Afrirent Fleet (Pty) Ltd v Moqhaka Local Municipality and another
| Jurisdiction | http://justis.com/jurisdiction/166,South Africa |
| Judge | Daniso J and Cronjé AJ |
| Judgment Date | 18 August 2023 |
| Citation | 2023 JDR 3200 (FB) |
| Hearing Date | 29 May 2023 |
| Docket Number | 4023/2021 |
| Court | Free State Division, Bloemfontein |
Cronjé AJ:
I NATURE OF THE APPLICATION
The Applicant (“Afrirent”) brought a review application to have the awarding of a tender to the Second Respondent (“Moipone”) by the First Respondent (“the municipality”) be: declared unlawful and void ab initio; that the tender process be reviewed and the tender set aside; and compensation for its alleged loss as a result of the awarding of the tender to Moipone. It is important to state that this judgment does not determine the merits/demerits of the relationship between the municipality and Moipone. If the tender did not comply with legislative provisions, Moipone may suffer the same consequence of not being entitled to any relief. What is good for the goose is good for the gander.
The precise relief sought are:
The decision by the First Respondent to award the tender with Reference number: 3/2/3/2020–21 and dated 20 April 2021 described as “APPOINTMENT LETTER: SUPPLY AND DELIVER[Y] OF MUNICIPAL FLEET ON FINANCE LEASE (3/2/3/2020-21) [“the tender”] to Moipone [Moipone Fleet (Pty) Ltd] is declared unlawful and invalid ab initio.”
The decision by the First Respondent to award the tender referred to in paragraph 1.1 above to Second Respondent is reviewed and set aside.
Any agreement concluded between the First Respondent and Moipone in consequence of the award of the tender by the First Respondent to Moipone is set aside.
2023 JDR 3200 p3
The Applicant is entitled to just and equitable compensation for the loss of profits in accordance with Section 8(1)(c)(ii)(bb) of the Promotion of Administrative Justice Act, 3 of 2000, which amount of compensation is equal to Afrirent’s bidding price (R139 979 786.00, VAT inclusive).
The First Respondent is ordered to pay the cost of the application, such costs to include those consequent upon the employment of two counsel, where so employed.
Afrirent also applies for an order granting any further and/or alternative relief, including but not limited to, an order directing the First Respondent to award the tender to the Applicant forthwith for a period of three (3) years from date of award.” [1] (own emphasis)
II THE INVITATION TO SUBMIT A BID/TENDER
On or about 19 August 2020, the municipality invited interested prospective bidders to submit offers for the tender. The closing date was 21 September 2020 at 12:00. [2]
The requirements in respect of the tender were inter alia:
Only SANAS accredited B-BBEE certificates and the sworn B-BBEE Affidavit Exempted Micro Enterprise which was signed by the Commissioner of Oaths, also is accepted. No other B-BBEE certificates would be acceptable according to the new preferential procurement regulations (PPR).
Bidders who do not have B-BBEE certificates would not be disqualified but would not qualify for B-BBEE points.
2023 JDR 3200 p4
Bids would be evaluated according to the 80/20 or 90/10 for preferential points system.
Tenders submitted were to hold good for a period up to 90 days.
. . .
Preference would be given to service providers within the Moqhaka Local municipality area.
The bid proposals will not necessary be accepted and the municipality reserves the right to accept, where applicable, a part or portion of any bid (or where possible) bids/proposals from multiple bidders.
The municipality also reserved the right in its sole discretion to readvertise or not to award the tender.
. . .
Failure to attach the abovementioned copies would result in the tender being non-responsive. [3]
The municipality would only communicate the outcome of the bid with the successful bidder and more information could be obtained from the municipal website.” (own emphasis)
Five tenders were submitted and were found to be responsive. [4] For purposes of this judgement only that of Afrirent and Moipone are discussed. Afrirent’s tender price was R139 979 786.00 and that of Moipone R154 874 242.00. [5]
2023 JDR 3200 p5
III AFRIRENT’S B-BBEE CERTIFICATES AND COMPLAINT
It complains that the municipality acted unlawfully [6] when it did not award it any B-BBEE points. It had a valid certificate at date that it submitted its tender. It seeks compensation in terms of the Promotion of Justice Act [7] (“PAJA”). The municipality aligns itself with Afrirent in so far as it states that the process was irregular.
The certificate that Afrirent submitted with its tender documents expired on 12 September 2020. [8] As a result of the expired certificate, Afrirent forfeited 10 (ten) B-BBEE points. If it received the points, it would have received the highest points which would have entitled it to be awarded the tender.
On 17 September 2020, [9] INC Ratings informed Afrirent that its audit findings in respect of its certificate will be issued as soon as a decision is made. [10] On 9 October 2020, a B-BBEE verification certificate was issued to Afrirent with date of expiry on 8 October 2021. [11] This entitled Afrirent to 10 B-BBEE points if the evaluation committee accepted it.
Annexure “MRG1” shows that Mr Gama (deponent of Afrirent) sent an e-mail to Mr Visagie of the municipality on 15 October 2020 at 6:17 pm wherein he stated:
“Afri Rent [12] responded to the fleet tender which was advertised by Moqhaka municipality, at the time when the tender closed we were still busy with the B-BBEE
2023 JDR 3200 p6
verification and we attached a letter from a SANAS accredited verification agency confirming the audit.
I am happy to inform you that the verification has been completed and we retained our level 1 B-BBEE score. I have attached the certificate to enable the municipality to allocate the necessary B-BBEE points.” [13]
It forwarded a valid copy of its certificate to Supply Chain after the tender was evaluated. It was not too late as the certificate was not mandatory at closing date of the bids. [14] It submits that the SCM regulations did not prohibit a request for a certificate before/upon appointment as with tax certificates and municipal rates and taxes accounts a provided for by the Municipal Finance Management Act [15] , Circular no. 90. [16]
The minutes of the meeting of the Bid Adjudication Committee (“BAC”), held on 22 October 2020, showed serious irregularities which favoured Moipone. Secret price negotiations for various items took place and in failing to accept Afrirent’s fresh B-BBEE certificate, Moipone had an unfair advantage, which resulted in it being awarded the tender irregularly after it lowered its tender price. [17]
In respect of the B-BBEE certificate of Afrirent, the BAC minutes record:
“Members asked whether Afri Rent (Pty) Ltd could not have been contacted to provide the municipality with the latest valid B-BBEE certificate before adjudication, as the point difference between the two bidders was on 0.42.
2023 JDR 3200 p7
The member stated that because on closing date their B-BBEE certificate had expired, they could not be given the B-BBEE points during the tender evaluation process as the committee was not in a position to determine at what B-BBEE Level will they be scored due to their expired certificate. It was noted that Afri Rent (Pty) Ltd did forward a copy of a valid B-BBEE certificate to Supply Chain after the tender was already evaluated, but it was too late as this document was a mandatory valid document needed at the closing date.
This was also clearly indicated on the tender advert and has been our practice not to award B-BBEE points in instances where the bidder did not submit a valid B-BBEE certificate. The member noted that the SCM regulations are silent in terms of requesting a valid B-BBEE certificate before/upon appointment, unlike with the Tax Clearance Certificate and up to date municipal rates and taxes as provided by MFMA Circular no. 90.
Member also indicated that in terms of alignment with the specifications of the vehicles, Afri Rent (Pty) Ltd scored higher than Moipone Fleet (Pty) Ltd as per the Technical Report and the main reason why Moipone Fleet (Pty) Ltd scored the highest was because of the B-BBEE points. Therefore when looking at the price and the specification alignment Afri Rent (Pty) Ltd is the better bidder.” [own emphasis]
The BAC made reference to MBD 6.1 [18] under Section 1: General Conditions, subsection 1.6 and 1.7 [19] which states:
Failure on the part of a bidder to submit proof of B-BBEE status level of contributor together with the bid, will be interpreted to mean that preference points for B-BBEE status level of contribution are not claimed.
2023 JDR 3200 p8
The purchaser reserves the right to require of a bidder, either before a bid is adjudicated or at any time subsequently, to substantiate any claim in regard to preferences, in any manner required by the purchaser.” [own emphasis]
It was further noted that it was not the first time that a bidder’s certificate had expired before the closing date and the committee has not in the past requested a valid one to be submitted. It has to main consistency in the matter. Afrirent complains that there was no consensus during the adjudication process in that some members were of the view that the certificate should be considered whilst others were opposed to it.
The committee eventually resolved to:
“Request for a cost estimation to be conducted by the user department, based on the quotation submitted by the bidders Moipone Fleet and Afri Rent. Thereafter the committee will meet again to conclude the recommendation to the Acting Municipal Manager.” [20]
The recommendation for appointment of Moipone was dated 16 October 2020. [21] On 24 March 2021, the Acting Municipal Manager met with Moipone where he, the CFO, the Manager...
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