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[2015] ZAWCHC 9
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Stiegelmeyer Africa (Pty) Ltd v National Treasury of South Africa and Others (2275/2014) [2015] ZAWCHC 9; [2015] 2 All SA 110 (WCC) (9 February 2015)
THE
REPUBLIC OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
no: 2275/2014
DATE:
09 FEBRUARY 2015
In
the matter between:
STIEGELMEYER
AFRICA (PTY)
LTD
..................................................................................
Applicant
And
THE
NATIONAL TREASURY OF SOUTH
AFRICA
......................................................
1
st
Respondent
THE
CHAIRPERSON OF THE SUPPLY MANAGEMENT BID
ADJUDICATION
COMMITTEE OF THE NATIONAL TREASURY
.............................
2
nd
Respondent
HOSPI-FURN
(PTY)
LTD
.............................................................................................
3
rd
Respondent
ARJO
HUNTELIGH SOUTH AFRICA (PTY)
LTD
.......................................................
4
th
Respondent
HOSPITAL
EQUIPMENT MANUFACTURERS (PTY)
LTD
..........................................
5
th
Respondent
Coram
:
BOZALEK J
Heard:
13 NOVEMBER 2014
Delivered:
9 FEBRUARY 2015
JUDGMENT
BOZALEK
J:
[1]
This is an application in which an
unsuccessful bidder for a state tender seeks to review part of the
award made and in which the
principal dispute relates to the scoring
system adopted in evaluating the competing bids.
THE
PARTIES
[2]
The applicant, Stiegelmeyer Africa (Pty)
Ltd (‘
Stiegelmeyer’
),
is a local subsidiary of a German multinational corporation
specialising in the manufacture and distribution of hospital beds,
patient trolleys and similar equipment used in the public and private
health care markets. It was an unsuccessful bidder in a hospital
tender (RT24-2013ME) which was first published in April 2013. The
tender was for the conclusion of so-called transversal term contracts
relating to the procurement of goods for more than one government or
provincial department and which invited bids on a per item
or unit
basis. The successful bidders would thereafter contract with those
government or provincial departments which opted to
participate in
the transversal contract and which required the hospital, ward and
theatre furniture and equipment forming part
of the tender. The
duration of the tender was from 1 October 2013 to 30 September 2015.
[3]
The tender was advertised, administered and
awarded by the first respondent, the National Treasury (‘
the
Treasury
’).
The chairperson of the Treasury’s Bid Adjudication Committee
(‘
the BAC’
)
was cited as second respondent and the three successful bidders
involved, Hospi-Furn (Pty) Ltd (‘
Hospi-Furn’
),
Arjo Huntleigh South Africa (Pty) Ltd (‘
Arjo
Huntleigh’
) and Hospital
Equipment Manufacturers (Pty) Ltd (‘
HEM’
),
were cited as third, fourth and fifth respondents respectively.
[4]
The relief initially sought by Stiegelmeyer
was a declarator that the award of certain disputed items to
Hospi-Furn, Arjo Huntleigh
and HEM was invalid and reviewing and
setting aside the decisions to that extent. The items were a
particular hospital bed (item
RT24-02-008ME), which was awarded to
Hospi-Furn, as well as the mattress (item RT24-02-014ME) and mattress
cover (item RT24-02-015ME)
for the bed, which were awarded jointly to
Hospi-Furn, Arjo Huntleigh and HEM. The further relief sought by
Stiegelmeyer was an
order awarding the tenders for the hospital bed
to itself, rather than Hospi-Furn, and the mattress and mattress
cover items to
itself, Arjo Huntleigh and HEM, thereby excluding
Hospi-Furn. In the alternative, Stiegelmeyer sought an order
directing the BAC
to reconsider the award of the disputed items
having regard to the recommendation of the Bid Evaluation Committee
(‘
the BEC
’)
concerning the scoring system applicable to the bids.
BACKGROUND
[5]
The tender was published on 16 April 2013
and its conditions provided that the 90/10 preference point system
would be applicable
to all bidders. In terms thereof points would be
awarded to bidders on the basis of their bid price (a maximum of 90
points) and
the B-BBEEE status level of the bidder i.e. a maximum of
10 points. The bidder obtaining the highest number of points would be
awarded the contract.
[6]
The tender in question and all bids
submitted thereunder were made subject to the ‘
Government
Procurement: General Conditions of Contract’
of July 2010 (‘
the GCC’
)
as well as to the ‘
Special
Conditions of Contract RT24-2013ME: Supply and Delivery of Hospital
Ward and Theatre Furniture and Ward Requirements to
the State for the
period 1 October 2013 to 30 September 2015’
(‘
the SCC’
).
Both the bid documentation and the GCC specify that where the SCC is
in conflict with the GCC, the SCC will prevail. The SCC
reserved to
the Treasury the right to award contracts to more than one contractor
for the same item. Significantly, they also provided,
in clause 16.4,
that items grouped as a series in specification would be regarded as
a group series and would be evaluated and
awarded accordingly.
[7]
The results of the tender were published in
a contract circular by the Treasury on 30 August 2013 from which it
appeared that Hospi-Furn
was the successful bidder in respect of the
bed whilst it, Arjo Huntleigh and HEM were declared the successful
bidders in respect
of the mattress and mattress cover items. The
joint award of these two items also to Arjo Huntleigh and HEM were
made on the basis
that they had successfully bid for other beds with
which the mattress and mattress covers were compatible.
[8]
That same day Stiegelmeyer addressed
correspondence to the Treasury in respect of the outcome of the
tender process, at that stage
focussing on its B-BBEEE status.
Although it had been verified and evaluated as a level 4 contributor
for the purposes of the tender,
a day after submitting its bid it had
been verified by its auditor as a level 3 contributor and, on this
basis, would have been
awarded eight (8) rather than five (5) points
for its B-BBEEE status. Stiegelmeyer sought a meeting with the
Treasury with a view
to its bid being evaluated on the more
favourable basis. On 20 September 2013 the Treasury responded by
pointing out that the SCC
precluded the evaluation of Stiegelmeyer’s
bid on anything but its B-BBEEE status at the time it submitted its
bid. However,
the Treasury also sought to explain the basis upon
which Stiegelmeyer’s bid for the three (3) items had been
unsuccessful,
in the following terms:
‘
The
bid price offered by your company for item RT24-02-008ME (the bed) is
higher than the awarded price. Also note that the following
items
were grouped as a series and have been evaluated and awarded as such
RT24-02-008ME, RT24-02-014ME, RT24-02-015ME. Your company
did not
score the highest points on the
series
award.’
[emphasis added]
[9]
It is necessary to note, however, that the
bid documents did not appear to indicate, either generally or
specifically, that the
three items would be grouped, scored or
considered as a series or group. What they did stipulate was that the
mattress and its
cover had to be compatible with a number of beds
including the bed in dispute.
[10]
Annexure A to the Treasury’s letter,
entitled
‘
Reasons
for non-award’
,
was a table purporting to explain, in terms of price, why
Stiegelmeyer had not been awarded the tender for the three items. It
set out the awarded price in respect of the three items as well as
Stiegelmeyer’s price, all under the heading ‘
Items
grouped as a series’
.
However, although it correctly reflected Stiegelmeyer’s bid
prices for the three items, the prices attributed to those items
in
respect of the successful bidder did not tally with those of
Hospi-Furn as reflected in the contract circular. It incorrectly
used
Arjo Huntleigh’s prices as a group as those of the successful
bidder in respect of the three items rather than those
of
Hospi-Furn’s. In fact, Arjo Huntleigh’s bid for the bed
had been unresponsive to the tender specifications and thus
could not
be considered.
[11]
Stiegelmeyer then sought clarification as
to why it had not been awarded the series of three items and, in
particular, the bed since,
when its prices for the three items were
taken together it scored the highest number of points, marginally
more than the points
scored by Hospi-Furn. On this basis, therefore,
it should have been the successful bidder. It should also be
mentioned that when
regard is had to the relevant annexure in the
contract circular and the unresponsive bids are eliminated,
Hospi-Furn scored the
highest points in respect of the bed item
considered alone i.e. as not part of a series.
[12]
Stiegelmeyer received no substantive
response to its queries from the Treasury other than several
indications that an appeal process
was ‘
ongoing’
and that the BAC was reviewing the matter. The BAC did in fact meet
to consider the award in respect of the disputed items on 3
October
and 21 November 2013. Ultimately, however, it took no decision
reviewing or correcting its award in respect of the disputed
items.
[13]
Furthermore, no formal appeal or review
process was ever underway or even available. What had transpired was
that the chairperson
of the BEC, Ms B Ngalo, had reconsidered the
matter in the light of Stiegelmeyer’s submissions and come to
the view that
it had indeed incorrectly not been awarded the bid in
respect of the three items. She addressed two separate memoranda to
the BAC.
In the first, which served before the BAC at its 3 October
2013 meeting, Ms Ngalo recommended that approval be granted for the
correction of the award of the three disputed items ‘
to
be a multiple award and include(s) Stiegelmeyer as the second company
complying with the series and specification requirements’
.
This recommendation was made on the basis that the series ‘
had
been’
awarded to Hospi-Furn and
‘
erroneously excluded the award of
Stiegelmeyer …
with
a pass over reason that the
bidder
is not recommended on the main item’
.
The memorandum recorded further that Stiegelmeyer had in fact scored
the highest total points for the series.
[14]
At its meeting on 3 October 2013 the BAC
debated the issue briefly but did not approve or adopt the
recommendation in question.
A perusal of the transcript of this
meeting indicates that the BAC did not take issue with the reasoning
underlying the recommendation
contained in the memorandum i.e. it
appeared to accept that the award had been incorrect, but was wary of
correcting the award
without first obtaining Hospi-Furn’s
consent to taking such a step. The suggestion which came from the BAC
was that Hospi-Furn
should be approached to advise it of the error
and to negotiate the cancellation of the award made to it in order to
clear the
way to making the award to Stiegelmeyer.
[15]
The BAC met again on 21 November 2013 when
a further memorandum from Ms Ngalo served before it. The proclaimed
purpose of the memorandum
was to obtain the BAC’s approval to
correct the award in respect of the three items which, it stated, had
been ‘
erroneously awarded to
Hospi-Furn (Pty) Ltd as a group for compatibility purposes’
.
It recorded that clause 16.4 of the SCC made provision for a group
award and that, after receiving an inquiry from Stiegelmeyer,
the
Treasury had reviewed the matter and realised that an error had
occurred in that ‘
Stiegelmeyer …
should not have been passed over and the items (had) been erroneously
awarded to Hospi-Furn (Pty) Ltd which
did not score the highest total
points for the group’
. In other
words it adopted Stiegelmeyer’s reasoning for the correction of
the award.
[16]
The memorandum proceeded that a meeting had
been convened between Hospi-Furn and the Treasury’s legal
department to discuss
its intention of ‘
re-awarding’
the items to Stiegelmeyer. However, Hospi-Furn had not responded
despite having been made aware of the oversight and the intention
to
correct the award which had also been conveyed to it in a letter. The
memorandum recorded that the BEC regretted the error and
recommended
that approval be granted to correcting the award of the three items
to Hospi-Furn and awarding them to Stiegelmeyer
as the bidder which
had scored the highest total points for the group.
[17]
In the result, the BAC did not accept the
recommendation at its meeting on 21 November 2013. Instead, it
decided that the Treasury
should again communicate in writing with
Hospi-Furn to remind it to respond and then take action. That letter,
the BEC decided,
should be drafted in consultation with the
Treasury’s legal department and indicate that if Hospi-Furn did
not respond within
a certain period they would be taken to have
acceded to the contents of the letter. All this is to be divined from
the minutes
and transcript of the meeting which also reflect that the
BAC was once again preoccupied with how to correct the award without
making a further error and facing litigation either from Hospi-Furn
or from Stiegelmeyer.
[18]
It is not clear what came of any further
correspondence but ultimately the BAC never ‘
corrected’
its award. In the result Stiegelmeyer approached its attorneys and
these review proceedings were commenced in February 2014.
THE APPLICANT’S
CASE
[19]
In essence Stiegelmeyer’s case is
that, pursuant to a recommendation by the BEC, the BAC had intended
to award the disputed
items grouped as a series but had erroneously
made the award to Hospi-Furn in respect of the bed and to Hospi-Furn,
HEM and Arjo
Huntleigh in respect of the mattress and the mattress
cover. Its case is further that had the bids in respect of three
items been
correctly scored i.e. as a group, it had scored the
highest total points and should have been awarded the tender in
respect of
the bed, the mattress and mattress cover, albeit jointly
with HEM and Arjo Huntleigh in respect of the latter two items.
[20]
In support of its case Stiegelmeyer relied
not only on the two memoranda referred to above but on the BEC’s
original memorandum
of 16 August containing its recommendation for
the award of the tender which was approved by the BAC on 22 August
2013 and which,
it was submitted, constituted the basis upon which
the BAC had made its award. That memorandum recommended, in
accordance with
clause 16.4 of the SCC, that the three disputed items
be awarded ‘
in groups’
…
‘
for compatibility purposes’
and the formal minute of the BAC’s meeting on 22 August 2013
reflected that the BEC’s memorandum in relation to that
tender
had been ‘
approved’
.
In other words, it was contended, there had been no deviation from
the BEC’s recommendation. The transcript of that meeting
confirmed that, for all intents and purposes, the recommendation of
the BEC had been accepted by the BAC without demur and the
award was
seemingly made in line with such recommendation.
[21]
The recommendation by the BEC referred to
an annexure K which dealt with group awards and which confirms that
the three items i.e.
the bed, the mattress and the mattress cover,
were indeed scored on a group basis. Having regard to this annexure
it was common
cause that, when non-responsive bidders were excluded,
Stiegelmeyer emerged as the bidder scoring the highest points for the
three
items on a group basis, marginally more than Hospi-Furn.
[22]
Stiegelmeyer’s case is, further, that
the BEC’s recommendation and the BAC’s acceptance thereof
was ultimately
not given effect. Instead the BEC’s memorandum
or its various annexures appeared to have been misread and the award
for the
bed was made scoring it as an individual item and not as part
of a group. Therefore, proceeded Stiegelmeyer’s case, the award
to the successful bidders was not authorised by the empowering
provision, was made contrary to a mandatory and material procedure
or
condition prescribed by an empowering provision, was made for reasons
not authorised by the empowering provision and because
irrelevant
considerations were taken into account, and was also made arbitrarily
or capriciously. These grounds were enumerated
under the various
provisions of sec 6(2) of the Promotion of Administrative Justice Act
(PAJA).
[23]
Although Mr Fagan, who appeared together
with Ms O’Sullivan for Stiegelmeyer, initially contended that
the award in respect
of the disputed items, and in particular the
bed, had in fact been made to Stiegelmeyer, he ultimately conceded
that the award
had been made to Hospi-Furn in respect of the bed and
to it, Arjo Huntleigh and HEM in respect of the mattress and mattress
cover.
Having regard to the contract circular, which declared
Hospi-Furn, HEM and Arjo Huntleigh to be the successful tenderers in
the
formula described above, (whether correctly or incorrectly
scored) this concession was, in my view, correctly made.
THE RESPONDENTS’
CASE
[24]
The Treasury’s case, (with which the
Chairperson of the BAC made common cause, and to whom I shall refer
collectively as ‘
the Treasury’
)
is that the award of the tender to Hospi-Furn was correct and that
the disputed items were scored and awarded by the BAC as individual
items and not as a group. Its case is further that, scored on an
individual basis, Stiegelmeyer had not received the highest points
in
respect of its tender for any of the beds contained in the
specifications and therefor could not, for compatibility reasons,
be
awarded a mattress or a mattress cover i.e. because it was not
awarded any bed. It sought to explain the various internal approaches
by Ms Ngalo to the BAC seeking a correction of the original award on
the basis of confusion on her part regarding the terms ‘
series’
and ‘
compatibility’
.
THE ISSUES
[25]
Against this background the primary issue
for determination must be whether the bids for the disputed items
should have been scored
as a group and, if so, what the appropriate
remedy should be. However, a related antecedent issue which came to
the fore during
argument was whether the tender conditions allowed of
scoring the three items on a group or series basis. Since this
question enjoyed
only limited attention during the hearing the
parties were, subsequent to argument, afforded an opportunity to
submit written argument
on the following three questions:
‘
1.
Given that:
1.1
Clause 16.4 of the SCC provides
inter alia that “(a)ll items that are grouped as a series
in
specification
shall be regarded
as a group series and be evaluated and awarded accordingly”;
1.2
Items RT24-02-008 ME, 014 ME and 015
ME were
not
grouped as a series in specification, could it ever have been
competent for the BEC to have recommended (and/or for the BAC to
have
accepted such recommendation) that the abovementioned items “be
awarded (in groups) as per paragraph 16.4 of the Special
Conditions
of Contract for compatibility purposes” (Annexure TB23)?
2.
Whether the First and Second
Respondent’s failure to pertinently raise this issue on the
papers precludes them from relying
thereon?
3.
Assuming that the aforesaid items
could not be evaluated on a group basis, the implications thereof for
the review application?’
[26]
Full written argument was subsequently
delivered by both parties on these questions, much of it concerning
whether the respondents
could even rely on the argument that the
terms of the tender precluded the three items being scored on a group
basis.
DISCUSSION
[27]
Turning to the question of the basis upon
which the bids for the three items were scored, it is in effect
common cause that, in
relation to the award as announced, the
exercise was done on an individual item and not on a group basis.
Stiegelmeyer’s
case is, of course, that this was mistakenly
done, in conflict with the BEC’s recommendation and the BAC’s
own acceptance
of that recommendation whilst the Treasury contends
that Hospi-Furn was deliberately awarded the hospital bed item
because it had
obtained the highest points for that item and that for
compatibility purposes, it and the other two successful tenderers
were awarded
the mattress and mattress cover items as a multiple
award.
[28]
The Treasury’s explanation does not
tally with the document trail, however. It is contradicted by the
original recommendation
of the BEC, by the minutes and transcript of
the BAC meeting on 22 August 2013 when the recommendation was
seemingly accepted and
adopted, by the two memoranda which served
before the BAC at subsequent meetings on 3 October and 21 November
2013 and the transcripts
of those meetings and by contemporaneous
correspondence between the Treasury and Hospi-Furn.
[29]
Faced with this documentation, the Treasury
either failed to deal with its contents and the implications thereof
or, in some cases,
furnished explanations which are inherently
improbable. By way of example, Ms Ngalo, the author of the two
memoranda submitted
to the post-award BAC meetings, claimed that she
had been pressurised by Stiegelmeyer into accepting that Treasury had
erred. This
explanation can safely be rejected notwithstanding that
the factual dispute arises in motion proceedings. Not only is it
inherently
improbable given Ms Ngalo’s seniority and apparent
experience but it is unsupported by the record or by any details she
gives.
A review of the correspondence from Stiegelmeyer to her and/or
other Treasury officials reveals that it was limited and invariably
of a polite and patient tone. The description of it as amounting to
‘
intolerable pressure’
is far-fetched.
[30]
If Stiegelmeyer’s version of events
regarding how its bid failed were to be accepted then the BAC’s
decision would,
in my view, prima facie fall to be reviewed. This
would be so because, in failing to heed the BEC’s
recommendation, despite
its undoubted intention to do so, the BAC
failed to take into account relevant considerations (the BEC’s
recommendation),
made the decision arbitrarily and capriciously or
took a decision which was not rationally connected to the information
before
it.
[31]
Before any such conclusion can be reached,
however, the question arises as to whether the terms and conditions
of the tender (and
notably clause 16.4 of the SCC) permitted the BEC
or the BAC to evaluate and award the items grouped a series. In
answering this
question regard may first be had to the proper
approach to the review of tender irregularities and the framework
relating to the
consideration of tenders such as the present. In
Allpay Consolidated Investment Holdings
(Pty) Ltd and Others v Chief Executive Officer, South African Social
Security Agency, and
others
2014 (1) SA
604
(CC) the Constitutional Court described that the proper approach
to the review of tender irregularities as follows:
‘…
[T]o
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
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.’
[32]
The question of whether the BAC’s
flawed handling of the three disputed items was an irregularity which
amounted to a sustainable
ground of review must of course be examined
in the light of the argument that it was precluded from scoring, as
earlier indicated,
the disputed items as a group or series.
[33]
Clause 16.4 of the SCC reads in full:
‘
16.4
Items Grouped as Series
16.4.1
All items that are grouped as a series in specification shall be
regarded as a group series and be evaluated and awarded
accordingly;
16.4.2
Bidders are required to offer prices for all items specified with the
series. Non-compliance with the abovementioned
special conditions
will invalidate the bid for the items/s concerned;
16.4.3
Bidders must take note that the allocation of points will be per
category (group award).’
[34]
The term ‘
in
specification’
is nowhere defined
in the tender documents but each item for which bids were sought has
detailed specifications which any responsive
bid had to meet.
Significantly, the specifications for the three disputed items do not
stipulate they would be grouped as a series
or would be evaluated and
awarded accordingly. Nor was any party able to point to any other
provision in the tender documentation
advising potential bidders that
the items would be treated in this manner. Although Stiegelmeyer only
annexed the specifications
relating to the three disputed items to
its founding affidavit, obviously the entire tender document was
available to it from the
outset.
[35]
The point that there was no prior
notification of the special scoring basis was first made by
Hospi-Furn’s managing director,
Mr S Cliffe (‘
Cliffe’
),
in correspondence addressed to the Treasury officials, presumably
after they advised Hospi-Furn that it had incorrectly been
awarded
the tender for the three disputed items. His initial email read as
follows:
‘
I
sent an email earlier today to Balekile asking of her to show us
where it states that items RT24-02-08ME, RT24-02-014ME and
RT24-02-015ME
form part of a series.
I have been
through all the tender documents I cannot see where it states that
these items, or any of the beds and cots, form part
of a series.
The tender
documents show very clearly that there are many items that are part
of a series (like the Patient Trolley and Emergency
Trolley) but
nowhere can I see that the above mentioned items form of a series.
You say that the
award will be reversed because the
series
items were
erroneously awarded to us although we did not score the highest total
points for the
series
according to the evaluation criteria.
If the tender
documents do not mention that the items form part of a series then,
surely, there was
no error
and the original award should
stand.
However, if I am
mistaken please can you show me where it states that the above
mentioned items form part of a series.
Can I suggest we
meet again as soon as possible to discuss this matter further.’
[36]
In response Cliffe received a reply which
failed to deal with the issues which he raised. In turn he responded
by repeating his
point and detailing examples of items in the tender
where it was clearly stated, in the specifications for such items,
that it
would be treated as a series with other identified items. He
concluded ‘
There is no such
statement in the specification for the ICU bed (RT24-02-008ME), nor
the Mattress (RT24-02-014ME) or the Mattress
Cover (RT24-02-015ME) so
I cannot understand how they can be evaluated as such.
’
[37]
This correspondence was first referred to
in Stiegelmeyer’s replying affidavits as not forming part of
the record initially
delivered by the Treasury and having only come
to light after further discovery of relevant documents was sought
from the Treasury.
Stiegelmeyer annexed the correspondence to its
replying affidavit and dealt with it in some detail but not with the
substance of
the point repeatedly raised by Cliffe. Furthermore, both
in its founding and in its supplementary founding affidavits,
Stiegelmeyer’s
managing director made explicit reference to
clause 16.4 of the SCC with its stipulation that ‘
all
items that are grouped as series
in
specification
shall be regarded
as a series and be awarded and evaluated accordingly.’
(my
emphasis). On neither occasion, however, did it grapple with the
implications of this clause taken together with the fact that
the
tender documentation appeared to have made no mention that the
disputed items were to be grouped as a series.
[38]
It is important to note in this regard that
it was never Stiegelmeyer’s case that its bid for the three
items was made on
the basis that they were to be grouped as a series.
Indeed, its case was that it was only when it sought to have its bid
re-evaluated
on the basis of a more favourable B-BBEEE rating that it
had become aware this scoring system had been used.
[39]
As Cliffe stated in his correspondence with
the Treasury the specifications for certain other items made it clear
that they were
to be grouped and evaluated as a series. One example
will suffice. The item for bassinets states in the last line of the
specifications
that they are to be considered as a series with
certain other items. This example and several others formed part of
annexure WM1
to the Treasury’s answering affidavit, the
relevant part being ‘
Annexure B:
Highest Points to specification’
which
appears to reproduce the advertised specifications for each item. In
the same document those pages dealing with the three
disputed items
noticeably do not contain the stipulation that they are to be grouped
as a series.
[40]
However, it is also clear that the Treasury
did not state in terms in its opposing affidavits that, in the
absence of a prior notice
to potential bidders that the three
disputed items were to be grouped and evaluated as a series, the BAC
was precluded by the terms
of the tender from doing so. Even in
argument the point was raised late and almost in passing. A critical
question is, therefore,
whether, by reason of its failure to
pertinently state that it relied upon clause 16.4 of the SCC, the
Treasury is precluded from
relying on its provisions to defeat
Stiegelmeyer’s review application.
[41]
On behalf of Stiegelmeyer, Mr Fagan
submitted that the Treasury could place no reliance on the point for
a number of reasons, the
first being that not only did it fail to
squarely rely on the point or make the argument in its papers, it
also failed to do so
when it was first raised in the correspondence
by Hospi-Furn. Counsel went on to speculate as to possible reasons
why the words
‘
in specification’
in clause 16.4 were not raised as a defence by the Treasury, whether
by oversight, because the grouping of the items was already
made
clear by the tender document or because the SCC do not specifically
require prior notification to bidders of grouping as a
series. His
argument proceeded that since the Treasury had failed to raise the
defence there were no facts pertaining to these
issues in the papers
and thus the Court was in no position to know what meaning or weight
to attribute to the words ‘
in
specification’
.
[42]
Mr Fagan argued further that as a result of
the Treasury’s omission Stiegelmeyer had not been afforded an
opportunity to advance
reasons why clause 16.4 was inapplicable or
had been fulfilled. For this reason, he submitted, any finding based
on clause 16.4
would be unfair to Stiegelmeyer. His argument
concluded that Stiegelmeyer had been entitled to proceed to Court on
the assumption
that it was common cause between the parties that the
BAC was not precluded by any provision of the SCC from evaluating the
items
as a group and awarding them as a series.
[43]
As far as the query raised by the Court
regarding the implications for the review if the BAC indeed lacked
the power to evaluate
and award the items on a group basis, Mr Fagan
submitted that in view of the complexity of questions raised and
implications of
scoring the items on an individual basis, the Court
would not be able to substitute its own decision for that of the BAC
and the
matter would have to be remitted back for a fresh
recommendation by the BEC.
[44]
In the further written submissions on
behalf of the Treasury, Ms Norman, who appeared together with Mr
Lecoge, clung to their primary
defence that the disputed items had
been awarded on an individual basis, again ignoring the implications
of all the documentation
indicating that this had never been the
BAC’s intent. Be that as it may, it was also contended on
behalf of the Treasury
that it would not have been competent for the
BAC to have accepted a recommendation from the BEC that evaluation
and scoring of
the disputed items take place on a group or series
basis. This, it was submitted, would have amounted to ‘
manipulation
of the evaluation process’
because the tender specifications could not be changed during the
evaluation or scoring process.
[45]
Dealing with the point that they did not
properly or timeously raise what can be termed the
ultra
vires
defence, it was contended on
behalf of the Treasury that the applicability of the SCC in general
formed part of its case. Furthermore,
it was submitted, all the
relevant facts were before the Court and Stiegelmeyer would suffer no
prejudice if the point were dealt
with. In conclusion, it was
contended, in the event of the Court finding that the BAC was
precluded from evaluating the bids for
the items as a series, the
application could not succeed.
[46]
Whether all the documentation comprising
the tender was initially put before the Court by Stiegelmeyer or not,
there can be no doubt
that the full terms and conditions of the
tender were, at all material times, known to the parties. In my view
no material term
of the tender can be disregarded by the Court in
circumstances such as these save where the party objecting to its use
has been
unfairly prejudiced in the presentation of its case.
[47]
Clause 16.4 of the SCC featured prominently
in the tender documents and when the record of the decision was made
available (whether
initially or as supplemented through discovery
procedures) its centrality was brought prominently to the fore, and
to the attention
of Stiegelmeyer, by the Treasury’s
correspondence with Hospi-Furn. It is indeed so that although
Hospi-Furn initially opposed
these review proceedings it subsequently
withdrew its opposition. Nonetheless Stiegelmeyer was made aware of
the basis upon which
Hospi-Furn maintained that the BAC could not
have scored the items as a series. In my view, Stiegelmeyer cannot
ask the Court to
turn a blind eye to this point simply because the
remaining respondents did not pertinently raise or rely on the point
in their
opposing affidavits.
[48]
There
are in my view at least three main reasons why the application cannot
be determined without squarely dealing with the implications
of
clause 16.4. Firstly, notwithstanding Stiegelmeyer’s
submissions regarding the lack of any evidence regarding the term
‘
in
specification’,
the overall point remains one of law, namely, the interpretation of
the terms of the contract, more particularly clause 16.4 of
the SCC,
within the context of the tender’s terms and conditions as a
whole. Factual evidence would have, at best, a very
limited role in
this question. In these circumstances the principle approved of in
Cabinet
for the Territory of South West Africa v Chikane
[1]
finds application: ‘…
a
party in motion proceedings may advance legal arguments in support of
the relief or defence claimed by it even where such arguments
are not
specifically mentioned in the papers provided they arise from the
facts alleged
’.
[49]
In
MEC for
Health, Gauteng v 3P Consulting (Pty) Ltd
2012 (2) SA 542
(SCA) at para [28] the Court, quoting with approval
the dicta of Joffe J in
Swissborough
Diamond Mines (Pty) Ltd and Others v Government of the Republic of
South Africa and Others
1999 (2) SA 279
(T) at 323F – 324C, stated that it is trite law that in motion
proceedings the affidavits serve not only to place evidence
before
the Court but also to define the issues between the parties and that
this dictum applied not only to constitutional issues
but to all
issues and applied equally to answering affidavits and replying
affidavits. The Court added, however, that a party in
motion
proceedings may advance legal arguments in support of the relief or
defence claimed by it even where such arguments are
not specifically
raised in the papers, provided that all relevant facts are before the
court, and no prejudice is caused to the
other party.
[50]
Similar
principles apply in regard to the raising of a legal issue for the
first time on appeal, namely, it must involve no unfairness
to the
other party and raise no new factual issues. In
Paddock
Motors (Pty) Ltd v Igesund
[2]
,
Jansen JA stated:
‘…
it
would create an intolerable situation if a court were to be precluded
from giving the right decision on accepted facts, merely
because a
party failed to raise a legal point, as a result as an error of law
on his part …’
[51]
The Court in
Naude
and Another v Fraser
[1998] ZASCA 56
;
[1998] 3 All SA
239
(A) at page 255F specifically found that the same principles
applied to review proceedings, and stated:
‘
There
appears to me to be no sound reason why the aforesaid principles
should not apply to review proceedings. Difference considerations
arise where a party, whether on review or appeal, raises a point for
the first time which is dependent upon factual considerations
that
were not fully explored in the court of first instance.’
[52]
The kind of considerations a court will
take into account in deciding whether there would be prejudice or
unfairness to an opposing
party should a court take into account a
belated argument were set out in
Paddock
Motors
(supra) at 23 D – F,
quoting the case of
Cole v Government of
the Union of SA
1910 AD 263
at page
272:
‘
If
the point is covered by the pleadings, and if its consideration on
appeal involves no unfairness to the party against whom it
is
directed, the Court is bound to deal with it. And no such unfairness
can exist if the facts upon which the legal point depends
are common
cause, or if they are clear beyond doubt upon the record, and there
is no ground for thinking that further or other
evidence would have
been produced had the point been raised at the outset. In presence of
these conditions a refusal by a Court
of Appeal to give effect to a
point of law fatal to one or other of the contentions of the parties
would amount to the confirmation
by it of a decision clearly wrong.’
[53]
One of the cases referred to by the Court
in
Chikane
as laying down the principle earlier referred to therein was
Van
Rensburg v Van Rensburg en Andere
1963
(1) SA 505
(A) where the Court was required to construe the meaning
of a Rule of Court requiring affidavits in application proceedings to
contain ‘
the facts and
circumstances upon which the party relies’
.
In opting for a more restricted meaning the Court stated as follows:
‘
In
iedere geval meen ek dat 'n uitleg van die Hofreël wat die
Hof sou verhinder om 'n aansoek op 'n regspunt uit te wys
wat uit die
beweerde feite ontstaan, slegs omdat die aansoekdoener nie in sy
aansoek uitdruklik daarop gesteun het nie, vermy kan
en moet word,
anders sou dit kon lei tot die onhoudbare posisie dat die Hof deur 'n
regsdwaling aan die kant van die aansoekdoener
gebonde kan wees’.
In
my view this reasoning applies squarely to the present position.
[54]
A second and related reason is that the
point regarding clause 16.4 was not sprung upon Stiegelmeyer
unexpectedly. Not only does
it emerge from a reading of the SCC, but
it was pertinently raised and highlighted by Hospi-Furn in
correspondence with the Treasury
which was seen by the applicant.
Although the correspondence may not have been available when it filed
its founding affidavits,
but only after its subsequent discovery,
Stiegelmeyer would have been entitled to seek leave to deal with the
point at that stage,
had it wished to do so. Since the point goes to
the very heart of the lawfulness of the review and involved a
question of law,
the applicant was not, in my view, entitled to
ignore it and then rely upon it being declared out of bounds.
[55]
The third reason is the centrality of the
point to the lawfulness of the award made by the Treasury and the
relief now claimed by
Stiegelmeyer. It would, in my view, be
untenable for a Court to ignore the importance of a material term of
a condition of a tender
which directly affects the lawfulness of both
the award and the relief sought simply because one or more parties
may have failed
to appreciate its significance at an early stage.
This would in effect require the Court to make an award which, if
made by the
party administering the tender, would have been unlawful.
[56]
Accordingly I hold that the Treasury is
ultimately entitled to rely on the point although not squarely raised
in its opposing affidavits.
[57]
This
brings me to the implications of clause 16.4 to the review
application. In my view the meaning and importance of clause 16.4
of
the SCC which forms a primary term of the tender, is clear: where the
Treasury or its constituent committees proposed to group
items as a
series for the purposes of evaluation and scoring it was required to
inform bidders of this fact prior to them submitting
their bids. Not
only does this interpretation square with the language used and its
clear implications, it is entirely congruent
with the legal and
constitutional requirements for a lawful tender process viz fairness,
transparency, competitiveness and cost-effectiveness
[3]
.
[58]
In
Steenkamp
NO v Provincial Tender Board, Eastern Cape
[4]
the Court observed:
‘
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 sec33 and the basic values governing public
administration in
s 195(1).’
[59]
In
Allpay
[5]
the Constitutional Court stated:
‘
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. To
hold
otherwise would undermine the demands of equal treatment,
transparency and efficiency under the Constitution. 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.’
[60]
The
Court also quoted with approval the following passage from
Premier,
Free State and Others v Firechem, Free State (Pty) Ltd
[6]
where the Supreme Court of Appeal was dealing with the award of
tender which fell outside the applicable legal framework:
‘
One
of the requirements … is that the body adjudging tenders had
to be presented with comparable offers in order that its
members
should be able to compare. Another was that a tender had to speak for
itself. Its real import could not be tucked away,
apart from its
terms. Yet another requirement was that competitors had to be treated
equally, in the sense that they should all
be entitled to tender for
the same thing.’
To these
requirements can be added a further one: that competitors are
entitled to know beforehand on what basis their tenders
are to be
evaluated.
[61]
Apart from these general considerations,
the necessity of prior notification to bidders of the grouping of
items as a series is
highlighted by the provisions of clause 16.4.2
with its adverse implications for bidders who fail to offer a price
on all items
grouped as a series, namely the invalidation of their
bid. Seen in this context the words ‘
in
specification’
in clause 16.4 can
only mean specifications which have been furnished to interested
parties prior to bidding.
CONCLUSION
[62]
Given the applicability and clear meaning
of clause 16.4 of the SCC, coupled with the Treasury’s failure
to notify of bidders
beforehand that the disputed items were to be
grouped as a series, it inevitably follows that the evaluation of
bids on this basis
would have exceeded the powers of the BAC and been
unlawful. Ironically, therefore, the BAC’s apparently
inadvertent failure
to follow the BEC’s recommendation in
regard to the disputed items saved its award from illegality. It
follows, furthermore,
that in scoring the bed item on an individual
basis, albeit unintentionally, the Treasury committed no
irregularity.
[63]
The bedrock of Stiegelmeyer’s review
of the award related to the score that it achieved for the bed item.
In respect of that
item it conceded that Hospi-Furn scored higher
than it and there remains no free-standing challenge to the balance
of the BAC’s
award. There is no justification for the remittal
of the matter back to the BAC for re-consideration of the award in
the light
of the BEC’s initial recommendation since that itself
was unlawful for the reasons given. As a result the review of the
award
must fail in its entirety.
COSTS
[64]
In the ordinary course, the application
having failed, the Treasury would be entitled to their costs. There
are, however, special
factors relating to the way in which they dealt
with Stiegelmeyer’s tender and their conduct in the subsequent
litigation
which would appear to justify a different order.
[65]
In the first place the Treasury officials
misled Stiegelmeyer into believing that an appeal process was
underway when, at best,
the BAC was considering whether it could
persuade Hospi-Furn to accede to the withdrawal of the award. As a
result Stiegelmeyer
delayed the institution of legal action until it
became clear that no internal relief would be forthcoming. Secondly,
the manner
in which the Treasury conducted the litigation leaves much
to be desired. Important and relevant documents were, for flimsy
reasons,
not initially disclosed as part of the record.
Significantly, these documents ultimately revealed that a key
Treasury official
and the BAC formed the view early on that there had
been an error in the evaluation of Stiegelmeyer’s bid and that
it should
have received the award. Notwithstanding this, throughout
the litigation the Treasury persisted in claiming, disingenuously in
my view, that the items had been deliberately evaluated on an
individual basis. The Treasury’s dogged adherence to this
defence
incidentally appeared to blind it to the real issue in
dispute, namely, whether it was competent to have scored the disputed
items
grouped as a series. Most fundamentally, the Treasury failed to
appreciate and apply a material term of the tender (clause 16.4
of
the SCC) to the evaluation of bids and this was the root cause of the
whole dispute.
[66]
It seems quite likely that, had the
Treasury not erred in one or more of the above respects, this
litigation would not have taken
place or, at the very least, would
have concluded at a much earlier stage. Taking all these factors into
account, I consider that
it would be inequitable for Stiegelmeyer to
be saddled with a costs order. In these circumstances, and also as a
mark of the Court’s
disapproval of their conduct as described
above, the Treasury should be denied their costs.
[67]
For these reasons the following order is
made:
1.
The application is dismissed with all
parties to bear their own costs.
BOZALEK
J
APPEARANCES
For the
Applicant: Mr E Fagan SC
Ms
M O’Sullivan
Instructed
by: Fairbridges
For the
Respondents: Ms T Norman SC
Mr
B Lecoqe
Instructed
by: State Attorney
[1]
1989
(1) SA 349
(A) at page 360 para F - G
[2]
1976
(3) SA 16
(A) at 23F-G
[3]
sec
217of the Constitution of South Africa Act, No 108 of 1996
[4]
2007
(3) SA 121
(CC), at para [33]
[5]
(supra)
[6]
2000
(4) SA 413
(SCA)