Milestone judgement to help challenge unfair tender processes

Milestone judgement to help challenge unfair tender processes

Government institutions and the private sector will be paying more attention to tender processes following the handing down of a milestone judgement by the High Court of South Africa in Port Elizabeth.

The Black Lawyers Association of South Africa, Port Elizabeth law firm Joubert Galpin Searle, and Western Cape law firms Rehana Khan Parker & Associates and Z. Abdurahman Attorneys successfully challenged the award of tenders by the Road Accident Fund to a new panel of law firms to represent the Fund. All the applicants except Z Abduraman Attorneys were represented by Warren Parker and MC Botha of Joubert Galpin Searle.

In his judgement handed down on March 25, Judge Clive Plasket found that the Road Accident Fund had acted irregularly when it awarded a tender in August 2013 to appoint 34 law firms to its national panel of attorneys as the tender validity period had expired in November 2012. The Judge further found that, in doing so, the Road Accident Fund did not follow its own internal procurement processes in an attempt to “rectify” the tainted tender process.

The Road Accident Fund has been ordered to initiate and finalise a new tender within the next eight months, and to pay the costs occasioned by the application to have the tender set aside

Busani Mabunda, chairman of the Black Lawyers Association, says the organisation decided to challenge the tender process “as a matter of principle.” We stood up for the principle that state institutions or any other organ of state should observe the due tender processes and act in a fair manner which is not detrimental to any of the parties who may be affected by the outcome.

“Our participation was not anything personal. There are certain of our members who won the bid, inasmuch as there are those who did not win the bid,” he says.

“It is unfortunate that the matter had to end up in the courts, as we always believed that the matter could be resolved in a conciliatory fashion,” says MC Botha, Managing Director  of Joubert Galpin Searle.  “We were initially reluctant to litigate against colleagues and a valued client and tried to resolve the matter through negotiation and even mediation. When these attempts proved unsuccessful we were forced to approach the courts.”

Joubert Galpin Searle became a party to the “David and Goliath” challenge because “we specialise in procurement and administrative law and were therefore fortunate to be skilled enough to identify the shortcomings of the tender” he says. It was indeed challenging for us to be taking on the might of an organ of state such as the Road Accident Fund, who was litigating against us with almost unlimited taxpayers funding. “There were up to 10 advocates in the Court at one time. We had over three thousand pages of court records, and at one time our most of our procurement department was engaged in the case,” he says.

We however were convinced that the process was fundamentally flawed and tainted, to the prejudice of all unsuccessful tenderers and believed that challenging the process was the correct thing to do.

According to Mabunda, the Black Lawyers Association also wanted to champion a precedent that would have wider implications for the business community as a whole.

“If state-owned entities or the state are to flout the prescribed procurement rules and processes which they have to follow, in relation to lawyers who are entrusted to uphold the law and it is allowed to go unchallenged, what hope is there for the members of the general public,” he asked. The Black Lawyers Association believed it to be its duty to ensure that organs of state and government institutions are held accountable.

According to Parker, the judgement followed a legal precedent set by the Constitutional Court. In the judgement Judge Plasket refers to the finding by Judge Johan Froneman in the Constitutional Court in which he found that “compliance with the requirements for a valid tender process, issued in accordance with the constitutional and legislative procurement process, is thus legally required,” and that “they are not merely internal prescripts.”

Parker says the two judgements provide both a precedent and guidelines for those wanting to challenge the award of tenders on the basis of unfair tender processes being followed. “We wanted to take up the cudgels on behalf of smaller firms who would not have the resources to challenge the tender.”

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