Worse than Losing a Government Tender: Winning it

• Jurisdiction: South Africa
• Date: 27 May 2019
• Published date: 27 May 2019
• Pages: 101-121
• Author: Geo Quinot

101

WORSE THAN LOSING A GOVERNMENT

TENDER: WINNING IT

Geo Quinot

BA LLB LLM LLD

Senior Lecturer, Stellenbosch University*

1  Introduction

In the case of Stee nkamp NO v P rovincial Tende r Board, Ea stern Cape1

a m ajority of Constit utional C ourt ju dges held that an organ of sta te was

not liable in del ict for a succes sful tenderer’s out-of- pocket losses followin g

the set ting aside of the te nder because of a bon a de error on th e part of the

organ of stat e in the te nder proces s.2 In reach ing this c onclusion the C ourt

ruled that the or gan of state’s neg ligent but bon a de conduc t in the publ ic

tender process was not wrongful since it owed no legal duty to tend erers,

whether suc cessful or unsucces sful, to avoid s uch lo sses and that there

were no publ ic policy consider ations that ju stied the rec ognition of such a

duty.3 From a public procur ement perspect ive, this judgment is unfo rtunate.

As I w ill indicate below, Moseneke DCJ’s majo rity judgm ent is based on a

number of assumpt ions which ar e highly co ntestable, as the joint m inority

judgme nt of Lang a CJ and O’Regan J points out. Furthe rmore, the major-

ity judgment holds implication s for public procureme nt that may largely

under mine some of the very public policy con siderations upon which it is

based.

In thi s contribution I analyse the policy considerations that mot ivated the

majority judgment from a public procurement perspective. I argue tha t the

dissenting minorit y judgment of Langa CJ and O’Regan J (Mokgoro J concur-

ring) is to be preferred over the majority judgment, because the dissenting

judgment is not only much more sensitive to the general realities of public pro-

curement, but specically the realities of South African public procurement.

In the nal analysis I argue that des pite my misgivings about the ruling i n the

Steenkamp matter, the problem does not lie there, but rather i n the hither to

fairly un sophisticated approach t o remedies following t he judicial review of

public tender deci sions. In order to overcome the problems illust rated by the

Steenkamp case, we should focus our attention on the development of appro-

priate and focused judicial rev iew remedies within t he public p rocurement

context. The recent judgment of the Supreme Court of Appea l in Millennium

* My thanks to Nad ene Badenhorst , Phoebe Bolton and Charl Hugo for com ments on a draft of th is article.

I take full r esponsibility fo r the argument s advanced here.

1 2007 3 SA 121 (CC).

2 Para 56.

3 Paras 54, 56.

(2008) 19 Stell LR 101

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102 STELL LR 2008 1

Waste Management v Chairperson Tender Board4 provides a solid foundation

for such a development.

2  The Steenkamp case5

2 1 The facts

In 1995 the Tender Boa rd6 invited tenders for the supply of a payment

system for welfare grants in the Easte rn Cape.7 Eight tende rs were received

including one by Ba lraz Technologies (Pty) Ltd (“Balra z”), an ostensibly

“wholly owned black company e specially incorporated” 8 for the purpose of

tendering for this particu lar government contract.9 Despite the reservat ions of

two technical committees about Balraz’s technical ability to effectively render

the service s under tender, the Tender Board decided to award one part of the

contract10 to Balraz in March 1996.11 Balraz forthwith accepted the award and

about two months later the Department of Health and Welfare placed an order

for the tendered service s with Balraz under the resultant contr act.12 However,

before Balraz could render the services, but af ter it commenced preparations

for its performa nce, an unsuccessful t enderer approached the High Cou rt for

the review of the t ender award.13 The review succeeded and i n June 1997

the contract was set aside by the reviewing court on the grounds that the

decision to award the contract was tainted by an “unwa rranted adherence to a

xed principle”; “a misc onception of the nature of the discre tion conferred”;

the consideration of ir relevant factors; a failure to consider relevant facts and

gross unreasonableness.14 In Steenkamp the parties agreed that while the

award of the tender was ad ministratively u nfair it was done in a b ona de

4 2007 JOL 21170 (SCA).

5 Steenkam p NO v Provi ncial Tender B oard of the Eastern Cap e 2004 JOL 13193 (Ck); Steenkamp NO v

Provincial Tender Boar d, Eastern Cape 2006 3 SA 151 (SCA); Steenkamp NO v Provincial Tender Board,

Eastern Cap e 2007 3 SA 121 (CC).

6 Initially the call for tenders was done by the National Tender Bo ard, but tha t body was r eplaced dur ing

the c ourse of the t ender pr ocess by the P rovincial Tender Board , which was con stituted late i n 1995.

Steenkam p NO v Provincial Tender B oard, Eastern Ca pe 2007 3 SA 121 (CC) para 5.

7 Para 4.

8 Para 59, but cf Cash Paymaster Ser vices (Pty) Ltd v Eastern Cape Prov ince 1999 1 SA 324 (CkH) 341D-F

where doubt was r aised about the exac t stakeholding in B alraz.

9 Steenkam p NO v Provi ncial Tender B oard, Easter n Cape 200 7 3 SA 121 (CC) para 6. A second line of

argument a s to whether the tender boa rd’s actions were wrongfu l in a delictual sense wa s whether Balraz

in fact submit ted a valid tender in light of the fa ct that Balraz was inc orporated and obt ained a certif icate

to commenc e business only after it subm itted, in its own name, its t ender. While the case was pri marily

decided on th e basis of this sec ond argument i n the High Cour t, that argu ment progressively declined in

prominenc e to the exte nt that the m ajority in t he Constitut ional Court decided the matter wholly on the

wrongfu lness argum ent and held that “no purpose will be serve d in arriv ing at a fir m conclusion on t he

validity of the t ender,” para 61.

10 The Tender Board de cided to split the cont ract into th ree parts in or der to allow it “to sp read the work as

much as p ossible” (Cash Pa ymaster Se rvices (Pt y) Ltd v Eas tern Cape Province 1999 1 SA 324 (CkH)

334B).

11 Steenkam p NO v Provincial Tender B oard, Eastern Ca pe 2007 3 SA 121 (CC) para 7.

12 Para 7.

13 Para 8.

14 Cash Paymas ter Services ( Pty) Ltd v Eastern Cap e Province 1999 1 SA 324 (CkH) 348.

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