Vumela Industrial Consultancy (Pty) Ltd (“Vumela”) successfully tendered for a contract for the provision of quality control and approved inspection authority services for PetroSA, being an organ of state (“the Contract”). Vumela had obtained the highest score in the tender evaluation process and offered a tender price that was R4.6 million lower than that of the only other competent tender, submitted by ABET Inspection Engineering (Pty) Ltd (“Abet”).
Abet brought an application in the Court a quo to review and set aside the Contract and to award the Contract to itself in Vumela’s stead by invoking section 6(2)(b) of the Promotion of Administrative Justice Act 3 of 2000 (“PAJA”), which states that a review may be necessary when “a mandatory and material procedure or condition prescribed by an empowering provision was not complied with”.
The empowering provision, in the circumstances, is section 2(1)(f) of the Preferential Procurement Policy Framework Act 5 of 2000 (“the PPPFA”) which states, inter alia, that “the contract must be awarded to the tenderer who scores the highest points”. This provision can only be complied with if the tenderer submitted an “acceptable tender”, defined as a tender “which, in all respects, complies with the specifications and conditions of tender as set out in the tender document”.
Abet claimed that Vumela failed to attach two essential certificates to its tender, which was specifically required by the PetroSA tender conditions. Therefore, the tender was not an acceptable tender, as defined in the PPPFA, and should not have been awarded to Vumela even though Vumela scored the highest points.
The two relevant certificates were the South African National Accreditation System (“SANAS”) certificate for the provision of quality control services and the Department of Labour (“DOL”) certificate for the Inspection of Pressure Equipment services also known as approved inspection authority services. The successful tenderer would need to maintain accreditation with SANAS and the DOL for the entire duration of the contract, failing which the contract would be cancelled forthwith.
The Court a quo dismissed Abet’s application by giving preference to the substance over form principle in finding that, although Vumela had failed to attach the two essential certificates in its own name, amounting to an irregularity, it did, in fact, have the necessary certification, as will be expounded upon below, and that Vumela’s tender had complied with the definition of an “acceptable tender”. The Court a quo thus reasoned that the irregularity did not amount to a ground of review in terms of section 6(2)(b) of PAJA.
Abet appealed the decision of the Court a quo, and obtained leave to do so.
The appeal Court inquired to find that the quality services division of Parsons Brinkerhoff Africa (“PBA”), now known as Vumela, was purchased as a going concern that included the SANAS and DOL certification which was essential in order to be successful in tendering for the Contract with PetroSA. It followed that the necessary certification had been purchased, part and parcel, with PBA and transferred into Vumela’s name.
The reason why Vumela failed to attach the necessary certification was that the transfer of the certification had not taken place within the limited time-frame that Vumela had in order to submit its tender to PetroSA. The invitation to tender was issued on 4 March 2016 and Vumela had until 31 March 2016 to submit its tender. In the circumstances, Vumela submitted the SANAS and DOL certificates of PBA. Vumela then pre-cognized the functionaries of PetroSA, who were responsible for approving acceptable tenders, that it had was in the process of arranging the re-issuing the SANAS and DOL certification in the name of Vumela, not its owners and, further, that the certification for PBA was valid until 31 July 2019.
Pursuant to 31 March 2016, SANAS issued a document certifying that Vumela had obtained SANAS certification unconditionally and retrospectively, with effect from 17 March 2016 and the DOL issued a letter indicating that Vumela had obtained DOL certification with effect from 17 June 2016.
- The Court found that the quality division of the business, which had the requisite SANAS and DOL certification, initially belonging to PBA, now belonged to Vumela and, further, that the functionaries of PetroSA were entitled to accept that the quality services division, now owned by Vumela, was, in fact, certified as required in terms of PetroSA’s terms and conditions of tendering.
- The Court held, after considering salient case law and legislation, that the certification attached to an organisation or facility and not the people or entities who owned that organisation or facility.
- The Court further held that the rejection of Vumela’s tender, because the attached certificates were in the name of PBA rather than Vumela, would amount to a wrongful act as it would amount to elevating form over substance.
- The Court then enunciated that it would have been unfair, inequitable and opaque for the functionaries of PetroSA to disqualify the tender of Vumela, and classify it as an unacceptable tender, on the basis that its tender failed to comply in form, when the name on the certificates was all that required changing and where the nature / character of the quality division of PBA, now Vumela, had not changed.
- The Court concluded that there was no irregularity, as required in terms of section 6(2)(b) of PAJA, in order to invoke same, and that if there was an irregularity, as alleged, it was incontestably immaterial.
Due to Abet’s lacklustre argument, the Court dismissed the appeal with costs, including costs of the application for leave to appeal.
The section 6(2)(b) provision, as contained in PAJA, can only be invoked if there is a material condition in terms of the empowering provision, in casu, section 2(1)(f) of the PPPFA, which has not, in substance, been complied with.
Written by Jasvir Sewnarain, Candidate Attorney and supervised by Anja van Wyk, Associate, March 2018