Publication: The Mercury Issued: Date: 2007-03-28 Reporter: Tania Broughton

Judge Warns over Award of Tenders

 

Publication 

The Mercury
Date

2007-03-28

Reporter

 Tania Broughton

 

The Supreme Court of Appeal this week cautioned that awards of public tenders were "notoriously subject to influence and manipulation" and the high constitutional standards governing the process were "honoured more in the breach than in the observance".

In an apparent warning to those in government who control the public purse, the court said the public interest was best served by selecting the cheapest tender and not to discard these because of "subsidiary", technical issues without evaluating their merits.

Before the court was an appeal by the minister of social development and three private companies against a decision by the Pietermaritzburg High Court to set aside the award of a tender to the companies for the supply of food hampers to the poor in KwaZulu-Natal and the Eastern Cape.

Judge Jonathan Heher, with four judges concurring, dismissed the appeal, upholding the order that the minister call for fresh tenders.

The Pietermaritzburg application was brought by unsuccessful bidder Phoenix Cash and Carry - PMB CC, which had a contract to supply food hampers between December 2003 and February 2004.

After the expiry of that contract, the department issued a new tender. Bidders were to provide prices for two options of hampers.

Conditions included proof that the service provider could deliver at the tendered price and that it had the financial resources to handle the contract. To this end, Phoenix submitted letters from its bank, accountants and proposed suppliers.

When it learned that it had been unsuccessful, Phoenix asked the department for reasons.

The response was that the company was not entitled to the tender and that the department had "exercised its prerogative" and "its discretion".

Judge Heher said information supplied by the department showed that the prices of the successful tenderers ranged from R269.10 to R299.69 a hamper, while, "in striking contrast", Phoenix's prices were R187 and R180.70.

Phoenix had been "understandably perplexed" because the tender stipulated the lowest bid would obtain 90 out of the maximum possible 100 points.

After the company lodged the Pietermaritzburg application, the department cited other reasons for failing to award the tender, including that it had failed to provide financial and bank statements.

It emerged that, because of this, Phoenix had been deemed "non-compliant", and had not even been adjudicated by the bid committee.

While the Pietermaritzburg court found that the tender document had been "too vague to satisfy the requirements of administrative fairness", the higher court found the conditions were clear and that Phoenix had complied with them.

"Every supporting document invited the bid committee to contact the writer should any further information be required. The opportunity to properly evaluate a bid which was, on the face of it, markedly superior to the (other) tenders was however spurned," the judge said.

"Phoenix did not receive the benefit of procedurally fair administrative action as was its constitutional entitlement."

He commented on several "disquieting features" of the case which, he said, should be noted by those responsible in order to avoid repetition.

They included:

That the initial reasons given by the department were "seriously misleading" because the impression was created that the tender had been evaluated and rejected on its merits; and

The department had been unable to supply Phoenix with addresses of successful bidders. It had emerged from the Companies Office that one, Snotho Trading, had only been registered as a close corporation after the closing date of the tender and, for that reason, should have been disqualified.

Neither Snotho nor another successful bidder, Pfula Mbokoto Consortium, had disclosed particulars of their owners.

"The merits of Phoenix's tender were so manifest and the grounds for exclusion so flimsy that doubts are raised as to the reliability and credibility of the procurement process," the judge said, ordering the minister and the companies to pay the costs of the appeal.

With acknowledgements to Tania Broughton and The Mercury.


Sounds very, very familiar.