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NOT REPORTABLE

IN THE HIGH COURT OF SOUTH AFRICA

(WITWATERSRAND LOCAL DIVISIONS

JOHANNESBURG

CASE NO: 12850/06

DATE: 2007.05.09

In the matter between:

ADCOCK INGRAM CRITICAL CARE (PTY) LIMITED..................................................Applicant

and

GAUTENG SHARED SERVICES CENTRE.....................................................First Respondent

AND OTHERS

JUDGMENT

WILLIS. J: The applicants have brought an application seeking an order, 20 reviewing and setting aside the decision made by the first respondent on 15 December 2005 to award tender GT7GHD/199/04 to the fourth respondent, and an order relating to costs. By agreement between the parties the relief that was sought was altered such that the tender, having this number, was described as having been awarded by the Departmental Acquisition Committee ("the DAC") of the third respondent. The papers were amended accordingly by agreement between the parties. The tender award was for tr supply of dialysis machines and dialysis consumables in respect c government hospitals in the province of Gauteng.

It is common cause that the awarding of the tender constituted administrative action in terms of the Promotion of Administrative Justice Act, 3 of 2000 {known, it would seem universally by lawyers, if somewhat esotericaily, as "PAJA").

The applicant has brought four grounds of review but by reason of what follows there is really only one that matters in this matter. Until, almost 10 the very end of the tender process, all formed communications between the bidders and the decision makers took place in writing. Shortly before the tender was awarded representatives of the DAC contacted three short listed bidders fay telephone and had separate discussions with each of them. The three short listed bidders were the applicant, Clinix Renal Care (Pty) Ltd (the fourth respondent) and Sanbonani Holdings (Pty) Limited, who is not a party to these proceedings.

On the DAC's own version each bidder was given less than 24 hours to respond. They each did so, although the applicant refused to lower its prices on the basis that it considered it improper to do so at that stage, and in 20 any event did not have sufficient time, given the deadline imposed. The fourth respondent lowered its price significantly. The DAC relied on these responses in making its award.

During the telephone discussions the fourth respondent was provided with a crucial piece of information by the DAC. That information indicated to the fourth respondent, that instead of tendering for a series of individual consumables, which would be individually awarded, it should provide an overall price for all consumables to be used by hospitals in the province. The fourth respondent did so, significantly lowering its price.

The applicants protest that both it and Sambonani Holdings (Pty) Limited, were not given this information at all.

The effectively uncontested evidence of the applicant, is that had it known the relevant information it would have been able to substantially lower its bid on its machines and consumables. By reason of not receiving this information it was not in a position to do so.

Dialysis consumables include a wide variety of items, such as need blood lines and dialysers (artificial kidneys). There are multiple types (each having different specification of each individual's consumables). When these individual consumables are combined, in certain combinations they are called "bundles". A bundle consists of three items: a needle, a blood line, and a dialyser. Significantly dialysis consumables, manufactured by one supplier, can be used in a dialysis machine manufactured by any other supplier. In completing their bids the bidders were not required or entitled to tender a price for bundles of consumables. Rather, each bidder was required to provide a tender price for each of its individual dialysis consumables.

The effect of these facts, as set out immediately above, is there was no guarantee that a single tender award would be made by DAC to one company for all 80 dialysis machines sought, and all consumables sought. On the contrary, there was a real possibility that the consumables tender would not be linked to the machines and could be split, or duplicated, among one or more bidders for certain individual items.

During the telephone conversations that took place between the DAC and the fourth respondent on 10 November 2005, however, the fourth respondent was told by the DAC that it could provide a price across 230,400 bundles of consumables, rather than on individual consumables. The fourth respondent duly responded to this telephone discussion by writing to the DAC with a reduction of its prices, calculated across 230,400 bundles of consumables, rather than for each individual consumable.

Notwithstanding that the figure 230,400 bundles had never previously been disclosed to the bidders, it was precisely the figure used by the DAC in 10 determining the price of each tender and presumably award the tender.

The applicant contends that the effect of the disclosure of this critical information to the fourth respondent is as follows:-

"What the first respondent indicated to the fourth respondent by telling it to quote on 230,400 bundles was that it would be awarding the tender for all of the consumables to one company. Until the fourth respondent learnt of that information it was just as likely that the first respondent would have been awarded the tender regarding consumables to multiple companies - either different companies for different products and/or more than one company for an individual product such as dialysers. This is because, as I explain below, a

dialyser manufactured by the applicant could be used on a dialysis machine manufactured by the fourth respondent, or vice versa. I should add that the price of a dialyser generally amounts to at least two-thirds of the overall cost of the bundle of consumables. Thus the fourth respondent was placed in a position where it was able from a financial point of view to reduce its prices on the consumables, ana particularly on the machines. This was due to the guaranteed volume that would result from such a tender award on all consumables to one company. The applicant could undoubtedly have adopted such an approach had it known that the award for consumables would be made an a global basis, such as that envisaged by the figure of 230,400 bundles. Unlike the fourth respondent, however, it was never given the opportunity to do so." These detailed averments are only baldly denied by the respondents and Mr Budhnder, who appeared for the applicant, has submitted that the these broad allegations fall to be rejected for the following reasons:-

1. The applicant's representative has stated positively under oath that they were never made aware that they could tender for 230,400 bundles of consumables instead of for each individual consumable.

2. The representatives of B Braun/Sanbonani Holdings (Pty) Limited and TS Dialysis also state positively under oath that their companies were never informed that they could tender for 230,400 bundles of consumables instead of for each individual consumable.

3. The respondent's first deponent, Ms Sithole, simply makes a bald allegation on this issue:-

"The quantity of consumable was communicated to the applicant, Sanbonani Holdings and the fourth respondent." She provides no details at all to substantiate or explain her bald

allegation I this regard. In any event, Ms Sithoie does not allege that she was part of the telephone conversations in question, and accordingly that she has personal knowledge on this score.

4. The respondent's second deponent, Mr Ramaano, also makes a bald allegation in this regard. He, however, qualifies his allegations as follows

"To the best of my knowledge all of the bidders, including the representatives of the applicant (sic) that the quantity of consumables sought by the second respondent was 230,000." (My emphasis).

5. Mr Ramaano offers a bald allegation, that it was Mr Daley who told the bidders of the 230,400 bundles, but this is hearsay evidence as no confirmatory affidavit from Mr Daley is attached.

6. Mr Ramaano's allegation, that it was Mr Daley who told the applicant and B Braun about the bundles of consumable during the telephone conversation is materially inconsistent with three pieces of evidence:

6.1 First, it is materially inconsistent with annexure VNR5. Mr Ramaano repeatedly states that this annexure contained the issues to be discussed in the telephonic discussions with the bidders. He also states that this was the facts sent to Sanbonani Holdings, indicating the issues raised over the telephone with them. Yet annexure VNR5 contains no reference at ail to the 230,400 bundles of consumers or anything of the sort.

6.2 It is materially inconsistent with the contemporaneous letter from Sanbonani Holdings in response to the telephone conversation. That letter reduces prices on three individual consumables supplied by Sanbonani Holdings (Pty) Limited, but does not provide a quote across 230,400 bundles, or even a single bundle.

6.3 Most critically the affidavit filed by the fourth respondent is materially inconsistent with the statement by Mr Ramaano, that Mr Daley told the bidders about 230,400 bundles. The affidavit of the fourth respondent states as follows:-

"At the outset it is worth noting that Fresenius was awarded the previous tender for the period 1999-2004 for the same supply of consumables to the first respondent. Based on the requirements of the previous tender, as well as historical purchases and treatments performed, Fresenius was aware that the requirements for consumables for a similar period would be approximately an amount of 230,400 bundles...Therefore, in my conversation with the first respondent's representatives referred to. above I enquired as to whether the same number of bundles could be used as a benchmark, for cross-calculating purposes. I wish to raise the point, that it is not for the fourth respondent, nor any other bidder, to enquire as to the information provided to its competing bidders. I was informed that the 230,400 bundles would be the correct benchmark to quote on, and accordingly did so. I was not aware that the other bidders were not given the same information, and frankly it would be irrelevant for the purposes of the fourth respondent's bid, to know either way."

Fresenius was the predecessor in title to the fourth respondent. The significance of this last quote is that the fourth respondent, against its own interests, indicates that it raised the question of the 230,400 bundles with the DAC during the telephone conversation, and not the reverse.

Mr Budlender submitted in my view correctly that there is not a real, genuine or bona fide dispute on this issue, and accordingly the court should reject the respondents' bald denial on this critical issue. The court of course is entitled to do so by reason of the well-known case of Plascon Evans Paints Ltd v van Riebeeck Paints (Pty) Ltd [1984] ZASCA 51; 1984 (3) SA 623 (A) at 634/5. See also Fakie No v CC11 Systems (Pty) Ltd [2006] ZASCA 52; 2006 (4) SA 326 (SCA) at para [55].

In other words, the effect of my concurrence with the submissions of Mr Budkender as to the facts upon which this application is to be founded are that the applicant was NOT informed that the DAC would consider tenders 2 o for 230,400 bundles as a single tender to be awarded singly.

Section 6.2(c) of PAJA gives the court the power to review administrative action if "the action was procedurally unfair".

It seems to me that one need not be nitpickingly fastidious nor even delicately sensible to conclude that if the applicant was not informed of this critical fact, namely that the DAC would consider a single tender for 230,400 bundles, that it would have been treated in a procedurally unfair manner. See, for example, Premier, Free State and others v Firechem Free State (Pty) Ltd 2000 (4) SA 413 (SCA) at para [301; Metro Projects CC and Another v Kierksdorp Local Municipality & others 2004 (1) SA 16 (SCA) at para [13]; Minister of Social Development v Phoenix Cash Carry [2001] SCA 26 (RSA) at para [19]. That to me is the end of the issue. Clearly the tender award is reviewable.

The next question is the appropriate order.

Section 8 of PAJA gives the courts very broad powers when considering a judicial review, and not only may the administrative action be set aside, but the court may grant any order that is just and equitable. Indeed, as I understand the section, upon a correct reading of it, the court is required to have regard to considerations of justice and equity in the making of its order.

The order which I shall make is one which, unsurprisingly, counsel for neither party was particularly delighted after I informed them that this would, in all probability be made by me, but nevertheless both of them indicated that under sufferance it would be tolerably just and equitable.

The following is the order of the court:

1. The award of tender (under tender number GT/GHD/199/04) by the Departmental Acquisition Committee ("DAC") of the third respondent on or about 15 December 2005, is reviewed and set aside and declared invalid.

2. The Departmental Acquisition Committee ("DAC") is hereby directed to reconsider and re-evaluate the bids of the applicant, the fourth respondent and Sambonani Holdings (Pty) Limited, and to decide on the successful bidder within a period of two months from the date of this order.

3. The Departmental Acquisition Committee ("DAC") is also directed to afford the above bidders an equal opportunity to revise their tender prices or to submit such further information as it may require. Such information shall be requested in writing from each of these bidders.

4. The order of invalidity, referred to in paragraph 1 above, is hereby suspended pending the outcome of the reconsideration, re-evaluation and award of the tender, in terms of paragraphs 2 and 3 above.

5. In the event the tender is awarded to either the applicant or Sambonani Holdings (Pty) Limited, the first to third respondents and the fourth respondent shall be afforded a reasonable opportunity to negotiate the cancellation of the contract which was concluded on/or about 1 January 2006, pursuant to the award or the tender of the fourth respondent and the installation of new machines by the successful bidder.

6. In the event that there arises an issue between the parties, or such other interested parties, on whether the period for that cancellation of the contract referred to in paragraph 5 is reasonable or not, the parties are hereby granted leave to approach the court on an urgent basis for the determination of that issue.

7. The third respondent is to pay the costs of this application.

On behalf of the applicant : Adv S Budlender

Attorneys..........................:Read-Hope Phillip Connath And Cadmann

On behalf of the first

To third respondents......:Adv I V Maleka SC

…...................................Adv K M Molemoeng

Attorneys for the first

To third respondents....:State attorney

The forth respondent bided the decision of the court

Date of hearing : 2007.05.09

Date of judgment : 2007.05.09

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