Fountain Civil Engineering (Pty) Ltd v Mhlathuse Water and Others (10138/04) [2004] ZAKZHC 14 (24 January 2004)

IN

THE HIGH COURT OF SOUTH AFRICA

NATAL

PROVINCIAL DIVISION

CASE NO : 10138/04

In the matter between :

FOUNTAIN CIVIL ENGINEERING (PTY) LTD Applicant

And

MHLATHUZE

WATER First Respondent

MURRAY &

ROBERTS CONSTRUCTION

(PTY) LTD Second Respondent

MAKHUBU CIVIL

Third Respondent

J

U D G M E N T

HUGO J .

During August 2004 the First Respondent advertised a tender was to supply and erection of certain pipes from Empangeni to Richardsbay.

It is common cause that the First Respondent is a organ of state as defined in the PERFERATION PROCUREMENT POLOCIY FRAMEWORK ACT NO 5 OF 2000 and as such is bound by the provisions of that act and its figurations.

This Act was being published in terms of Section 217(3) of The Constitution, Act 108 of 1996. Section 217 of the constitution provides as follow:

“217. (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 or 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 the 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) may be implemented.”

Sect 1 of Act 5 of 2000 (PPPN) defines a quote “acceptable tender” as “any tender which in all respects comply with the specifications and conditions of tender as set out in the tender document.”

The Applicant and ten of eleven other interpleads a tender in respect of this advertisement. The applicant did not succeed and the tender was awarded to Second Respondent.

The Applicant has expressed its dissatisfaction at this state of affairs by launching the present application as a matter of urgency. The applicant applies for the following relief :

“1. That the requirement for service and notice in terms of Rule 6(12) be dispense with and that the application be heard in a matter of urgency.

2. Reviewing and setting aside the discussion of the First Respondent to disqualify the Applicant from the tender alternatively the First Respondent failure to take the Applicants tender into consideration.

3. That Applicant be appointed as the contractor and be awarded the tender and the contract number 557/001/2004 for the Empangeni Regional Effluent Handling and Disposal System.

4. Alternatively to par 1,2 and 3 above at the decision of the First Respondent to award contract number 557/001/2004 for the Empangeni Regional Effluent Handling and Disposal System to the Second and Third Respondent as a joint venture dated 8 November 2004 be reviewed and set aside.

5. That Second and Third Respondent be ordered to pay the costs of the application.”

The Second and Third Respondents do not joined the fray. It appears from the papers that the Applicants tender was not considered and was disqualified because it did not “complete and submit the tendered goal calculations.”

Contained in the structions to tenderers are the following paragraphs

2.6

TENDER

DOCUMENTS

“Complete set of tender documents comprises.

One bound contract document.

One copy of each of the drawings listed in the list of drawings.

Four pages of the document are numbered and tenderers shall check for omissions of duplications and shall satisfy themselves with the clarity and tent of consistency of the document of obtaining if necessary, corrections or explanations from the engineer in writing.

….. Failure to complete and sign all of the required forms contained under Section 9 of the document may render the tender non responses and lead to its rejection.”

2.16 REJECTION OF

TENDERS

Any tender which does not comply with the Instructions to Tenderers may be regarded and incomplete and may be rejected.

The Employer does not bind itself to accept the lowest or any tender.”

2.33.3.1 “The minimum Contract Participation Goal percentage (Ds) is 10%.

2.33.3.2 The maximum Contract Participation Goal percentage above which no further adjudication points will be awarded (X) is 35%.

2.33.3.3 A Tender will qualify for tender adjudication points if its tendered Contract Participation Goals exceed the minimum set in 3.1 above.”

Of particular importance in this regard are the provisions of clause 2.33.4.1 “Examination of Tenders and Determination of Responsive” (Sick)

Prior to the detailed evaluation of tenders, each tender will be examined to establish it: (sick)

• meets the requirements of the Conditions of Tender;

has been properly sighed;

is responsive to the requirements of the Contract document;

provides any clarification and/or substantiation required;

complies with the tender submission requirements in all other respects.

A responsive tender is one, which conforms to all the terms, Conditions and Specifications of the Contract without material deviation or qualification. A material deviation or qualification is one which;

Could detrimentally affect the scope, quality, or performance of the Work

Changes risks and responsibilities under the Contract for any of the parties involved with the Contract; or

Would affect the competitive position of other Tenderers presenting responsive tenders, if it were to be rectified.

If the Tender does not meet the requirements or is not responsive, it is liable to be rejected by the Employer, and may not subsequently be made acceptable to the Employer by correction or withdrawal of the non-conforming deviation or reservation.”

It is common cause that the Applicant did not fill in that section of the contract document that deals with incremetation of targeted procurement. There is a considerable amount of documentation in the contract documents dealing with the so-called tendered goal calculation. Catogot has been pointed out however that this set of documents is headed as follows:

NOTE: This annex may be used by Tenderer calculate their expected contract participation goal for the given contract. Employers may use this annex to assist them in understanding how the Tenderer intents achieving his goal obligations in the performance of the contract.

As I have said the applicant did not full in the document and has argued that it was not necessary for it to have done so because he did not intend to claim any bonus participation points.

However it is common cause that the applicant is not and affirmable business enterprise (ABE) as intended in the contract documents. It is also common cause that the Applicants did not intend subcontracting with or entering their adventures with any such enterprises. In terms of Section 2 of the PPPF Act provides that a preference point system must be followed by in particular in 2(1)(3) provides that “for contracts with a rand value above the prescribed amount, a maximum of 10 points may be allocated for specific goals is contemplated in paragraph (d) provided that the lowest acceptable tenders scores 90 points for price.”

Section 2(1)(d) provides that the specific goals may include

(i) contracting with persons or categories of persons, historically disadvantage by unfair discrimination on the basis of race, gender or disability.”

The applicant is and was content to rely only on the 90 points which it was allegedly entitled to having tendered the lowest price and did not intent claiming any additional preference points bases upon its ABE status for its intentions to contract with peolpe

DATE OF TRIAL : 6 January 2004

COUNSEL FOR THE APPLICANT : Adv M Snyman instructed by, M J Hood and Associates

COUNSEL

FOR THE

1st RESPONDENT : Adv C J Pammenter SC with Adv L Naidoo instructed by Shepstone & Wylie

DATE OF JUDGMENT : 14 January 2004