01 September 2002 | Construction, Engineering and Infrastructure Law
The High Court of South Africa, Transvaal Provincial Division, recently set aside a tender award by the Mpumalanga Tender Board and awarded the tender to the tenderer that had achieved the most points.
In March 2001 tenders were invited for the rehabilitation and construction of a road in the Province of Mpumalanga.
The conditions of tender:
A firm of consulting engineers, Africon (Pty) Ltd (“Consultant”), was appointed, with the approval of the Tender Board of Mpumalanga, by the Department of Public Works, Roads & Transport (Mpumalanga) to inter alia evaluate and report on tenders received.
The relevant section, being section 2, of the Act provides as follows:
(1) an organ of State must determine its preferential procurement policy and implement it within the following framework:
(a) a preference point system must be followed;
(b)(i) for contracts with a rand value above the prescribed amount a maximum of 10 points may be allocated for specific goals as contemplated in paragraph (d), provided that the lowest acceptable tender scores 90 points for price;
(e) specific goals may include –
(i) contracting with persons, or categories of persons, historically disadvantaged by unfair discrimination on the basis of race, gender or disability;
(ii) implementing the programmes of the Reconstruction and Development Programme as published in Government Gazette No 16085 dated 23 November 1994;
(f) any specific goal for which a point may be awarded must be clearly specified in the invitation to submit a tender;
(g) the contract must be awarded to the tenderer who scores the highest points, unless objective criteria in addition to those contemplated in paragraphs (d) and
(e) justify the award to another tenderer; and
(2) any goals contemplated in subsection (1)(e) must be measurable, quantifiable and monitored for compliance.
In terms of the tender, the only specific goal for which points might be awarded as contemplated in section 2(1)(e) of the Act was equity ownership by historically disadvantaged individuals in the tenderer whether as sole contractors or as part of a joint venture.
Various tenderers submitted tenders for the contract including a joint venture incorporating Grinaker-LTA (“Grinaker JV”) and another joint venture incorporating King Civils (“King JV”).
The Consultant evaluated the tenders and awarded the Grinaker JV 94 points and the King JV 91,7 points. The Consultant recommended the award of the tender to the Grinaker JV having considered inter alia whether there existed any objective criteria in addition to those contemplated in paragraphs (d) and (e) of section 2(1) of the Act which might have justified the award to another tenderer.
The Tender Committee of the Department of Public Works also recommended that the tender be awarded to the Grinaker JV.
Notwithstanding all of this, the Tender Board of Mpumalanga awarded the tender to the King JV, reasoning that the historically disadvantaged element of the Grinaker JV had no experience in civil contracts and there was only a 2% variance in the tender sums of the two joint ventures, both of which fell within the budget.
The Mpumalanga Tender Board was evasive and over a protracted period refused to provide reasons for its decision to the Grinaker JV. It took the attitude inter alia that it had the sole power to award tenders. Eventually when, after the institution of legal action, it was forced to provide reasons, it gave different and conflicting reasons for its decision at various stages.
The court held that:
The general principle of our law is that if a decision is set aside on review, the matter is, unless special circumstances exist, referred back to the body that made the decision.
The Promotion of Administrative Justice Act provides that in exceptional cases the court reviewing administrative action can substitute its own decision for that of the administrative body concerned.
The court considered that the case in question was one in which it could properly exercise its discretion to both set aside the decision of the Tender Board and to impose its own decision.
In the event, the court set aside the tender award to the King JV and directed that the tender be awarded to the Grinaker JV. This despite the protestations on behalf of the Tender Board that this should not be done because a contract had already come into existence with the King JV.
It would seem that aggrieved tenderers who believe they have been unfairly passed over can take heart from this decision which provides useful guidelines to both tenderers and those organs of State which are engaged in making tender awards.