Crossover Consulting (Pty) Ltd/ Nickigyn Joint Venture v MEC: Local Government and Human Settlements, North West Province and Others (M114/2017) [2019] ZANWHC 47 (19 September 2019)

IN THE NORTH WEST HIGH COURT, MAFIKENG

CASE NO: M 114/2017

In the matter between:

CROSSOVER CONSULTING (PTY) LTD /

NICKIGYN JOINT VENTURE

Applicant

and

MEC: LOCAL GOVERNMENT AND HUMAN

SETTLEMENTS, NORTH WEST PROVINCE

1st Respondent

HEAD OF DEPARTMENT, LOCAL

GOVERNMENT AND HUMAN SETTLEMENTS,

NORTH WEST PROVINCE 2nd Respondent

KING AND ASSOCIATES ENGINEERING AND

PROJECT MANAGERS CC 3rd Respondent

GOBENG CONSULTING (PTY) LTD

4th Respondent

TRILLION CAPITAL PARTNERS (PTY) LTD

5th Respondent

ABEA TRADING ENTERPRISE

6th Respondent

AES CONSULTING CC

7th Respondent

INDIGO KULANE GROUP

8th Respondent

MONKUMO HOLDING (PTY) LTD 9th Respondent

FUMELI ADVERSARY SERVICES

10th Respondent

T M MOLEFE CONSULTING (PTY) LTD

11th Respondent

BAGALE CONSULTING (PTY) LTD

12th Respondent

ON-BOARD CONSULTING ENGINEERS

13th Respondent

ONE TOUCH SL MANAGEMENT JV

14th Respondent

AURECON SOUTH AFRICA

15th Respondent

ETSHO CIVILS (PTY) LTD

16th Respondent

DATE OF HEARING

: 02 AUGUST 2019

DATE OF JUDGMENT

: 19 SEPTEMBER 2019

FOR THE APPLICANT

: ADV. CHWARO

WITH ADV. LYSTER

FOR THE 1ST & 2ND RESPONDENTS : ADV. MOKOENA SC

WITH ADV. MOAGI

FOR THE 3RD RESPONDENT : ADV. HITCHINGS

ORDER

(i) The application is dismissed.

(ii) The applicant is ordered to pay the costs of this application incurred by the 1st and 2nd respondents on a party – and – party basis.

(iii) Such costs to include the costs consequent upon the employment of two counsel (junior and senior), where applicable.

(iv) No costs order is made in favour of the 3rd respondent and the 3rd respondent should therefore bear its own costs.

JUDGMENT

HENDRICKS ADJP

Introduction

[1] The applicant launched this application for the review and setting aside of a tender / contract awarded by the 2nd respondent, acting on behalf of the Department of Local Government and Human Settlements in the North West Province (the Department), to the 3rd respondent together with some auxiliary relief. It is contended that the tender was incorrectly adjudicated by the 2nd respondent who awarded it to the 3rd respondent, instead of awarding it to the applicant as recommended by both the Department’s bid evaluation committee (BEC) and bid adjudication committee (BAC). Initially the contention by the applicant was that the awarding of the tender should be reviewed and set aside together with an order that it be remitted to the 2nd respondent for adjudication, ab initio. This subsequently changed.

[2] The applicant in its heads of argument and during oral submissions made at the hearing of the application, prayed for an order that the tender be reviewed and declared invalid but not set aside. Furthermore, that the declaration of invalidity will not affect the rights of the 3rd respondent in finalizing the contract but not for any period further then the initial contract period, as well an order for costs. The 3rd respondent who was legally represented and also submitted heads of argument, did not earnestly took issue with the latest relief prayed for, except insofar as such an order would impact negatively on a decision by the department to extend the contract in the event that it might be necessary to do so. To fully appreciate the relief sought, one need to have regard to the background facts that underpins this application.

Background

[3] On 1st August 2016, the department advertised a tender on the eTender Publications Portal ("ETPP"), inviting prospective tenderers to submit their bids for the provision of PMU services for a period of thirty-six (36) months. A briefing session was held on 10th August 2016 and the tender closing date was on the 22nd August 2016.

[4] In terms of the tender document and the information obtained at the briefing session, the department was to engage in the evaluation process made up of three stages.

4.1. Firstly, the pre-evaluation requirement stage where the respective bids were checked for compliance on various returnables. This involved verification and checking of documents like registration with the centralised database, valid tax clearance certificate, company registration documents, identity documents of directors, joint venture agreements and proof of registration with professional bodies in respect of key personnel;

4.2. The second stage was functionality where the department, through its bid evaluation and adjudication committees, had to check the qualifying bidders against pre-set functionality criteria where bidders had to obtain a minimum of 60 points to make it to the next stage of evaluation. The functionality criteria were the following:

4.2.1. Qualification of key project team personnel involved in the project, which was allocated a total of 20 points;

4.2.2. Proven track record on previous projects of a similar nature and value, which was allocated 20 points;

4.2.3. Detailed work programme and delivery schedule, which was allocated 20 points;

4.2.4. Approach, methodology and implementation, which was allocated 20 points; and

4.2.5. Ability to demonstrate Regional Office infrastructure or the ability to establish same within a short space of time to support the Regional Directors of the department, which was allocated 20 points.

4.3. The third and final stage was evaluation on the basis of the 90/10 preferential points, where 90 points were allocated to the lowest tendered price and 10 points allocated for Broad-Based Black Economic Empowerment (BBBEE) status.

[5] It is common cause that following the above-mentioned evaluation and adjudication process, the applicant obtained the highest points, followed by Gobeng, the 4th respondent. The 3rd respondent obtained the third highest points. Despite the highest points scored by the applicant, the 2nd respondent appointed the 3rd respondent as the successful bidder to render the PMU services for the contract period of thirty-six (36) months.

[6] In appointing the 3rd respondent as the successful bidder, the 2nd respondent deviated from the recommendation made by the departmental bid adjudication committee, which had recommended the appointment of the applicant based on the highest points scored. As reason for his decision to deviate from the recommendation of the bid adjudication

committee, the 2nd respondent stated that the applicant misrepresented facts by stating that its key personnel were registered with relevant professional

bodies, when in fact they were not so registered.

The applicant’s tender

[7] It was submitted by the applicant that its bid was responsive and that it was unlawfully disqualified. Furthermore, that it should have been appointed as the successful bidder. The BEC resolved that in terms of Paragraph 16.1 of the Preferential Procurement Regulations, which state that a contract must be awarded to the bidder with the highest total points, the applicant scored a total of 100 points and therefore recommended it for appointment. The BEC's report was submitted to the BAC for adjudication.

[8] On 17th October 2016 after considering the report of the BEC, the BAC recommended to the 2nd respondent that he should consider the recommendations of the BEC, who recommended that in terms of the preferential procurement

regulations, the contract must be awarded to the bidder with the highest total points, namely the applicant.

[9] Upon perusal the reports of the BEC and BAC, the 2nd respondent realised that both the BEC and the BAC did not verify the registration of key project team personnel with the relevant

professional bodies. The registration credentials of the key project team personnel was than verified with the relevant professional

bodies. The verification process revealed that some of the key project team personnel of the applicant and the 4th respondent were not registered with relevant professional bodies and/or their registration with relevant professional bodies had

expired.

[10] In the case of the applicant, the registration certificate of Mr Newton Chirowa with the Project Management Institute indicated that he was registered as a member from 26 March 2013 to 25 March 2016. The verification report received from the South African Project and Construction Management Profession dated 26 October 2016 confirmed that Mr Newton Chirowa was deregistered. This was not disclosed in the bid document, yet Mr Newton Chirowa was presented as Senior Programme Manager of the key project team.

[11] Furthermore, the report received from the Engineering Council of South Africa (ECSA) dated October 2016 confirmed that Mr Tebogo Karabo Goeieman's registration as candidate engineer was cancelled. This was also not disclosed in the bid. Mr Tebogo Karabo Goeieman too, was presented as Programme Director of the key project team. So too was Mr Benny Makasi's registration with the South African Council of Planners not valid. This as well, was not disclosed in the bid document. Mr Makasani was presented as a Town Planner and therefore a member of the key project team.

[12] The same applies with regard to the 4th respondent as well. The registration of Mr Benard Munjeri with the Engineering Council of South Africa was not valid. This was also not disclosed in the bid document submitted by the 4th respondent. Mr Munjeri was presented as Programme Manager and therefore as a member of the key project team of the 4th respondent.

[13] The verification process confirmed that the registration of key project team personnel in respect of the 3rd respondent were valid and active. Based on the findings of the above verification process, the 2nd respondent decided to deviate from the recommendation of the BEC and BAC and to appoint the 3rd respondent.

[14] On 25th October 2016, the 2nd Respondent submitted a report to the Auditor General and to the Provincial Treasury regarding his decision to deviate from the

recommendations of the BEC and BAC in appointing the applicant as the recommended bidder. The report was submitted in the context of paragraph 2.6 of the Code of Conduct for the Bid Adjudication Committees, read with section 2 (1) of the Preferential Procurement

Policy Framework Act (PPPFA) and paragraph 16.2 of the Implementation Guide: Preferential Procurement Regulations, 2011 dated 01 December 2011, as published by the National Treasury.

The legal framework

[15] It is trite law that public procurement in the provincial sphere of government is highly regulated and find its source in section 217 of the Constitution of the Republic of South Africa Act, 108 of 1996, which provides:

"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 and 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 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"

[16] The national legislation envisaged in section 217 (3) is the Preferential Procurement Policy Framework Act 5 of 2000, ("the PPPFA") which, amongst others, sets out the guidelines and/or framework for the implementation of preferential procurement by detailing a system of allocation of preferential points to a maximum of 10 points where the lowest acceptable tender scores 90 points for price. In as far as the award of a tender to the highest scoring bidder is concerned, section 2 (1)(f) of the PPPFA provides thus:

“2 Framework for implementation of preferential procurement policy

(1) An organ of state must determine its preferential procurement policy and implement it within the following framework:

………

(f) 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..”

[17] The Regulations to the PPPFA provide for the Implementation Guide Preferential Procurement Regulations, 2011 pertaining to the Preferential Procurement Policy Framework Act, No 5 of 2000 dated 01 December 2011, ("The Implementation Guide'). In terms of paragraph 16 of the Implementation Guide, the contract must be awarded to the bidder who scored the highest total number of points and in exceptional circumstances, a contract may, on reasonable and justifiable grounds, be awarded to a bidder who did not score the highest number of points.

[18] The applicant submitted that the Promotion of Administrative Justice Act 3 of 2000 (PAJA) is applicable to this application. Section 6 of PAJA states:

“6. (1) Any person may institute proceedings in a court or a tribunal for the judicial review administrative action.

(2) A court or tribunal has the power to judicially review an administrative action if—

(a) the administrator who took it –

(i) was not authorised to do so by the empowering provision; (ii)... (iii)...

(b) a mandatory and material procedure or condition prescribed by an empowering provision was not complied with;

(c) the action was procedurally unfair

(d) …

(e) the action was taken –

(i) for a reason not authorised by the empowering provision;

(ii) for an ulterior purpose or motive;

(iii) because irrelevant considerations were taken into account or relevant considerations were not considered;

(iv) because of the unauthorised or unwarranted dictates of another person or body;

(v) in bad faith; or

(vi)...

(f) the action itself-

(i) contravenes a law or is not authorised by the empowering provision or

(ii) is not rationally connected to –

(aa) the purpose for which it was taken;

(bb) the purpose of the empowering provision;

(cc) the information before the administrator; or

(dd) the reasons given for it by the administrator;

(g) …

(h) the exercise of the power or the performance of the function authorised by the empowering provision, in pursuant of which the administrative action purportedly taken, is so unreasonable that no reasonable person could have so exercised the power or performed the function; or

(i) the action is otherwise unconstitutional or unlawful.”

Evaluation of tender

[19] It is quite apparent that according to the BEC the applicant scored the highest points and the 3rd respondent, the third highest. It was recommended that the contract be awarded to the applicant. The BAC also recommended to the 2nd respondent that the applicant be awarded the contract. The 2nd respondent investigated the key project team personnel of the recommended tenderers. The verification report revealed that three

(3) of the personnel mentioned by the applicant did not fulfill the requirements to comply as key project personnel whilst one of the members of the 2nd highest scoring tenderer (the 4th respondent) also did not have a valid certificate which was not disclosed in its bid document. On this basis, the two highest tenderers were disqualified in their bid to be awarded the tender / contract. That left the 3rd respondent as the third highest scoring bid. The tender bid of the 3rd respondent was compliant and suited all the required criteria for the awarding of the tender. Therefore, based on this verification

process, the 2nd respondent decided to award the tender to the 3rd respondent, whose tender was responsive.

[20] The contention on behalf of the applicant is that it should not have been disqualified and its tender should not have been found to be irresponsive because of the verification process conducted by the 2nd respondent. Based on the fact that three out of the team of seven key project personnel did not comply whilst the majority did comply, it suit the requirement. The submission is that the 2nd respondents’ decision is irrational and should be reviewed and set aside.

[21] On behalf of the 1st and 2nd respondents, it was submitted that this contention by the applicant is unmeritorious. It is quite clear that the tender of the applicant is non-responsive insofar as the key project team personnel are concerned. The decision by the 2nd respondent is also rationally connected to the information and material that was at his disposal, when he took the decision to award the tender to the 3rd respondent.

[22] In Mellenium Waste Manangement (Pty) Ltd v Chairperson, Tender Board: Limpopo Province and Others 2008 (2) SA 481 (SCA) the following is stated:

“[4] The final Constitution lays down minimum requirements for a valid tender process and contracts entered into following an award of tender to a successful tenderer (s217).6 The section requires that the tender process, preceding the conclusion of contracts for the supply of goods and services, must be ‘fair, equitable, transparent, competitive and cost-effective’. Finally, as the decision to award a tender constitutes administrative action, it follows that the provisions of the Promotion of Administrative Justice Act7 (PAJA) apply to the process. This is the legislative background against which the present matter must be considered.”

[23] In Allpay Consolidated v Chief Executive Officer, SASSA 2014 (1) SA 604 (CC) the following s stated:

“Proper legal approach

[22] This judgment holds that:

(a) The suggestion that “inconsequential irregularities” are of no moment conflates the test for irregularities and their import; hence an assessment of the fairness and lawfulness of the procurement process must be independent of the outcome of the tender process.

(b) The materiality of compliance with legal requirements depends on the extent to which the purpose of the requirements is attained.

(c) The constitutional and legislative procurement framework entails supply chain management prescripts that are legally binding.

(d) The fairness and lawfulness of the procurement process must be assessed in terms of the provisions of the Promotion of Administrative Justice Act (PAJA).

(e) Black economic empowerment generally requires substantive participation in the management and running of any enterprise.

(f) The remedy stage is where appropriate consideration must be given to the public interest in the consequences of setting the procurement process aside.

[40] 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. That does not mean that administrators may never depart from the system put into place or that deviations will necessarily result in procedural unfairness. But it does mean that, where administrators depart from procedures, the basis for doing so will have to be reasonable and justifiable, and the process of change must be procedurally fair.”

[24] In my view, the decision taken by the 2nd respondent is a rational decision based on the facts and the material at his disposal. It cannot be said that the decision is irrational

and need to be reviewed and set aside. Furthermore, there are also other considerations that need to be taken into account like the awarding of a just and equitable remedy. This contract was awarded in 2016. A period of more than two (2) years has lapsed during which the 3rd respondent performed in term9s of the contract and in terms of which a considerable amount of the work is done. That brings me to the practicality of this matter and the relief now contended for in the applicants’ heads of argument.

[25] The applicant no longer desire that the awarding of the tender should be reviewed and set aside but instead that it be declared invalid but not set aside. Furthermore, that the declaration of invalidity does not affect the rights of the 3rd respondent in finalizing the contract. In essence what is required is that this Court should find that the decision by the 2nd respondent to award the tender to the 3rd respondent instead of the applicant, was wrong. The decision should be declared invalid but no further consequences flow from such

declaration for the 3rd respondent. The 3rd respondent should be allowed to finalize the contract in the stipulated time period. It does however not end there. It is submitted that there should not be any extension of the contract period. I need to deal with these submissions

[26] It was submitted on behalf of the 1st and 2nd respondents that the relief prayed for is moot and only of academic value. Furthermore, that this Court should not award an order solely for this purpose seeing that the issues are no longer alive between the parties and the application has been overtaken by the events. The relief now sought by the applicant is of no value and will therefore not determine any dispute between the parties. This, the applicants’ attorneys of record was made aware of in a letter addressed to them by the attorneys of record acting on behalf of the 1st and 2nd respondents. They were also warned that a prayer for costs on a punitive scale will be made.

[27] It is trite that courts will not usually or normally grant orders where the case has become moot or academic. In National Coalition Gay and Lesbian Equality and Others v Minister of Home Affairs and Others 2000 (1) (CC) the following is stated:

“The ripeness of the matter for hearing.

[21] Although, in the High Court, the question of mootness was also raised by the respondents, there has been no appeal against the High Court’s dismissal of this argument. While the concept of ripeness is not precisely defined, it embraces a general principle that where it is possible to decide any case, civil or criminal, without reaching a constitutional issue, that is the course which should be followed.”

In Independent Electoral Commission v Langberg Municipality [2001] ZACC 23; 2001 (3) SA 925 (CC) the following is stated:

“[12] There is no live controversy between the parties. The elections are over and there is no suggestion that any order we make could have any impact on them. Stilbaai was satisfied with the provision ultimately made by the Commission. No purpose will be served by determining now whether the High Court was right when it concluded that the section 19(2) rights of the voters of Stilbaai town had been infringed by the Commission’s decision concerning the establishment of a voting station there. Nor is there any practical value in deciding whether the Commission’s director of delimitation properly applied his

mind to the need for Stilbaai town to become a separate voting district or to have an additional mobile voting station.”

[28] However, the Constitutional Court has made it clear that mootness is not an absolute bar to justiciability, and that the court has a discretion to hear the matter, if it will be in the interest of justice to do so.

In Van Wyk v Unitas Hospital [2007] ZACC 24; 2008 (2) SA 472 (CC) the following is stated:

“[29] It is by now axiomatic that mootness does not constitute an absolute bar to the justiciability of an issue. The Court has a discretion whether or not to hear a matter. The test is one of the interests of justice. A relevant consideration is whether the order that the Court may make will have any practical effect either on the parties or on others. In the exercise of its discretion the Court may decide to resolve an issue that is moot if to do so will be in the public interest. This will be the case where it will either benefit the larger public or achieve legal certainty.”

[29] The contract term expires during October 2019. The 3rd respondent in its answering affidavit stated that as at 25th January 2019, 88.44% of the work have already been completed. This application was heard on 02 August 2019, more than six (6) months

after the 25th January 2019. So already more than six (6) months have passed since the 3rd respondent stated that 88.44% of the work have been completed. It goes without saying that even a greater percentage of the work must have been completed at the time that this application was argued on 02nd August 2019. Even more would have been done by the time that this judgement will be handed down. The contract will most definitely have run its course in the near future. No wonder the applicant contend that there must be a declaration of invalidity but with no consequences flowing from such declaration. This is not the type of case in which a court would grant an order despite the mootness of the case, in the interest of justice.

[30] The applicant contend in its heads of argument and during oral submissions that this Court should order that the contract should not be extended beyond the initial term agreed upon. The submission is that the contract should not be open ended. I am not inclined to accede to this request by the applicant. The nett effect of such an order would be that this Court would be prescriptive to the parties what they should or should not agree upon. This would impact negatively on the freedom of the parties to negotiate and agree on the extension of the contract, if indeed necessary. The parties must enjoy freedom of contract. As correctly submitted by Adv. Hitchings on behalf of the 3rd respondent, this prayer amounts to an interdict that is sought against the 1st, 2nd and 3rd respondents. This was not what was prayed for in the notice of motion. Furthermore, no case has been made out by the applicant for such relief. It is only in the heads of argument and during oral submissions, that this was contended for. I am in full agreement with this contention by Adv. Hitchings.

[31] Adv. Mokoena SC also submitted that the order now prayed for in the heads of argument namely that the rights of the 3rd respondent in finalizing the contract will not be affected, “but not for any period further than the initial contract,” is not justified. Reason being that not only was this relief not sought in the notice of motion or in the founding affidavit, but it would constitute a substitution of the decision making discretion to be excised by the relevant administrative functionary. This Court would than in the process usurp the powers and functions of the administrative functionary, something that could not be done. It is up to the 1st, 2nd and 3rd respondents to negotiate an extension of the contract if need be, which right this Court cannot take away from them without any

justification. As correctly submitted by Adv. Mokoena SC that by so doing, this Court would in affect be exercising a discretion in future and in a vacuum, without knowledge of any of the factors which would inform the exercise of such a discretion. This Court would be interdicting the conclusion of a contract which would otherwise have been perfectly lawful. I am in full agreement with this submission by Adv. Mokoena SC.

Conclusion

[32] I am unconvinced that the decision of the 2nd respondent is not rationally connected to the facts and material that was placed before him. I am of the view that the decision is rationally connected to the facts and one which a decision-maker would have made under the circumstances of this case. The review of the decision of the 2nd respondent in awarding the tender to the 3rd respondent, should consequently fail.

Costs

[33] As far as costs are concerned, it should follow the result and be awarded in favour of the successful litigant, in this instance to the 1st and 2nd respondents. The 3rd respondent did not actually entered into the fray and was only guarding its interest. The 3rd respondent stated that it would abide the decision of this Court. I am of the view that given the attitude of the 3rd respondent, no costs order should be made in its favour but that it should bear its own costs. This matter is meritorious of the

employment of two counsel. Both the applicant as well as the 1st and 2nd respondents employed the services of two counsel (senior and junior or senior-junior and junior). The costs should therefore also include the costs consequent upon the employment of two counsel.

[34] It was contended that a punitive costs order should be made against the applicant because of its stance taken and especially the fact that it was forewarned not to proceed with this application. I am holding a different view. The applicant was well within its right to challenge the decision taken by the 2nd respondent to award the tender to the 3rd respondent instead of awarding it to the applicant. It is indeed correct that the applicant changed its stance from the reviewing and setting aside of the tender to a declaration of invalidity with no consequences flowing from it insofar as the finalization of contract is concerned. I am however of the view that the applicant should not be saddled with a punitive costs order under these circumstances. A punitive costs order would amount to punishment for the exercising of its rights by the applicant. In my view, costs should be awarded on a party-and-party basis, taxed on the applicable high court scale.

Order

[35] Resultantly, the following order is made:

(i) The application is dismissed.

(ii) The applicant is ordered to pay the costs of this application incurred by the 1st and 2nd respondents on a party – and – party basis.

(iii) Such costs to include the costs consequent upon the employment of two counsel (junior and senior), where applicable.

(iv) No costs order is made in favour of the 3rd respondent and the 3rd respondent should therefore bear its own costs.

_______________

R D HENDRICKS

ACTING DEPUTY JUDGE PRESIDENT OF THE HIGH COURT,

NORTH WEST DIVISION, MAHIKENG