|The Appellant, Airports Company South Africa Soc Ltd (ACSA), published a Request for Bids (RFB) on 5 September 2017, in terms of which members of the public were invited to submit bids for the hiring of 71 car rental kiosks and parking bays at nine airports operated by ACSA. |
The Respondent, Imperial Group (Pty) Ltd (Imperial) submitted a bid in response to the RFB. In addition to its bid, Imperial launched an application in the Gauteng Division of the High Court, Johannesburg for an order reviewing and setting aside ACSA’s decision to issue and publish the RFB. Relying on the Promotion of Access to Justice Act 3 of 2000 (PAJA) and the principle of legality, ACSA contended that the decision to issue and publish the RFB was unlawful, unreasonable, inconsistent with section 217 of the Constitution and invalid.
The court a quo held that the decision to publish the RFB was unlawful, inconsistent with the Constitution and the legislative framework envisioned thereunder. ACSA thereafter applied to the court a quo for leave to appeal to the Supreme Court of Appeal (SCA).
ACSA’s contention was that PAJA did not apply to the RFB. Additionally, ACSA argued that section 217 of the Constitution refers only to instances where an organ of state incurs expenditure and as such, had no applicability to the RFB.
The Supreme Court of Appeal considered the following in its finding:
1.the interpretation and applicability of section 217 of the Constitution, together with legislation falling under this section;
2.the rationality of certain provisions of the RFB; and
3.the process leading to the decision to publish the RFB.
In its determination, the SCA found that the issuance and publication of the RFB constituted an administrative action under section 1 of PAJA. This action was deemed ripe for challenge, in lieu of the fact that the pre-qualification criteria contained in the RFB, automatically disqualified Imperial from the evaluation process. Thus, it had an external effect and adversely affected Imperial’s legal rights.
In assessing section 217 of the Constitution, the SCA held that section 217 does not limit its applicability to the means by which goods and services are acquired. The test of whether a transaction amounts to ‘procurement’, as provided for in section 217, is the real substance of the transaction and not the form attached to it. It was found that section 217 of the Constitution is applicable to the RFB.
Furthermore, the SCA found that in order to implement preferential procurement policies (policies providing for categories of preference in the allocation of contracts and protection and advancement of people disadvantaged by unfair discrimination), section 217(3) of the Constitution envisages that this may only be done within the boundaries prescribed by national legislation.
In this instance, the Preferential Procurement Policy Framework Act 5 of 2000 (PP Act) and the Broad Based Black Economic Empowerment Act 53 of 2003 (B-BBEE Act) were enacted to fulfil the obligations set out in section 217(3) of the Constitution.
In this regard, the SCA held that in setting pre-qualification criteria in the RFB that deviates from those prescribed in the B-BBEE codes, ACSA’s decision to publish the RFB cannot be said to be informed by reason or rationality. Additionally, the SCA found that the RFB contravened the provisions of section 2(1)(f) of the PP Act, thus rendering the RFB unlawful.
Furthermore, ACSA failed to show that the qualification criteria embodied in the provisions of the RFB were rationally connected to the purpose for which they were intended.
The Supreme Court of Appeal held that the High Court correctly found that the RFB was unlawful and invalid and thus correctly set the decision, to issue and publish the RFB, aside. The Supreme Court of Appeal dismissed the application with costs.
Where a decision is taken to publish a RFB, and the decision is materially tainted by irrationality, that decision is unlawful in terms of PAJA and the principle of legality. Thus, the decision to publish a RFB may be scrutinised by judicial review, despite the fact that no award has been made in terms of the RFB.
Written by Tayla Bruce and Jayna Hira