MACP Construction (Pty) Ltd v Greater Tzaneen Municipality and Another (5906/2012) [2012] ZAGPPHC 55 (12 April 2012)

MACP Construction (Pty) Ltd v Greater Tzaneen Municipality and Another (5906/2012) [2012] ZAGPPHC 55 (12 April 2012)

The court found that the Municipality's use of the arithmetical average of all tender prices as a basis for eliminating tenders was irrational, unscientific, and not supported by National Treasury guidelines. This method failed to account for legitimate differences in production costs and the possibility of strategic pricing by tenderers. The process was not rationally connected to the statutory and constitutional requirements for fairness, competitiveness, and cost-effectiveness. The court held that the applicant was not required to exhaust internal remedies, as any appeal would not provide effective relief due to accrued rights of the successful tenderer. The decision to award the...

Citation
[2012] ZAGPPHC 55
Parties
Applicant: MACP Construction (Pty) Limited; Respondent: Greater Tzaneen Municipality; Respondent: Makgetsi Construction Enterprises CC
Court
North Gauteng High Court, Pretoria
Jurisdiction
South Africa
Judgment Date
12 April 2012
Case Number
5906/2012
Procedural Posture
Review Application / Final Judgment on Urgent Review
Outcome
Application for review granted; tender award and service level agreement set aside; matter remitted for reconsideration; costs awarded to applicant.
Judges
Tuchten
Legal Topics
Promotion of Administrative Justice Act, Municipal Tender Review, Irrationality, Internal Remedies, Costs Award
Administrative Law Civil Procedure Promotion of Administrative Justice Act Municipal Tender Review Irrationality Internal Remedies Costs Award

Case Brief

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Parties

MACP Construction (Pty) Limited

Applicant

Greater Tzaneen Municipality

Respondent

Makgetsi Construction Enterprises CC

Respondent

Procedural Posture

Review Application / Final Judgment on Urgent Review

Legal Issues

  1. 1 Whether the use of the arithmetical average as a basis for eliminating tenders was rational and lawful.
  2. 2 Whether the applicant was required to exhaust internal remedies before approaching the court.
  3. 3 Whether the tender process complied with constitutional and statutory requirements for fairness, competitiveness, and cost-effectiveness.

Ratio Decidendi

The court found that the Municipality's use of the arithmetical average of all tender prices as a basis for eliminating tenders was irrational, unscientific, and not supported by National Treasury guidelines. This method failed to account for legitimate differences in production costs and the possibility of strategic pricing by tenderers. The process was not rationally connected to the statutory and constitutional requirements for fairness, competitiveness, and cost-effectiveness. The court held that the applicant was not required to exhaust internal remedies, as any appeal would not provide effective relief due to accrued rights of the successful tenderer. The decision to award the...

Court Disposition

Application for review granted; tender award and service level agreement set aside; matter remitted for reconsideration; costs awarded to applicant.

Orders

  • The decision of the Municipal Manager to award tender SCMU 23/2011 to the second respondent and the service level agreement concluded on 17 January 2012 are set aside.
  • The matter is remitted to the first respondent for reconsideration of the tender from the stage immediately prior to the exclusion of the applicant and four other tenderers based on deviation from the arithmetical average.