Camelsa Consulting Group (Pty) Ltd v Ratlou Local Municipality and Another (M410/2014) [2015] ZANWHC 29 (13 July 2015)

IN THE HIGH COURT OF SOUTH AFRICA

NORTH WEST DIVISION, MAHIKENG

CASE NO: M410/2014

In the matter between:-

CAMELSA CONSULTING GROUP (PTY) LTD

Applicant

and

RATLOU LOCAL MUNICIPALITY

1st Respondent

ACCTECH SYSTEMS (PTY) LTD

2nd Respondent

DATE OF HEARING

: 09 JUNE 2015

DATE OF JUDGMENT

: 13 JULY 2015

COUNSEL FOR THE APPLICANTS

: ADV. N RAJAB-BUDLENDER

COUNSEL FOR RESPONDENTS

: ADV. M SMIT

REASONS FOR JUDGMENT / ORDER

HENDRICKS J

Introduction:-

[1] On 09 June 2015 an order was granted in the following terms:-

“1. THAT: The tender NW381/BT001/2014 (“the 2014 Tender”) awarded by the First Respondent to the Second Respondent is reviewed and set aside;

2. THAT: The First Respondent pay the costs of Part B of this application.

3. THAT: If reasons are required, same must be applied for within ten (10) court days from date of this order.”

On 24 June 2015 a “Request for Reasons for Judgment’ was filed with the Office of the Registrar of this Court. Here follows the reasons for judgment / order.

[2] The Applicant (“Camelsa”) seeked an order in terms of its Amended Notice of Motion. The relief claimed was the following:

“1.1 an order reviewing and setting aside the first respondent’s (the Municipality) decisions in respect of tender NW381/BTO01/2013 (the 2013 Tender) and tender NW381/BTO01/2013/2014 (the 2014 Tender), including the decision to award to the second respondent (AccTech Systems) the 2014 Tender;

1.2 an order directing the Municipality to begin the tender for Administration and Support Maintenance of Pastel Evolution Accounting System afresh; and

1.3 an order directing the Municipality to extend the contract concluded between it and Camelsa until the final award of the new tender process is concluded.”

Background:-

[3] Camelsa was the service provider to the First Respondent (“Municipality”) for the supply of the Pastel Support Services of Municipal Billing from 21 January 2011 to approximately 31 May 2014.

During June 2013 the Municipality issued the 2013 Tender. The closing date for the tender was 19 June 2013. Camelsa received no correspondence from the Municipality on the award of this tender despite a written request on 13 August 2013.

[4] On 14 February 2014 the Municipality issued the 2014 Tender. This tender was advertised as a “readvert” and the closing date for the tender was 11 March 2014. Despite written request from Camelsa’s legal representatives on 17 June 2014 and 01 September 2014, the Municipality failed to communicate to Camelsa about the progress in awarding the 2014 Tender. The Municipality also failed to communicate or clarify why the 2013 Tender was re-advertised, whether it had lapsed or been withdrawn, and why the

2014 Tender was substantially the same as the 2013 Tender. In other words, the entire tender process was shrouded in an air of confusion.

During September 2014 Camelsa saw on the Municipality website the Municipal notice marked April 2014, which recorded the award of the 2014 Tender to AccTech Systems (“AccTech”), the Second Respondent.

The 2013 Tender

[5] In its Amended Notice of Motion the Applicant applies for the review of the 2013 Tender. It became apparent that the 2013 Tender was re-advertised as the 2014 Tender. This was done because the time period within which the tender was to be awarded accordingly to the price specifications, has lapsed.

During argument I made it clear to both counsel that it was not necessary to pursue the review of the 2013 Tender for obvious reasons. I find it therefore unnecessary to comment on the 2013 Tender seeing that it was re-advertised as the 2014 Tender.

The 2014 Tender

[6] Camelsa contended that the awarding of the 2014 Tender was unlawful and that it is reviewable on the following grounds:-

The decision • was not rationally connected to the information before the decision maker (section 6(2)(f)(ii)(cc) of The Promotion of Access to Justice Act 3 of 2000 (PAJA);

• was so unreasonable that no reasonable person could have exercised the decision-making power in that manner (section 6(2)(h) of PAJA);

• was taken for an ulterior purpose or motive (section 6 (2)(e)(ii) of PAJA);

• irrelevant consideration were taken into account and relevant consideration were not taken into consideration (section 6 (2)(e)(iii) of PAJA); and

• was procedurally unfair (section 6(2)(c) of PAJA).

[7] In addition, Camelsa submitted that the bid of the Second Respondent (“AccTech”) was flawed in the following respects:-

1. the submission included reference to State employee numbers for each company director;

2. TE Zitzke’s proof of residence identified the property as vacant;

3. ML Zitzke did not attach a proof of residence as part of the returnable documents;

4. the BBBEE certificate submitted was not a certified copy of the original;

5. the AccTech Systems’ Pastel Accreditation did not include accreditation for the municipal billing module;

6. the submission failed to provide an answer to question 9.8 of the RFP indicating the bidder’s total years of experience;

7. the letters of professional experience did not include the relevant experience pertaining to the Pastel Evolution municipal billing

module.

[8] It was furthermore contended that in the 2014 Tender process, AccTech Systems was treated favourably on the following basis:-

· The Municipality telephoned AccTech Systems to query the inclusion of State employee numbers to each company director in the bid

submission;

· The Municipality incorrectly and unfairly accepted the director, TE Zitzke’s proof of residence, which proof indicated the property as vacant;

· The Municipality failed to note that the director, ML Zitzke, did not attach a proof of residence as part of the returnable documents;

· The Municipality incorrectly and unfairly accepted AccTech Systems’ BBBEE certification where the certificate was not a certified copy of the original

· The Municipality incorrectly accepted the AccTech Systems’ Pastel Accreditation despite the fact that the accreditation did not include accreditation for the municipal billing module;

[9] The Municipality treated the AccTech Systems’ bid submission incorrectly in that it accepted the letters of previous professional

experience in the face of reference letters that do not show experience to the tender, namely the administration and support of

Pastel Evolution Accounting Systems.

On the basis, the Municipality failed to treat all bid submissions equally and failed to conduct the tender process in a fair and

equitable manner as required in terms of section 217 of the Constitution of the Republic of South Africa Act 1996, read with Regulation 2 (1)(b) of the Municipal Supply Chain Management Regulations Gen . N. 868 in Government Gazette NO 27636 of 30 May 2005.

[10] This, it was submitted, renders the 2014 Tender reviewable on the basis that the tender process was procedurally unfair in terms of section 6(2)(c) of PAJA, that irrelevant consideration were taken into account and relevant considerations were not considered in terms of section 6(2)(e)(iii) of PAJA. Moreover, the decision was not rationally connected to the information before the decision-maker in terms of section 6(2)(f)(ii)(cc) of PAJA.

[11] In each of the circumstances listed above, AccTech Systems was either contacted for clarification regarding the discrepancy or the failure was excused for reasons unknown.

In the Supplementary Answering Affidavit, the Municipality seeks to explain its procedure with reference to information obtained

following the institution of these proceedings or, in the case of relevant experience, by stating that AccTech has thus far demonstrated competence in its performance in terms of the contract. Thereby utilising current performance as a measure rather than previous experience which was in fact the yardstick set out in the tender specifications.

[12] In view of the aforementioned, it was contended on behalf of the Applicant that the treatment of AccTech System’s bid submission is indicative of the unequal treatment of the bidders and indeed renders the 2014 Tender reviewable on the basis of procedural unfairness in terms of section 6(2)(c) of PAJA, the failure to into account relevant consideration in terms of section 6 (2)(e)(ii) of PAJA, lack of a rational connection to the information before the Municipality in terms of section 6(2)(f)(ii)(cc) of PAJA, and in the alternative, the decision was materially influenced by an error of law in terms of section 6(2)(d) of PAJA or the decision was taken for an ulterior purpose or motive in terms of section 6(2)(c) of PAHA in terms of section 6 (2)(e)(ii) of PAJA.

The Law

[13] Section 217 (1) of the Constitution of the Republic of South Africa Act, 1996 (“the Constitution”) provides:-

“(1) When an organ of state in the national, provincial or local sphere of government, or any other institution identified in national legislation, contracts of goods or services, it must do so in accordance with a system which is fair, equitable, transparent, competitive and cost-effective.”

Section 195 (1) (g) of the Constitution provides:-

“(g) Transparency must be fostered by providing the public with timely, accessible and accurate information.”

See:- • Steenkamp NO v Provincial Tender Board, Eastern Cape 2007 (3) SA 121 (CC)

• Robcon Civils/Sinamandla 2 Joint Venture v Konga Municipality and another 2010 (3) SA 241 (ECP)

[14] In Millennium Waste Management (Pty) Ltd v Chairperson, Tender Board: Limpopo 2008 (2) SA 481 (SCA) the Supreme Court of Appeal (“SCA”) confirmed the position that the question of the degree of compliance necessary for a tender to be an acceptable tender requires the exercise of judgment and that the test is one of materiality and reasonableness. Not every slip of the pen, or inconsequential or obvious error in a bid will render the tender unacceptable.

[15] However, where the legislature has prescribed a particular administrative process for a valid tender process, organs of State

including local government entities, are compelled to follow the statutory regime. 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 held:

“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.”

[16] In the Allpay Consolidated Investment Holdings case, the Constitutional Court set the test for compliance in the following

manner – an assessment of the fairness and the lawfulness of the procurement process must be independent of the outcome of the tender process and the materiality of compliance with the legal requirements depends on the extent to which the purpose of the requirements is attained.

The Constitutional Court held that insistence on compliance with process formalities has a three-fold purpose:

• it ensures fairness to participants in the bid process;

• it enhances the likelihood of efficiency and optimality in the outcome; and

• it serves as a guard against a process skewed by corrupt influences.

[17] In addition to treating AccTech System’s bid submission favourably, the Municipality failed to afford all bidders an equal opportunity (by way of telephone or otherwise) to explain any apparent deficiencies in their respective bid submissions, as it was done with AccTech.

Non-compliance at the first stage is material as disqualification at the first stage means that there is no possibility for a bidder who may have scored better on price in the third stage to be considered at all. In this regard, it is clear that Camelsa’s tendered price was in fact some R400,000.00 less than that tendered by AccTech Systems but because of the flaws in the tender bid, Camelsa was disqualified at the first stage.

[18] The failure to contact Camelsa in respect of the returnable documents in circumstances where AccTech Systems was contacted for clarification, resulted in AccTech Systems being afforded an unequal opportunity to explain the content of their bid submission. It was submitted that the minor deficiency in the Camelsa bid submission is entirely technical, and would not have the effect of altering the functionary or price of the bid submission made (as the necessary documents would have to be dated earlier than the bid submission date). Yet, the effect of the unfair procedure adopted by the Municipality has had severe implications to the tender process as a whole and resulted in the disqualification of the Camelsa bid submission.

In my view, the failure to provide Camelsa an equal opportunity to clarify its bid submission is reviewable because it is procedurally

unfair in terms of section 6(2)(c) of PAJA. Furthermore , relevant considerations were not taken into account in terms of section

6(2)(e)(iii) of PAJA.

[19] As far as the second prayer (paragraph 1.2) of the Amended Notice of Motion is concerned, I deemed it superfluous to order that the First Respondent begin the tender process afresh. It follows automatically that in the absence of a tender being remitted for re-adjudication, the process shall start anew, if the First Respondent still wants to proceed with such a tender process.

[20] As far as the third prayer (paragraph 1.3) of the Amended Notice of Motion is concerned, I did not deem it prudent to prescribe to the First Respondent that it should “extend the contract it concluded with Camelsa until the final award of the new tender

process is concluded”.

This Court is not in a position to determine whether such an order will be in the best interest of the First Respondent. Neither can it prescribe to the First Respondent, in the absence of sufficient and relevant facts being placed before it, to continue with a contract that has come to an end.

[21] In fairness to all prospective tenderers, a new tender process that is fair, equitable, transparent and costs- effective in terms of all the legislative prescripts should be made. In my view the 2014 Tender process has fallen far short of the standard that is required.

[22] It is for the aforementioned reasons that I granted an order in the terms set out in paragraph [1] of this judgment.

R D HENDRICKS

JUDGE OF THE HIGH COURT