Roadmac Surfacing (Pty) Ltd v MEC for the Department of Public Works and Roads, North West Province and Another (UM23/22) [2023] ZANWHC 199 (2 November 2023)

SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document in compliance with the law and SAFLII Policy

IN THE HIGH COURT OF SOUTH AFRICA

NORTH WEST DIVISION – MAHIKENG

CASE NO: UM23/22

Reportable: YES/NO

Circulate to Judges:

YES/NO

Circulate to Magistrates:

YES/NO

Circulate to Regional Magistrates: YES/NO

ROADMAC SURFACING (PTY) LTD APPLICANT

And

MEC FOR THE DEPARTMENT OF

PUBLIC WORKS & ROADS,

NORTH WEST PROVINCE

1ST RESPONDENT

DOWN TOUCH INVESTMENTS (PTY) LTD 2ND RESPONDENT

ORDER

(i) The application is dismissed with costs.

JUDGMENT

REDDY AJ

INTRODUCTION

[1] The purpose of this review by the applicant is predicated on the failure by the first respondent to award Tender No: PWR85/13(“the tender”) fairly, transparently and in manner that is cost effective. Further thereto, the decision to disqualify the applicant from this tender and or to award the tender to the second respondent be reviewed and set aside. Resultantly, the applicant further moves that the contract concluded with the second respondent because of the tender, be set aside. Pursuant to the latter, that the tender be awarded to the applicant in terms of the section 8(1)(c (ii) (aa) of the Promotion of Administrative Justice Act 3 of 2000,(“ PAJA”), alternatively remitting the tender for the bid evaluation and adjudication by the first respondent subject to such directions as the court deems meet, with the due consideration of the court’s findings in terms of section 8(1)(c of PAJA.

AD PARTIES

[2] The applicant is Roadmac Surfacing, (“Roadmac”), a company registered and incorporated in terms of the statutes of the Republic of South Africa, with the main place of business at 3[...] E[...] Road, Bartlett Boksburg, Gauteng.

[3] The first respondent is the Member of the Executive Committee: Public Works & Roads: North West Province,(“the MEC”), in his capacity as such and whose address for the purposes of this application is Old Parliament Complex, Modiri Molema Road, Mmabatho, North West Province.

[4] The second respondent is Down Touch Investments (Pty) Ltd,(“Down Touch”), a company registered and incorporated in terms of the statutes of the Republic of South Africa with registered address situated at 5[...] L[...] Road, Industrial Area, Welkom, Free State Province.

[5] The first and second respondent opposes the relief.

OVERVIEW

[6] The issue can be formulated as follows. Roadmac and various other tenderers including Down Touch , took interest on an invitation, by the MEC in Tender No. PWR 85/13(“the tender”), to be considered as a service provider for the rehabilitation of road P175/1 from Potchefstroom to Vanderbijlpark. Roadmac proceeded through the various stages of the tender process. It was established that Roadmac was the second lowest tenderer whilst Down Touch was the eleventh lowest. On 25 January 2022, Roadmac came to understand that the tender had been awarded to Down Touch, whereas properly assessed, the tender should have been awarded to the Roadmac.

[7] Consequent to the award of the tender to Down Touch, Roadmac requested written reasons from the MEC for same. These reasons were provided in an unsigned letter, which the Roadmac contends was never received. The nucleus of the disqualification of Roadmac hinged on the Roadmac’s failure to fully complete “Annex E” of the Local Production Content as required.

Submissions by Applicant

[8] Mr. Buys asserted that the Tender Data does not require “Annex E” to be submitted along with the bid documents to be deemed a responsive and compliant tender. The bid document expressly states and limits the required documents to the “Declaration Certificate “and “Annex C.” The submission goes that the required documents are a closed list with no room for interpretation. As a result, Roadmac cannot be disqualified for not submitting documents that were not required by the Tender Data.

[9] The Bid Adjudication Committee disqualified the applicant on a factually incorrect basis, in that it reasoned that “SBD6.2 ANNEXURE C AND E INCOMPLETE.” Elucidating on the basis of the disqualification, Mr Buys asserted that Roadmac did not submit a completed “Annex E”. However, it was never an obligation to submit “Annex E.”

[10] Mr. Buys opined that according to the Tender Data, more pertinently the “Local Content Declaration”, the MEC only has the power to request “Annex D” and “Annex E” in order to verify information contained in “Annex C” and the “ Local Content Declaration; however, it is required that only “ Annex C” be submitted with the documentation not “ Annex E.”

[11] In the view of Mr Buys, Roadmac was not only a compliant and responsive tenderer in terms of the provisions of section 2(1)(f) of the Preferential Procurement Policy Framework Act 5 of 2000 (“ the PPPFA”) the tender should have been awarded to Roadmac due to the Roadmac’s tender also lower in price with the highest B-BBEE score.

[12] Mr. Buys advanced the contention, that given the ambiguity in the clauses dealing with the completion of this tender, the main relief ought to succeed given his contention that substance should prevail over form. Finally, Mr Buys emphasised that the Regulations that formed the basis of the consideration for the tender although valid at the time of submission of this tender, have now been declared unconstitutional and invalid, which impacted on Roadmac’s tender bid.

Submissions by first respondent

[13] Mr. Mmolawa asserted that the completion of Annex E was a substantive requirement for a responsive tender. Roadmac chose to draw a diagonal line on the face of Annex E, contrary to the tender requirement, which necessitated it to be completed. Consequently, the tender was inexorably justifiably disqualified.

Submissions by second respondent

[14] Mr Grobler asserts that the disqualification of Roadmac was fully justified when juxtaposed with the tender requirements. Roadmac was the author of its own misfortune by not submitting a responsive bid. This must be seen against the backdrop of Roadmac conceding to not completing Annex “D “and “E” to Form C5. The submission further ran that if Roadmac were permitted by the MEC to submit the necessary information after the closing of the tender bids, this would impact on the fairness to other tenderers and would conflate with section 217 of the Constitution of the Republic of South Africa, Act 108 of 1996, (“the Constitution”). This would have constituted an irregularity in the process.

[15] Mr Grobler questioned the contention that Roadmac is in possession of the relevant information that is required to complete the bid documents but purposefully elected not to, as irrational. In dealing with the disputed Regulations, Mr Grobler avowed that he was unable to gauge the correlation between a fully completed bid and the Regulations.

The law

[16] In terms of section 2 of the Constitution of the Republic of South Africa, the Constitution is the supreme law of our country. It provides in s217(1) that 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. A subset of s 217 is s217(3), which evinces that national legislation must prescribe a framework within which the policy referred to in s217(2) must be implemented. The national legislation referred to would result in a synergy amongst the various pieces of legislation to ultimately give effect to various competing interest in a lawful, reasonable, and procedurally fair manner.

[17] To this end, the following was held in Metro Project CC and Another v Klerksdorp Local Municipality and others 2004(3) SA 346 (SCA) at paragraphs [11] – [14]

“[11] As an organ of state in the local government sphere the first respondent in awarding a tender is obliged to comply with s 10G(5)(a) of the Local Government Transition Act 209 of 1993 read with s 217(1) of the Constitution of the Republic of South Africa Act 108 of 1996. These provisions mandate it to do so in accordance with a system which is fair, equitable, transparent, competitive and cost-effective. The Preferential Procurement Policy Framework Act 5 of 2000 requires organs of state to establish a procurement policy, and also makes it obligatory for the first respondent, as an organ of State in the local sphere, to follow a tender procedure for the procurement of goods and services.

[12] There is another reason that the tender procedure of a local authority must be fair. Invitations to tender by organs of State and the awarding of tenders where it is done in the exercise of public power is an administrative process (see Logbro Properties CC v Bedderson NO and Others 2003 (2) SA 460 (SCA) at 465F-466C where the leading cases are collected). Section 3(2)(a) of the Promotion of Administrative Justice Act 3 of 2000 requires the process to be lawful, procedurally fair and justifiable. But primarily, in the case of a local authority, the process must be fair because s 10G (5)(a) of the Local Government Transition Act 1993 requires it.

[13] In the Logbro Properties case supra at 466H-467C Cameron JA referred .’to the ‘ever-flexible duty to act fairly’ that rested on a provincial tender committee. Fairness must be decided on the circumstances of each case. It may in given circumstances be fair to ask a tenderer to explain an ambiguity in its tender; it may be fair to allow a tenderer to correct an obvious mistake; it may, particularly in a complex tender, be fair to ask for clarification or details required for its proper evaluation. Whatever is done may not cause the process to lose the attribute of fairness or, in the local government sphere, the attributes of transparency, competitiveness and cost-effective.”

ANALYSIS

[18] Roadmac seems to harbour under a misapprehension that it is the final arbiter of whether its tender was compliant. This is a misnomer. The evaluation of Roadmac’s tender must be done on the tender documentation as a stand-alone and how it was completed or not completed, and applying that to the applicable legal framework. See: Roadmac Surfacing (Pty) Ltd v MEC For The Department of Police, Roads and Transport, Free State Province, and Another (171/2022) [2022] ZAFSHC 318.

[19] Fairness undoubtedly has a meaningful role to play in the determination of whether a tender is responsive. The homely metaphor

that fairness must be determined within the purview of each tender unequivocally finds application. In appropriate circumstances the tenderer may be called on to explain any ambiguity that may arise, and/or to correct or explain an obvious error. In casu Roadmac, pinned its colours to its mask by electing to complete the tender documents in a specific manner and later sought to justify its approach.

[20] In Chairperson, Standing Tender Committee and Others v JFE Sapela Electronics and Others 2008 (2) SA 638 (SCA) at paragraph [11] an “acceptable tender” is described as follows:

“An 'acceptable tender' in turn is defined in s 1 as meaning 'any tender which, in all “respects, complies with the specifications and conditions of tender as set out in the tender document'. It is well established that the legislature and executive in all spheres are constrained by the principle that they may exercise no power and perform no function beyond those conferred upon them by law. This is the doctrine of legality. ….. The acceptance by an organ of State of a tender which is not 'acceptable' within the meaning of the Preferential Act is therefore an invalid act and falls to be set aside. In other words, the requirement of acceptability is a threshold requirement.”

[21] In Millennium Waste Management (Pty) Ltd v Chairperson, Tender Board: Limpopo Province and Others, 2008 (2) SA (SCA) at paragraphs [18] - [19], the Supreme Court of Appeal considered the definition of “acceptable tender” and held as follows, extracting from JFE Sapela Electronics with approval:

“[18] …. Therefore the definition in the statute must be construed within the context of the entire s 217 while striving for an interpretation which promotes 'the spirit, purport and objects of the Bill of Rights' as required by s 39(2) of the Constitution.

In Chairperson: Standing Tender Committee and Others v JFE Sapela Electronics (Pty) Ltd and Others Scott JA said (para 14):

‘The definition of 'acceptable tender' in the Preferential Act must be construed against the background of the system envisaged by section 217(1) of the Constitution, namely one which is 'fair, equitable, transparent, competitive and cost-effective'. In other words, whether 'the tender in all respects complies with the specifications and conditions set out in the contract documents must be judged against these values'.

[19] In this context the definition of tender cannot be given its wide literal meaning. It certainly cannot mean that a tender must comply with conditions which are immaterial, unreasonable or unconstitutional. The defect relied on by the tender committee

in this case is the appellant's failure to sign a duly completed form, in circumstances where it is clear that the failure was

occasioned by an oversight. In determining whether this non-compliance rendered the appellant's tender unacceptable, regard must also be had to the purpose of the declaration of interest in relation to the tender process in question.”

[22] Cutting the wheat from the chaff to my mind, simply leaves the crisp issue of whether the applicant had submitted a responsive bid? This relates Form C5, Declaration Certificate for Local Production Content for Designated Sectors (SBD 6.2) and Annex C, D E. It is common cause that Annex E was not completed fully by Roadmac.

[23] In terms of the tender requirements, it was peremptory for the tenderers to study amongst others the general conditions, definitions , directives applicable in respect of Local Content as prescribed in the Preferential Procurement Regulations 2017, the South African Bureau of Standards (SABS) approved technical specification number SATS 1286:2011(Edition 1) and the Guidance on the Calculation of Local Content together with the Local Content Declaration Templates[Annex C Local Content Declaration : Summary Schedule to Annex C) and E ( Local Content Declaration :Supporting Schedule to Annex C) and E( Local Content Declaration Supporting Schedule to Annex C)].

[24] Any ambiguity that may have been harboured in the completion of the tender data was addressed at a Clarification

Meeting held at the Site Venue for the Rehabilitation of the Road P175/1 from Potchefstroom to Vanderbijlpark Road on 9 September 2021. Mr Manoko as a representative of the MEC in the opening and introduction to the meeting informed the tenderers present that

notwithstanding the emphasizing certain salient portions of the contract document, tenderers were nonetheless required to acquaint

themselves with the entire content of the contract documents.

[25] Clause 4.1.1 of the Tender Data specifies that only those tenderers who complied with the eligibility criteria as set out in this clause, would be eligible to have their tenders considered. Clause 4.1.1 Local Content (Form C5) requires completion of the Local Production and Content of Goods document to be responsive and compliant, each tenderer had to complete “Annexure E” of the Local Production and Content as obligatory in terms of the Preferential Procurement Regulations, GN R32 GG 40553 (20 January 2017). Roadmac chose not to do so, notwithstanding guidance provided at a clarification meeting. There was no ambiguity in the completion of the tender documents by Roadmac that called for clarification or correction to give effect to the spirit of fairness within the subset of due consideration of Roadmac’s tender. Roadmac chose to stand and fall by the tender documents that had been submitted, notwithstanding the caution provided for in terms of the serious consequences that were attached to a non-responsive tender.

[26] Annex A (Form A3), Annex D (Form A3): Mrs Hart emphasized the importance of the document as it is a declaration and bidders are disqualified if the document is incomplete or not signed. She explained the questions in detail and referred to section 5. She explained the completion of the tables and indicated that if bidders failed to declare directors/ trustees/ members or stakeholders information the bidder will be regarded as non-compliant and be disqualified.

[27] Annex C (Form C1): Mrs Hart explained that this bidding document is not compulsory as it is a form for the bidder to claim points in terms of their contributions (BBBEE). She also indicated that the department cannot allocate points if the claim is not completed.

[28] Local Production and content: Mrs Hart explained that the SBD 6.2 Annex C, D& E is a condition on the bid and that bidders must ensure that Annex C and Annex F is fully completed and calculated as indicated on SBD 6.2 page 76 of the bidding document. She explained Annex C in depth and informed bidders that the amount in C24 on Annex C must tally with annexure E (E13) after manpower costs, factory overheads, administration overheads and mark ups were taken into consideration. Bidders were warned not to summarise the items on Annex E, but ensure it is declared in line with SBD 6.2.

[29] Furthermore, she informed bidders that the winning bid must update Annexes C & E monthly as audits will be conducted and the documents must be safeguard for 5 years after completion of the project. Bidders that did not comply with the condition will be disqualified and will not be considered for further evaluation.

[30] To have a proper sense of the disqualification of the applicant by the BAC on the basis that SBD6.2 Annexes C and E was incomplete, the tender process in broad warrants encapsulation. A successful tender must pass the muster of four enquiries. The first would require of the tender to cohere with what is prescribed as an acceptable tender within the purview of section 1 of the PPPFA. Importantly of relevance, in the first enquiry, tenderers are to comply with the eligibility criteria as set out in Clause 4.1.1 of the Tender Data, which amongst others include that the tenderer must complete the form of Local Production and Content of Goods, Form C5, SBD 6.2. If the tender is responsive the tenderer would progress to the second enquiry, whereat the tender is to meet the requirements as evinced as per Regulation 4 of the PPPFA. On condition that the tender is responsive, the tenderer progresses to the scoring as displayed by Regulations 5 and 6 of the PPPFA. The fourth and final enquiry is the consideration of additional objective criteria as required in terms of section 3 (1)(f) of the PPPFA.

[31] Interspersed in the tender document are clauses dealing with the positive obligation that is intrusive in the completion of the tender bid and the risks inherent in an election not to comply. There certainly exists an interdependence in the information that needs to populated in Annexes A, D and E. Annexes A, D and E must be consolidated in with Annex C. Annex E is the Local Content Declaration – Supporting Schedule to C. Annex D and E are supplementary schedule to Annex C. Fully completed Annex E is a peremptory requirement. A correctly completed Annex E is therefore not placing reliance on form rather than substance.

[32] The BAC correctly halted the progress of Roadmac’s tender due to an intentional non-acquiescence with the directives pertaining to the tender data. Roadmac did not comply with the substantive specifications and conditions of the tender data. The latter conditions cannot be said to be unreasonable, immaterial, or unconstitutional. In my view, Roadmac was correctly disqualified from further progress.

[33] Costs are at the discretion of the court. There is no basis to deviate from the customary order, that costs follow the result.

[34] In the premises, I make the following order:

Order

(i) The application is dismissed with costs.

A REDDY

ACTING JUDGE OF THE HIGH COURT

OF SOUTH AFRICA

NORTH WEST DIVISION, MAHIKENG

APPEARANCES:

Counsel For Applicant Adv C Buys Attorneys For Applicant L& V Attorneys C/O Smith Stanton Attorneys 29 Warren Street Mahikeng Counsel For 1stRespondent Adv M Mmolawa State Attorney Cnr Sekame Road & Dr James Moroka Drive 1st Floor Mega City Complex Mmabatho Counsel for 2nd Respondent Adv S Grobler Attorney For Respondents Peyber Attorneys Bloemfontein Date Of Hearing: 06 JUNE 2023 Date Of Judgment: 02 NOVEMBER 2023