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[2008] ZANWHC 29
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Renaissance Security and Cleaning Services CC v Rustenburg Local Municipality and Others (1811/2007) [2008] ZANWHC 29 (19 August 2008)
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CASE NO. 1811/2007
In the matter between:
RENAISSANCE SECURITY AND
CLEANING SERVICES CC
APPLICANT
and
RUSTENBURG LOCAL MUNICIPALITY
1ST RESPONDENT
MUNICIPAL MANAGER: RUSTENBURG
LOCAL MUNICIPALITY
2ND RESPONDENT
WHITE LEOPARD SECURITY SERVICES CC
3RD RESPONDENT
APPLICATION
MMABATHO
Date of Hearing:
26 JUNE 2008
Date of Judgement:
19 AUGUST 2008
For Applicant:
ADVOCATE W.R. MOKHARE
For First and Second Respondents:
ADVOCATE L.J. MORISON
____________________________________________________________________________
___________________________________________________________________________
GURA J
Introduction
[1]
This is an application for review in terms of Rule 53 of the Uniform Rules of Court and Section 6 of the Promotion of Administrative Justice Act, No 3 of 2000.
Factual background
[2]
The following facts are either common cause between the parties, are admitted or are not denied.
[2.1]
The Applicant and Third Respondent were some of the bidders
to a tender award for providing security services to the First Respondent. The tender award process went through the normal channels of adjudication which have been established in terms of Section 26(1) of the Supply Chain Management Policy, 2005 (the Supply Policy). The Applicant and Third Respondent scored 100 and 85.95 points respectively.
The Second Respondent awarded the tender to the Third Respondent.
[2.2]
The First Respondent then made a recommendation to the Second Respondent that the contract for security services which had just been
awarded to the Third Respondent be for a period of three years and not seventeen months as it was originally advertised. After Applicant
drew the attention of the Respondents to this anomaly the period was altered to seventeen months. At that time, no written contract
for service had as yet been executed between the Respondents.
[2.3]
From the date of its publication, the tender was valid for ninety days. A decision to award a tender therefore had to be taken within
ninety days. The rationale behind this is that prices may change after a lapse of time. The First Respondent had developed a practice,
however, of considering the tenders even if the period of ninety days had expired. In that case, all bidders are first contacted
to verify whether the price as quoted remains unchanged and whether they are still interested in the bid. Where all of them confirm
that the price is the same and that their bids are still valid, the tenders are adjudicated upon as if the period of ninety days
has not yet expired. In the present case, the tenders were adjudicated upon after ninety days. However, prior to that all bidders
were contacted (including Applicant and Third Respondent) and they confirmed that their bids were still valid and the price remained
the same.
[2.4]
Prior to the present tender award, Applicant had, for a continuous
period of at least one year, provided security services to First Respondent.
[2.5]
In an urgent application between the parties which served
before my Brother Landman J, the First and Second Respondents (the Respondents) averred that the reason why the tender was not awarded to the
Applicant, being the highest bidder, was its poor track record. The Respondents relied on Section 38 (1) (d)(ii) of the Supply Policy for the exercise of such powers.
The issues
[3]
The issues are whether:-
[1]
The Second Respondent was entitled in law not to award the tender to the Applicant although it scored
the highest points;
[2]
The tender invitation expired after ninety days
from date of advertisement; and
[3]
The awarding of the render to the Third Respondent,
for a period of three years instead of seventeen months, renders the award reviewable.
[4]
Mr Mokhare, for the Applicant, made the following submission:-
No written notice relating to the alleged poor service delivery was ever issued by the Respondents to the Applicant as required by Section 38(1) (d) (ii) of the Supply Policy. This provision is mandatory. In any case, Applicant rendered satisfactory service.
[5]
Mr Morison made the following submission:-
Section 38(1) (d) (ii) of the Supply Policy is not relevant to this matter. The Respondents did not rely on this provision in taking a decision
not to award the tender to Applicant. The Applicant had not performed satisfactorily in its previous contract with First Respondent.
Its bad track record of service delivery constitutes a reasonable and justifiable ground not to award the tender to it.
[6]
The golden rule of statutory interpretation requires adherence to the plain language of a statute
unless this would lead to an absurdity or to a result contrary to the intention of the legislature (Manyasa v Minister of Law and Order [1998] ZASCA 112; 1999 2 SA 179 (SCA) at 185B-C).
[7]
Section 38 of the Supply Policy provides:-
"38 The accounting officer must establish measures for the combating of abuse of the Supply Chain Management system which must
stipulate the following:-
1
the accounting officer must-
a.
- - - - b. - - - -
c. - - - -
d. rejects any bid from a bidder-
[i]
if any municipal rates and taxes or municipal services charges owed by that bidder or any of its
directors to the municipality, are in arrears for more than 3 months as reflected in an appropriate affidavit submitted by the bidder;
[ii]
who during the last 5 years has failed to perform satisfactorily on the previous contract with the municipality
or any other organ of state after written notice was given to that bidder that performance was unsatisfactory;
e.
- - - -
f.
- - - - ."
(The underlining is mine)
[8]
The effect of Section 38(1) (d) is to debar certain prospective service providers from winning a tender bid. The approach by Phoebe Bolton in matters such as this one is the following:-
“where a contractor’s debarment or exclusion from government contract awards is the result or consequence of a conviction
for fraud or corruption in a court of law, there is generally no difficulty because the contractor will have been afforded an opportunity
to be heard. The audi alteram partem rule would in other words, have been complied with. Where, however, a decision is made to debar a contractor in the absence of a conviction
for fraud or corruption, the debarment decision should not be taken lightly. The same applies to the decision to debar a contractor
for the failure to render satisfactory contractual performance in the past. A debarment decision is accordingly subject to the requirements
of lawfulness, reasonableness and procedural fairness” (The Law of Government
Procurement in South Africa, Page 401).
[9]
It is clear that Section 38 (1) (d) penalises two categories of bidders. The first is the one who
owes or whose director (s) owe (s) municipality services, taxes or rates, for a period in excess of three months. With this first
category (as envisaged in Section 38(1) (d) (i)), no written notice needs to be given by the municipality to the bidder because the
bidder is already aware about its indebtedness. Once the municipality is satisfied that the bidder is indebted to it for any amount
for a period in excess of three months, the municipal manager automatically rejects the bid.
[10]
Section 38(1) (d) (ii) deals with the second category of bidders who are also subject to the penalty.
Contrary to the first category, the drafter of Section 38(1) (d) (ii) deliberately introduced a procedure which should be adhered
to by the municipality / state organ before the penalty may be invoked. The municipality / state organ has to inform the service
provider about its unsatisfactory performance. In my view, Section 38(1)(d)(ii) is couched in peremptory terms. Failure on the part
of the municipality / state organ concerned, to communicate the information to the bidder would preclude it from relying on “bad
track record” as a justification for refusing to award the tender to the bidder.
[11]
In a constitutional state, openness between the service provider and the service receiver is a corollary
of democracy. The following sentence: “after written notice was given to that bidder that performance was unsatisfactory”
constitutes a safety valve at the disposal of service providers. The legislature, in my view, placed a duty on the municipality /
state organ to continuously monitor the nature of the service which is rendered by a service provider. The municipality / state organ
has a duty to inform the service provider timeously, frequently and in writing about its unsatisfactory performance. The purpose
of this frequent communication, directed to the service provider, is to enable it to improve on the performance. The clear spirit
of Section 38(1)(d)(ii) is to dispel the use of any secret weapon against the service provider in future.
[12]
It is only when a contractor has knowledge about its sub-standard performance that it could improve. The
purpose of this proviso must be seen in the background of the history of our country. Potential service providers with no or little
business training background should not be visited with a sledgehammer. At best, they should be progressively nurtured and trained
by municipalities / state organs to be professional business people of the future.
[13]
In my view therefore, if this Court is satisfied that neither First nor Second Respondent notified Applicant,
in writing, about its poor performance, Applicant has to succeed in this matter.
Was there any such written notification as envisaged in terms of Section 38(1) (d) (ii) of the Supply Policy?
[14]
The Respondents insisted that Applicant was aware about its unsatisfactory performance and that some letters
were written to it in that regard. However, Respondents were unable to produce any copy of such letters. In my view, if a municipality
/ state organ, such as the First Respondent, raises a defence of unsatisfactory track record in a case such as this one, it (municipality
/ state organ) bears the onus to prove at least that Applicant:-
[a]
has a poor track record;
[b]
Was informed about such poor performance in writing;
and
[c]
Received or could reasonably be expected to have
received such notification.
[15]
The Respondents produced a letter dated 16 March 2007 which they received from Applicant. The first paragraph
thereof reads:-
“Our company is in dire need to rectify the improper behaviour of guards sleeping on duty at the Mayor’s house last night .” (my underlining)
[16]
There is a dispute as to what prompted this letter. Respondents insisted that it was a response by Applicant,
to their complaint about unsatisfactory performance. Applicant says its supervisor visited the guards the previous night at the Mayor’s
house and found them busy snoring. In my view, what prompted the writing of this letter is not so important, what is important though,
is that the security officers were guarding whilst fast asleep. However, a single isolated incident such as this, in a contract for
a period of at least 365 days, does not, in my view, constitute a poor track record. It is clear that the Respondents have failed
to discharge the onus which rests upon them.
[17]
The view taken by the Respondents is that even if no such written notification exists the mere fact that
Applicant has a poor track record debars the municipal manager from awarding a tender to it. To hold otherwise, so runs the argument,
would defeat proper service delivery which the Procurement Act seeks to achieve. My view is that municipalities or city managers
cannot be allowed to disregard legislation which governs their own internal procedures (like Section 38(1) (d) (ii)) and instead
latch on the Procurement Act.
[18]
In its endeavours to display the true colours of Applicant’s track record, Respondents annexed a
letter of complaint, addressed to it by a member of the public. This letter was written on 31 May 2007. The incident complained about
in the letter occurred on 30 May 2007. Respondents’ case is that it was on the basis of this letter, amongst others, that Applicant’s
bid was turned down. This is unfortunate because a decision to reject Applicant’s bid was taken on 11 May 2007. This letter
could not have influenced the decision to reject this tender bid.
The Ninety Days Period
[19]
Applicant did not refer this Court to any authority to substantiate its claim that the tender bid had
expired. What is interesting though is that had Applicant won this tender bid it would not reject it because it had expired. The
municipality and all bidders were agreed that despite the lapse of ninety days, the tender adjudication process could still go on.
Applicant was part of this process. There is absolutely no reason why this Court should interfere with this long established procedure.
In my view therefore, Applicant has failed to prove that there was anything irregular in the adjudication of this tender beyond the
ninety days period.
The duration of the proposed service contract between First and Third Respondent
[20]
The Respondents explained the reasons for what may appear to be an anomaly as follows: - After Third Respondent
won the bid, First Respondent recommended to its manager that this contract be for three years (instead of seventeen months). This
was an error on the part of First Respondent. After this incorrect information was conveyed to Third Respondent, the error was immediately
corrected when it was discovered. Third Respondent was also informed about this error. This Court cannot find any sinister motive
behind what appears to be an innocent clerical error. Indeed, the manager was acting within his/her powers to correct this error.
The submission by the Applicant that the conduct of the Respondents was illegal does not have any substance.
Conclusion
[21]
There is one last aspect relating to an objection which was raised by Respondents’ counsel when Applicant’s counsel addressed Court. Mr. Mokhare took the Court to what purported
to be the record of the municipality relating to this tender. He referred the Court to paragraph 7 of pages 46 to 53. In so doing,
he questioned the 100% which had been allocated to Applicant, for track record. This, in his opinion, was in conflict with the Respondents’
version that Applicant had a bad track record. Mr. Morison then raised an objection because in its founding/replying affidavit, Applicant
never referred to specific pages of the municipality tender record where it was basing its case. He referred the Court to Swissborough Diamond Mines v. Government of the RSA 1999 (2) SA 279 (TPD) at 323F-J. His line of reasoning was that Applicant’s counsel should be disallowed from referring the Court to pages 46 to 59 of the
municipality tender record. Having considered these submissions carefully, and the potential prejudice which the Respondents were
likely to suffer, the Court dismissed the objection and reserved reasons for judgment. Here then are the reasons.
[22]
In the Swissborough case, the Court, at page 323F –J, stated the law relating to the content of affidavits generally as follows:-
“It is trite law that in motion proceedings the affidavits serve not only to replace evidence before t he Court but also to
define the issues between the parties. In so doing, the issues between the parties are identified. This is not only for the benefit
of the Court but also, and primarily, for the parties. The parties must know the case that must be met and in respect of which they
must adduce evidence in affidavits. _ _ _ An Applicant must accordingly, raise the issues upon which it would seek to rely in the
founding affidavit. It must do so by defining the relevant issues and by setting out the evidence upon which it relies to discharge
the onus of proof resting on it in respect thereof.”
[23] I agree with Mr. Morison that this is the correct reflection of the legal position and that:-
“if there are absent from the petition such facts as would be necessary for determination of the issue in the petitioner’s
favour, an objection that it does not support the relief claimed is sound .”
(Hartu Pinetown Drive-Inn Cinema (Pty) Ltd 1972 (1) SA 464 (D) at 469D) The problem that confronts this Court with the objection raised is that right in its founding affidavit, the Applicant avers that
it got 100% and therefore it should have won the tender bid. The Applicant’s case is that it did not only get 100% in its total
score but that under the weighting “track record” it also scored 100%. Any Respondent would have known, immediately upon
the perusal of Applicant’s affidavit, that the most important document in the municipality tender record, was the one which
purports to contain the various weightings and the scores which were allocated. Failure on the part of the Applicant to refer, specifically
to paragraph 7 of the municipality tender record in its affidavits, does not, in my view, render it objectionable. Respondents were
aware long before the date of hearing that the allocation of points was the central issue in Applicant’s case. It is for these
reasons that the objection was dismissed.
[24]
In the result the following order is made:-
“The decision of the First and Second Respondents to award a tender (number RLM/DTS/0061/2006/07) to Third Respondent is reviewed and
set aside with costs”
____________________
SAMKELO GURAJUDGE OF THE HIGH COURT
Instructing Attorneys
For Applicant:
S M MOOKELETSI ATTORNEYS
For First and Second Respondents:
MINCHIN & KELLY INC.
For Third Respondent:
KGOMO MOKHETLE & TLOU ATTORNEYS