Altech Alcomo Matomo (Pty) Ltd v South African Police Service and Others (3369/2009) [2009] ZAGPHC 31 (16 February 2009)

/LVS

IN THE HIGH COURT OF SOUTH AFRICA

(TRANSVAAL PROVINCIAL DIVISION)

DATE: 16 FEBRUARY 2009

CASE NO: 3369/2009

UNREPORTABLE

In the matter between:

ALTECH ALCOMO MATOMO (PTY) LTD APPLICANT

vs.

SOUTH AFRICAN POLICE SERVICE FIRST RESPONDENT

INTEGCOMM (PTY) LTD SECOND RESPONDENT

NATIONAL COMMISSIONER OF THE

SOUTH AFRICAN POLICE SERVICE THIRD RESPONDENT

THE CHAIRPERSON OF THE SOUTH AFRICAN

POLICE SERVICE BID ADJUDICATION

COMMITTEE FOURTH RESPONDENT

_____________________________________________________

JUDGMENT

BOTHA J:

This is an application for an interim interdict brought on an urgent basis. The application is brought pending review proceedings to be instituted. The applicant intends to set aside a tender awarded to the second respondent on 12 December 2008.

The applicant is Altech Alcon Matome (Pty) Ltd.

The first respondent is the South African Police Service (SAPS).

The second respondent is Integcomm (Pty) Ltd.

The third respondent is the National Commissioner of the South African Police Service.

The fourth respondent is the Chairperson of the South African Police Bid Adjudication Committee.

In September 2007 the first respondent invited tenders for the supply of a Tetra two-way radio communication service for the South African Police Service in the Eastern Cape Province. The closing date was 18 December 2007 but it was later extended to 18 February 2008.

Bids had to be submitted with a validity period of 90 days from 18 February 2008 to 18 May 2008. The validity periods were extended on several occasions.

Initially there were six bids but four tenders were eliminated for non-compliance. Eventually only the applicant and the second respondent remained in the race.

The two remaining bids were evaluated by the SAPS Bid Evaluation Committee (BEC) who awarded 86.61 points to the applicant and 88.65 points to the second respondent. The second respondent outscored the applicant in respect of the price – 40 points as against 36.38. The applicant’s bid was for R100 4090159.80. The second respondent’s bid was for R920 757.24. In respect of technical compliance and HDI (Historical Disadvantaged Individuals) the applicant outscored the second respondent.

In spite of the fact that the second respondent had the higher score, the BEC recommended that the tender be awarded to the applicant.

On 10 October 2008 the applicant received a letter from the section head, Acquisition Management, of the first respondent who happened to be the secretary of the BAC to the effect that the bid was cancelled and that it would be re-advertised.

This cancellation was advertised in the Government Tender Bulletin of that day.

On 30 October 2008 the Acting National Commissioner of the South African Police Service decided to cancel the decision of the Bid Adjudication Committee taken on 23 September 2008 to cancel the bid. It was stated that it was essential that the bid be finalized so that the network could be in place ahead of the forthcoming national elections and Confederations and 2010 World Cup Finals.

On 7 November 2008 the applicant received a letter from the director. Supply Management, of the SAPS in which the applicant was informed that in spite of the cancellation of the bid, the first respondent would be approached for approval of the retraction of the cancellation. It was indicated that in the event of such approval, the bid would be placed before the Bid Adjudication Committee (BAC).

The applicant was asked to indicate whether its bid was still applicable in terms of the original prices, terms and conditions.

On 10 November 2008 the applicant confirmed that it was prepared to uphold its bid based on the original prices, terms and conditions. It mentioned that it was also in a position to offer a discount of R50 million. It noted that no term of validity extension was requested and indicated that it expected that a request for validity extension would be received.

On 3 December 2003 the BAC decided to award the contract to the second respondent.

On 12 December 2003 the tender was awarded to the second respondent. On the same day a contract was concluded with the second respondent.

The applicant was informed of the award on that day. Also on that day the applicant informed the first respondent that it objected against the award and that it reserved its rights.

On 23 December 2003 the applicant had a meeting with Mr Mokwena, a Deputy Commissioner of the SAPS, who was also the deponent of the first, third and fourth respondents. It was decided that the applicant would formulate its concerns in a letter.

On 13 January 2009 the applicant delivered the letter to the first respondent.

On 19 January 2009 the applicant received a letter of acknowledgment from the first respondent. On that day it was also informed of the conclusion of the contract between the first and second respondents.

On 21 January 2009 the applicant sent letters to the first and second respondents asking an undertaking that the contract would not be implemented pending review proceedings. When that was not forthcoming the application was launched on 23 January 2009, setting down a contracted time for the filing of an answering affidavit and setting the matter down for 10 February 2009.

The matter was heard on 12 February 2009.

As is to be expected the first point raised was that of urgency. The argument was that the applicant had not sufficiently explained the lapse of time between the 12th December 2008 and the 23rd January 2009.

In my view the delay was not inordinate. There was nothing wrong in first having a meeting with the first respondent. There was some delay in sending the letter that flowed from the meeting, but that was over the Christmas – New Year period. After the letter of 13 January 2009 the matter came to a point fairly swiftly.

I have no doubt that the matter is urgent, relatively urgent, so as to justify a speedier hearing than the Rules would normally allow. The respondents were given adequate time to file their affidavits. It would make no sense to refuse an earlier hearing because of so-called self created urgency. I would rather consider the lapse of time in the context of the balance of convenience.

That brings me to the merits of the application.

I must make it clear that I can make no conclusive findings on the reviewability of the award of the tender. Not only is the dictum in Tony Rahm Marketing Agencies v Greater Johannesburg Traditional Metropolitan Council 1997(4) SA 213 (W) at 215 J-216D applicable, but in view of the fact that the fourth respondent has not given his reasons and the absence of the record of the proceedings of the BAC, I can at best make an assessment of whether the applicant has a prima facie right and if so, to what extent it is subject to doubt.

The applicant attacked the award on four grounds:

that it was made without an extension of the validity of the bids;

that the cancellation of the bids could not be rescinded;

that according to Mr Mokwena the reason for the cancellation of the bids was that both bids were non-compliant; and

that the fourth respondent failed to take the discount of R50 million offered by the applicant into account.

It seems clear that all bids were required to be valid for a period of 90 days. It is true that the bids of the applicant and the second respondent were reconsidered at a time when the last extension (to 20 October 2008) had lapsed. It is also true that in its letter dated 7 November 2008 the applicant indicated that it expected to receive an extension. That, in my view said no more than that it made it clear that it was not prepared to keep its bid open on the same terms, conditions and pricing indefinitely.

It was asked on 7 November 2008 whether its bid could be considered on the same terms, conditions and pricing and its response clearly indicated that it was prepared to do so at that time, but not indefinitely. There is no indication that the applicant had any problems with the bid being considered as it was at the time when it was considered. The problem of validity would only have arisen is there was a delay in the adjudication.

I therefore find that although the issue of validity was not addressed, and technically the bid was considered beyond the termination of an extension, there is a serious doubt whether this point will succeed in review proceedings.

In respect of the rescission of the cancellation of the bids, Mr Tokota SC who, with Mr Matebese, appeared for the first, third and fourth respondents, referred me to Holden v Minister of the Interior 1952(1) SA 98(T), Natal Technikon v Avenue Delicatessen and Others 1986(4) SA 503 (N) and Nkosi v Khanyile NO and Another 2003(2) SA 63 (N) at 70 A-B and Baxter Administrative Law at 379.

He argued that the authority that made the decision to take away the right of the bidders by cancelling the bid had the right to restore their rights by rescinding his cancellation with the consent of the bidders. It seems to me that the principle is sound. It is clear that the two remaining bidders both consented to a re-opening of the bid.

Mr Kennedy SC, who, with Mr Cockrell, appeared for the applicant, argued that there could be no valid consent where the cancellation had already been rescinded on 30 October 2008. That should make no difference. The consent can ratify the rescission or make it complete.

Although there was a reversal of an administrative decision, there are sound reasons of policy why decisions should be capable of being reversed in such circumstances. The public interest is not affected because the bids were to be considered on the same terms, conditions and pricing. There was a relatively short lapse of time between the cancellation and its reversal.

Once again I came to the conclusion that although on the face of it the functus officio principle may be relied upon, it is doubtful that it will succeed in the review.

The applicant alleges that Mr Mokwena said at the meeting of 23 December 2008 that both bids were non-compliant. Mr Mokwena denies it. Mr Kennedy relied on the principle, as pronounced, amongst others, in Reckitt v Colman SA (Pty) Ltd v SC Johnson & Son (SA) Pty Ltd 1995(1) SA 725 (T) at 730 A-D that the applicant’s version should prevail. As stated in that case the inherent probabilities should also be considered. I find it improbable that the first, second and fourth respondents would, after having weeded out four non-compliant bidders, proceed with two who are also non-compliant. I find it improbable that they would then award the tender to a non-compliant bidder. In as much as Mr Mokwena was alleged to have said that the applicant was non-compliant, it is certainly not the applicant’s case that it was non-compliant.

Once again I doubt that this allegation will be accepted on review.

The first, third and fourth respondents say that the discount of R50 million offered by the applicant was considered by them, but it still meant that the applicant’s price was R33 million higher than that of the second respondent.

The point of the applicant is that the points scored by the applicant should have been adjusted and on that basis the applicant would have scored more points than the second respondent.

An adjustment of the applicant’s points would not necessarily have led to the tender to it.

The applicant was informed that the bids would be submitted to the BAC, that performed an adjudicating function. The point scoring was performed by the BEC.

It would have been highly irregular, and manifestly unfair to the second respondent, if the applicant would in midstream have been allowed a re-evaluation of its tender on the basis of a reduction of its price.

In my view I do not think that this point is likely to succeed on review.

On the merits my conclusion is therefore that serious doubt surrounds the applicant’s alleged prima facie right.

As far as the balance of convenience is concerned, it may be true that nothing has been done to implement the tender contract. The first respondent could conceivably wait longer for the introduction of the Tetra system in the Eastern Cape. It has an existing system that can be used, just as in all the other provisions except Gauteng. The problem is that there is irreparable harm to the second respondent who only received notice of the applicant’s intention to impugn the award on 21 January 2009. The second respondent gave particulars of commitments and expenses incurred by it in the mean time.

Should an interdict be granted and the review be dismissed, losses sustained by the second respondent will be irrecoverable.

If I weigh up the likelihood of success on review, the harm that an interdict can cause to the defendant, and the harm that the refusal of an interdict can cause the applicant, I am of the view that an interdict should not be granted. See Olympic Passanger Service (Pty) Ltd v Ramlagan 1957(2) SA 382(D) at 383 E-G.

Mr Kennedy stressed the fact that if an interdict is refused the effect of irreversible steps taken in implementing the contract may be such that a court of review may find it impossible to set aside the tender even if it was awarded irregularly. That consideration would have carried more weight if I was convinced that the review was likely to succeed.

In the result the following order is made:

The application is dismissed with costs which, in the case of the first, third and fourth respondents, shall include the costs attendant upon the employment of two counsel.

_________________________

C. BOTHA

JUDGE OF THE HIGH COURT