly costs, irrespective of the number of
vehicles
involved, divided by the number of monthly lifts.
38
Pharmaceutical
Manufacturers Association of SA and another: In re Ex parte
President of the Republic of South Africa and others
[2000] ZACC 1
;
2000 (2) SA
674
(CC);
2000 (3) BCLR 241
at para. 85. See also
Affordable
Medicines Trust and Others v Minister of Health and Others
[2005] ZACC 3
;
2006
(3) SA 247
(CC);
2005 (6) BCLR 529
, at paras 74 – 75)
39
Oudekraal
Estates (Pty) Ltd v City of Cape Town and Others
2004 (6) SA 222
(SCA);
[2004] 3 All SA 1
, at para. 36
40
See
especially para.s 11-21.
41
Note
8.
42
An
important feature in the current matter which distinguishes it from
the
Millennium Waste
case is that the fourth respondent’s
price is lower than that tendered by the applicant. In
Millennium
Waste
the successful tenderer’s price was vastly higher
than that offered in the bid of the applicant for judicial review.
This
was evidently considered by the SCA (see para. 29 of the
judgment) to afford a powerful reason in the public interest to
require the evaluation of the applicant’s unlawfully excluded
tender notwithstanding that it was not evident to the court
whether
or not the tender had been an ‘acceptable tender’.
43
See
the table, which is set out in para. Error: Reference source
not found, above.
44
At
para. .
45
As
will become apparent, the applicant contended that the intended use
of
two
vehicles was in fact the relevant information to be
extracted upon a proper reading of its bid document. See para.
and
following, below.
46
The
position is, in my view, contextually quite distinguishable from
that which was the subject of the observation made in
Minister
of Land Affairs and Agriculture and others v D&F Wevell Trust
and others
2008 (2) SA 184
(SCA) at
para. 43 that as a matter of principle ‘
the
issues and averments in support of the parties' cases should appear
clearly
[from the affidavits]
.
A party cannot be expected to trawl through lengthy annexures to the
opponent's affidavit and to speculate on the possible relevance
of
facts therein contained. Trial by ambush cannot be permitted
’
.
That principle, as I understand it, pertains where the content of
the documents on which counsel seek to rely in argument at
the
hearing - despite the passages concerned not having been identified
in the affidavits - involve matters of evidence,
which could
have been addressed in further evidence by the parties had the
arguments that counsel seek to advance been adumbrated
in the
relevant affidavits.
47
Clause
6.7 of the tender document provided that ‘
The
CoCT may, after the closing date, request additional information or
clarification of tenders in writing.
’
48
R18 033.54
x 2 / 2.
49
See
clause 138 of the SCMP.
50
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A),
at 634E – 635C.
51
It
is unnecessary to consider what the position might have been had the
City nevertheless purported to accept the offer after
the expiry of
the 120 day period; cf.
Manna v Lotter and another
2007
(4) SA 315 (C). The provisions of clause 2.2 of
part 2
of the
tender bid in any event make it evident that the stipulation that
the offer was open for acceptance for 120 days was incorporated
in
the form of an agreement between the tenderer and the City to that
effect. It is plain that the determination of the period
of validity
of the offer was not exclusively for the benefit of the offeror and
amenable to waiver by the applicant.
52
See
SCM
regulation 29(6).