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By Zimri Attorneys
2021-06-24

Zimri Attorneys acted on behalf of a successful applicant in the case of Rail Refurb CC v South African Road Agency SOC Limited & 2 Others (24377/2020). The application involved the unlawful award of two road maintenance contracts in circumstances where our client’s bids were collectively more than R20 million lower than the bids accepted by SANRAL. The review application was heard by Judge Tolmay of the Gauteng Division of the High Court, Pretoria on 10 February 2021 and the judgment was handed down on 18 June 2021 in favour of our client. The link to the judgement appears below:


Rail Refurb CC v South African National Roads Agency SOC Limited and Others (24377/2020) [2021] ZAGPPHC 415 (18 June 2021) (saflii.org)


The application brought by our client on 5 June 2020 sought an order reviewing and setting aside the award of two tender contracts by SANRAL on the basis that they were unlawfully awarded to the successful bidders. This application was opposed by SANRAL and one of the successful bidders.


The court found that there were three main issues in the matter. The first issue was whether our client was denied a hearing on the rebalancing of its pricing rates and whether the contract award was procedurally unfair for this reason. The second was whether SANRAL’s refusal to re-evaluate our client’s bids was irrational. The third was whether, in event that the awards be set aside, the Court should award the tenders to our client or whether the decisions should be referred back to SANRAL for consideration.


Our client made submissions in the tender process for two road maintenance contracts. Our client’s bids made it to the pricing and preference stage of the bid evaluation but were rejected by SANRAL at that stage. SANRAL’s reason for doing so was that our client’s rates were “unresponsive”. It was common cause that during the course of the evaluation of the tenders, our client was promised a meeting by SANRAL’s Procurement Manager to discuss our client’s rates but they unilaterally abandoned the meeting without informing our client. While waiting for the meeting to take place, SANRAL instead awarded the contracts to other bidders.


It is trite that SANRAL’s decisions had to be objectively rational, reasonable and fair. SANRAL was required to comply with the mandatory tender requirement that it had to obtain clarity on ambiguity in a tender bid. SANRAL failed to do this. SANRAL’s failure to comply with conditions applicable to the tender process meant that their decisions were procedurally unfair.


In addition, SANRAL applied an inconsistent approach in its different regions and towards different tenderers. SANRAL failed to have regard to the entire package of our client’s rates and instead had regard to individual rates. This was despite SANRAL conceding that it needs to have regard to a package of rates. The court found that SANRAL’s approach in respect of our client’s rates was procedurally irrational and unfair and is therefore reviewable in terms of the Promotion of Administrative Justice Act (PAJA).


Further, SANRAL relied on a predetermined benchmark in its evaluation process which was not disclosed to our client. The court stated that: “it is trite that a tender is required to speak for itself”. Regulation 11(2) of the Preferential Procurement Regulations 2017 states that “if an organ of state intends to apply objective criteria in terms of section 2(1)(f) of the Act, the organ of state must stipulate the objective criteria in the tender documents”. Having regard to this section and National Treasury Circular of 10 May 2005, the Court found that SANRAL’s decisions were reviewable in terms of section 6 (2)(e)(i) of PAJA and the principle of legality.


Thus, a legally sound process was clearly not followed, resulting in decisions that were irregular and invalid. SANRAL’s decisions were therefore declared invalid and accordingly set aside.


As regards substitution, the court found that the Court was not in as a good as a position as SANRAL to make an appropriate decision. The decisions were therefore remitted back to SANRAL for reconsideration.