Each year government institutions across the country procure goods and services through the tender mechanism. A tender is a formal offer made by a private entity to a procuring organ of state, which is adjudicated on in terms of clearly defined laws.
Words and phrases like “tender fraud”, “unfair awarding of a tender” and “corruption” have been placed at the forefront of the tender debate. This is not surprising since the global Corruption Perceptions Index places South Africa as one of the most corrupt countries out of the 180 countries which it scores and ranks[1].
Maladministration and procurement corruption[2]. are the foremost contributors to this concerning statistic, and this is where the law steps in.
The Role of the Law
The Constitution of the Republic of South Africa requires that organs of state must comply with 5 core principles when procuring goods or services from the private sector – these are fairness, equitability, transparency, competitiveness and cost-effectiveness[3]. In short, this means that when procuring goods or services, these five principles must be met by government. Government should attract the maximum number of contractors to participate in the tender bidding process. The aim should be the attainment of value for money, meaning, public money should be spent in both an effective, transparent and efficient manner. The tender bidding process should be fair. The process should be open to the public and transparent. It should permit fair competition in the process, to yield a broad spectrum of offers for government, and the outcome of the tender bidding process should result in one that does not waste public funds, one that is cost-effective. These constitutional requirements are echoed in section 51(1)(a) of the Public Finance Management Act 1 of 1999 (PFMA).
This begs the question, what happens when a tender is awarded unfairly, and contrary to these principles?
Review Application as a Remedy
The contemporary era of South African constitutionalism has provided certain thoroughfares in law to ensure that those who are unfairly denied a tender, or prevented unfairly from contracting with the state, have certain forms of relief available.
One such form of relief is “review proceedings”. A review proceeding is a legal process in which a party seeks to challenge the decision of an administrative body or official.
In the context of public procurement, a review application may be brought by a tender bidder who is dissatisfied with the outcome of the tender process or the decision of the procurement officer or evaluation committee. The review application may challenge the final tender decision on various grounds, including procedural irregularities, bias, unfairness, and non-compliance with the relevant procurement laws or regulations[4]. The typical relief sought through a review application is to have the decision or action of the administrative body or government official set aside or declared invalid. The applicant may also seek other remedies, such as to stop the continuation of the tender, have the tender process awarded afresh or seek the award of financial damages for any losses suffered as a result of the irregularities in the procurement process.
Whilst it has been possible to bring review applications in terms of the common law relic of Rule 53 on the Uniform Rules of Court, in more recent times South Africa’s legislative framework has introduced laws that work valiantly toward the more direct realisation of the right to just administrative action.
The Promotion of Access to Information Act (2 of 2000) (PAIA) and the Promotion of Administrative Justice (3 of 2000) (PAJA) both envisage tailor-made rules that impact on review applications. PAJA regulates the administrative decision-making by public institutions, such as the awarding of tenders, by ensuring that these types of decisions are fair, reasonable and lawful. Enforcing the transparency and impartiality of the tender procurement process can therefore be achieved through launching a review application in terms of PAJA.
PAJA is complemented by PAIA, which is a tool that compels government to provide information dealing with the tender bidding process. PAIA empowers the public to access all considerations, including the objective criteria deployed in the awarding of a tender. In effect, these two pieces of legislation provide the public with an opportunity to uplift the veil of bureaucracy and secrecy on how certain decisions are made, and to seek appropriate relief thereafter.
The overarching theme that is deduced from recent High Court and Constitutional Court judgements is that the decision to award a tender can be successfully reviewed and set aside.[5] One particular case that stands out is the Trencon Construction (Pty) Limited v Industrial Development Corporation of South Africa Limited and Another case. Trencon was successful in the Gauteng High Court, Pretoria in having a tender reviewed and set aside. What adds a unique twist is that the court, when considering an appropriate remedy to the tender dispute, found that there were exceptional circumstances justifying a substitution order in terms of PAJA. As a result, the High Court substituted its own decision for that of the decision made by the tenderee and awarded the tender to Trencon.
What we see here is, in exceptional circumstances, the court can go beyond the mere setting aside of a tender and in fact grant an order awarding the tender a different tenderer.
By its nature, an application of this sort can prove to be legally complex. This however should not detract one from using this important legal mechanisms to upkeep cornerstone principles of democratic constitutionalism. The process of reviewing the unfair awarding of government contracts/tenders, coupled with novel and effective legal assistance, is not a process one should fear.
[1] South Africa has a CPI of 44/100, 0 being completely corrupt and 100 being completely non-corrupt. [2] Collectively make up 34% of the reports of corruption - https://businesstech.co.za/news/government/573484/the-most-common-types-of-corruption-in-south-africa/ [3] Section 217 of the Constitution. [4] The Preferential Procurement Policy Framework Act 5 of 2000 (PPPFA) and the regulations published under it in 2011 (PPPFA Regulations)and the Municipal Finance Management Act 56 of 2003 (MFMA) are some examples of the laws applicable to tender disputes. [5] Steenkamp NO v Provincial Tender Board, EC 2007 (3) SA 121 (CC) and Gijima Holdings (Pty) Ltd v State Information Technology Agency Soc Limited 2021 JDR 2656 (GJ)) examples in case law where decisions to award tenders have been reviewed and set aside.
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