Road Mac Surfacing (Pty) Ltd v MEC for the Department of Transport and Roads, North West Province and Others and; Raubex (Pty) Ltd v MEC for the Department of Transport and Roads, North West Province and Others And; Star Asphalters/Kgotsong Civils Joint Venture and Another v MEC for the Department of Transport and Roads, North West Province and Others

• Jurisdiction: South Africa
• Judge: Landman J
• Judgment Date: 06 September 2005
• Docket Number: 820/2005, 821/2005, 822/2005
• Court: Bophuthatswana High Court
• Hearing Date: 28 July 2005
• Citation: 2005 JDR 1033 (BG)

Landman J:

[1]

On 6 July 2005 three applications under case numbers 820/05, 821/05 and 822/05 were launched. The applicants sought interim relief and the review of five tender awards. They served before me on 14 July but were postponed and heard on 28 July.

[2]

The same issues arise in each application. Counsel agreed that Mr Coetzee (with him Ms Henriques), who appeared for all the applicants in these matters, 'would present their case first, thereafter Mr Pistor (for the first three respondents in case 822/05), Ms Zwiegelaar (for the first three respondents in case 821/05) and Ms Gutta (for the first three respondents in case

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820/05) presented their case. Ms Henriques replied. I reserved judgment and intimated that I might make an order and hand down reasons later. I handed down the following order on 8 August 2005:

1.

CASE NUMBER 820/2005

1.1.

It is declared that

(a)

the award of Tender number NW276/03 to the sixth respondent is vitiated by a gross irregularity committed by officials of the first respondent;

(b)

the tender ought to have been awarded to the applicant;

(c)

the first respondent is liable for the damages, if any, suffered by the applicant flowing from the failure of the first respondent's officials to award the tender to the first applicant.

1.2.

It is declared that

(a)

the award of Tender number NW277/03 to the fifth respondent is vitiated by a gross irregularity committed by officials of the first respondent;

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(b)

the tender ought to have been awarded to the applicant;

(c)

the first respondent is liable for the damages, if any, suffered by the applicant flowing from the failure of the first respondent's officials to award the tender to the first applicant.

1.3.

The application to review and set aside number NW278/03 is dismissed.

1.4.

The first respondent is ordered to pay two thirds of the applicant's costs, including the costs of two counsel, and further including the costs incurred on 14 July 2005.

2.

CASE NUMBER 821/2005

2.1.

It is declared that

(a)

the award of Tender number NW176/03(B) to the fourth respondent is vitiated by a gross irregularity committed by officials of the first respondent;

(b)

the award of the tender is reviewed and set aside and substituted by an order that: "Tender number NW176/03(B) is awarded to the Applicant".

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2.2.

The first respondent is ordered to pay the applicant's costs, including the costs of two counsel, and further including the costs incurred on 14 July 2005.

3.

CASE NUMBER 822/2005

3.1.

The application is dismissed with costs. These costs are to include the costs of 14 July 2005.

The reasons for judgment are provided hereunder.

Invitation to tender:

[3]

The North West Provincial Government, through its Department of Transport and Roads, invited tenders for certain road projects. It used the offices of the Tender Board to facilitate the process. The tender documents set out certain terms and conditions. Certain documents dealing with standards were incorporated or annexed to the tender documents. The applicants submitted their tenders but were unsuccessful. This led to the present litigation.

The legal framework:

[4]

Before dealing with the issues raised in the papers it is necessary to sketch the legal framework governing the procurement of goods and services in the North West Province.

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[5]

Prior to 1 April 2005 the Provincial Government procured services and supplies through or under the supervision of a provincial tender board. The North West Tender Board was established for this purpose. See the North West Tender Board Act 3 of 1994.

[6]

Section 217 of the Constitution of the Republic of South Africa of 1996 envisaged a change to this system. It reads:

"(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.

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[7]

The Public Finance Management Act 1 of 1999 (PFMA) was enacted to give effect to s 217 of the Constitution. It came into operation in stages. This Act enables a Provincial Department to be permitted by its Provincial Treasury to assume its own procurement and cease availing itself of a Provincial Tender Board. The Act does not repeal any provincial legislation providing for provincial tender boards. It takes precedence over provincial legislation. See s 3(3) of the PFMA. In effect it provides an alternative process which is destined to become, in time, the sole method of procurement of supplies for Provincial Governments and national and other institutions. Regulations have been promulgated in terms of s 76 of the PFMA.

[8]

The Preferential Procurement Policy Framework Act 5 of 2000 (the PPPFA) was introduced to give effect to the right conferred in s 217(2) of the Constitution on, inter alia, Provincial Governments to give preference to certain persons in awarding contracts and to advance them.

[9]

The PPPFA, as its name indicates, is not intended to directly regulate the awarding of preferences when goods and supplies are procured. It sets out the legal framework within which, inter alia, each Provincial Government may frame its own preferential procurement policy. It is, in my view, incorrect to approach tender matters by applying the' PPPFA. It is, the Preferential Procurement Policy of the North West Province which, if it conforms to the PPPFA, that must be applied.

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Landman J

[10]

The material parts of the PPPFA read:

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:

(a) A preference point system must be followed:

(b) (i) for contracts with a Rand value above a prescribed amount a maximum of 10 points may be allocated for specific goals as contemplated in paragraph (d) provided that the lowest acceptable tender scores 90 points for price;

(ii) for contracts with a Rand value equal to or below a prescribed amount a maximum of 20 points may be allocated for specific goals as contemplated in paragraph (d) provided that the lowest acceptable tender scores 80 points for price;

(c) any other acceptable tenders which are higher in price must score fewer points, on a pro rata basis, calculated on their tender prices in relation to the lowest acceptable tender, in accordance with a prescribed formula;

(d) the specific goals may include-

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(i)

contracting with persons, or categories of persons, historically disadvantaged by unfair discrimination on the basis of race, gender or disability;

(ii)

implementing the programmes of the Reconstruction and Development Programme as published in Government Gazette 16085 dated 23 November 1994;

(e) any specific goal for which a point may be awarded, must be clearly specified in the invitation to submit a tender;

(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; and

(g) any contract awarded on account of false information furnished by the tenderer in order to secure preference in terms of this Act, may be cancelled at the sole discretion of the organ of state without prejudice to any other remedies the organ of state may have.

(2)

Any goals contemplated in subsection 1 (e) must be measurable, quantifiable and monitored for compliance."

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Preferential Procurement Regulations:

[11]

The PPPFA is supplemented by regulations made in terms of s 4 called the Preferential Procurement Regulations, 2001. The following regulations are pertinent to the matters under consideration:

"(1)

The following formula must be used to calculate the points for price in respect of tenders/procurement with a Rand value above R500 000:

Ps = 90(1- Pt - min)

P min

Where

Ps = Points scored for price of tender under consideration

Pt = Rand value of tender under consideration

Pmin = Rand value of lowest acceptable tender

(2)

A maximum of 10 points may be awarded to a tenderer for being an HDI and / or subcontracting with an HDI and / or achieving any of the specified goals stipulated in regulation 17.

(3)

The points scored by a tenderer in respect of the goals contemplated in sub-regulation (2) must be added to the points scored for price.

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(4)

Only the tender with the highest number of points scored may be selected.

[12]

Stipulation of preference point system to be used

7.

An organ of state must, in the tender documents, stipulate the preference point system which will be applied in the adjudication of tenders.

[13]

Evaluation tenders on functionality and price

8. (1) An organ of state must, in the tender documents, indicate if, in respect of a particular tender invitation, tenders will be evaluated on functionality and price,

(2) The total combined points allowed for functionality and price may, in respect of tenders with...