MUNICIPAL TENDER AWARDS AND INTERNAL APPEALS BY UNSUCCESSFUL

OBJECTIONS, COMPLAINTS & INTERNAL APPEALS BY

UNSUCCESSFUL BIDDERS

Section 62 • 1) A person whose rights are affected by a decision taken …. in terms

of a power or duty delegated or sub-delegated by a delegating authority …… may appeal against that decision by giving written notice of the appeal and reasons to the municipal manager within 21 days of the date of the notification of the decision.

• (2) ……

• (3) The appeal authority must consider the appeal, and confirm, vary or revoke the decision, but no such variation or revocation of a decision may detract from any rights that may have accrued as a result of the decision.

• (4) When the appeal is against a decision taken by–• (a) a staff member other than the municipal manager, the municipal

manager is the appeal authority.

CC Groenewald v M5 Developments

• Brief facts:o municipality invited tenders for the appointment of an

"implementation agent" for housing projectso BAC award bid to M5o M5 informed successful and o 4 bidders were informed they were unsuccessful and

given 21 days to appeal in terms of section 62.o ASLA and Blue Whale lodge appeals o Only Blue Whale’s appeal was lodge on time o MM was appeal authority and only considered Blue

Whale’s appealo MM as appeal authority of the view that ASLA out of

time and Blue Whale’s appeal had no merits


• Brief facts continue…o MM –

• Re-evaluated the tenders submitted. He concluded that both the consulting engineers and the BEC had incorrectly scored the tenders.

• approached M5 and ASLA requesting the provision of further information

• ASLA responded on time but M5 did not respond • Based upon the new information received from ASLA the

MM recalculated the points scored and decided that the tender should not have been awarded to M5 but to ASLA

• M5 took matter to WC HC and was successful• Mun and ASLA appeal to SCA


• M5 argued that an unsuccessful bidder has no right to appeal under Section 62 based of CoCT v Reader

• SCA - unsuccessful bidders were all parties to the tender approval process and hence had a right to appeal under Section 62.


• SCA- o Whether the MM as appeal authority, was

entitled to award the tender to an unsuccessful bidder who was not a party to the appeal.

o Appeal under S62 is a "wide appeal" involving a re-hearing of the issues, but

o held that S 62 does not allow the appeal authority to revisit all the tenders and to award the tender to an unsuccessful bidder who did not appeal or, as in this case, whose appeal was out of time.


• SCA- oOnce the municipal manager was of the

view that Blue Whale's appeal was without merit and having dismissed ASLA's appeal, the only course of action was to dismiss Blue Whale's appeal.

oMM was not entitled to re-evaluate and re-allocate the tender as he did.


• SCA- o Appellants argue that should the court find

that the MM had no power to award the contract to ASLA, the court should refer the matter back to the BAC for reconsideration

o MM as appeal authority, had the power under S62(3) to "consider the appeal, and confirm, vary or revoke the decision“

o MM had no power to refer the matter back to the BAC for reconsideration. This being so, the court is also not in a position to make an order on review that the MM could not have made.

Accrual of rights under Section 62(3)Loghdey v Advanced Parking Solutions

CC

• BAC awarded a tender to Loghdey for a kerbside parking management service and soon after a formal contract was concluded.

• Advanced Parking Solutions, an unsuccessful bidder, appealed against the award, relying on S62

• Loghdey approached the court for an order that no appeal was available.

Loghdey v Advanced Parking Solutions CC

• Advanced Parking Solutions countered that the municipality's tender invitation made the award of the contract subject to a 21-day appeal period and that the municipality's own supply chain management policy stipulated that tender awards may only be made once any appeals have been satisfactorily resolved


• The court found in favour of Loghdey.

• It held that even though the bid conditions and the municipality's supply chain management policy both made provision for an appeal process, they did not provide for a right of appeal.

• Simply created an obligation that participating bidders be informed of their right to appeal a tender award.


• Neither the notification of the tender award to Loghdey nor the formal contract concluded with it made the award or the conclusion of the contract conditional upon an appeal period, unconditional rights vested in Loghdey following the award of the tender and the conclusion of the contract.

• The court distinguished the case judgment in Syntell (Pty) Ltd v The City of Cape Town

• Facts in Syntell were very similar, the primary difference was that the notification of the tender award in Syntell expressly stated that the award was subject to a 21-day appeal period, and that no rights would accrue before the expiry of that period.

• In the case at hand, the court held, the notification contained no such statement.


Lohan Civil-Tebogo Joint Venture v Mangaung Plaaslike

Munisipaliteit

• Lohan felt aggrieved by the award of the tender to Moeletsi and approached the court for an interim interdict to o prevent the execution of the tender pending the finalisation of a review

application o setting aside the award of the tender and contract

The municipality, raised a preliminary point. - Section 7(2)(a) of PAJA, a review application cannot succeed

unless the court is satisfied that an applicant has exhausted internal remedies available to it.


Munisipaliteit• The court held that on the language of Section 62(1), it

is clear that it envisages an appeal against a decision that was taken pursuant to a delegation of authority.

• In the present case, the decision to award the tender to Moeletsi was ratified by the MM who was not exercising a delegated power, but an original power.

• In terms of Regulation 29(5)(b)(i) of the Supply Chain Regulations, the MMof the municipality has the final power of approval read with Section 60 of the MFMA, which describes the MM as "accounting officer"


Munisipaliteit

• Appeal to MM where he took the decision. Logic dictates that this is not at all an effective remedy.

• An appeal under Section 62 of the Municipal Systems Act was, accordingly, not available to Lohan.

• This court decision taken in February 2009 Manana v King Sabata Dalindyebo Municipality was decided in November 2010

Manana v King Sabata Dalindyebo

Municipality• “14. As is to be expected, the Act is replete with

provisions recognising that executive authority vests in the council and in nobody else.

• Indeed, ordinary legislation is not constitutionally capable of divesting a municipal council of its executive authority – or any part of it and the construction of a statute that would produce that result must be avoided if it is possible to do so

• Q does Lohan still apply after Manana

• The supply chain management policy –o must allow persons aggrieved by decisions or actions

taken by the municipality or municipal entity in the implementation of its supply chain management system, to lodge within 14 days of the decision or action a written objection or complaint to the municipality or municipal entity against the decision or action.

• 50. (1) The supply chain management policy of a municipality or municipal entity must provide for the appointment by the accounting officer of an independent and impartial person not directly involved in the supply chain management processes of the municipality

• - (a) to assist in the resolution of disputes between the municipality or municipal entity and other persons regarding-

o (i) any decisions or actions taken by the municipality or municipal entity in the implementation of its supply chain management system; or

o (ii) any matter arising from a contract awarded in the course of its supply chain management system; or

(b) to deal with objections, complaints or queries regarding any such decisions or actions or any matters arising from such contract.

Regulation 50

Resolution of disputes, objections, complaints and

queries

4. The person appointed must –

o (a) strive to resolve promptly all disputes, objections, complaints or queries received; and

o (b) submit monthly reports to the accounting officer on all disputes, objections, complaints or queries received, attended to or resolved.

7. This regulation must not be read as affecting a person’s rights to approach a court at any time.

Objections and complaints

• In the light of the above provisionso "independent and impartial", o not be "directly involved in the SCM processes“

It stands to reason that even though the MM (or an official designated by him or her) is required to "assist" the person appointed to ensure the effective performance or his or her functions, it is not permissible for the MM to perform the functions himself or herself.

Objection & complaints v S62 Appeals

• Section 62 qualifies as an internal remedy for the purposes of Section 7(2) of PAJA,

• whereas 49 & 50 do not give rise to an internal remedy as referred to in Section 7(2) of PAJA.

Objection & complaints v S62

• Muni’s could effectively prevent S62 from having any application to their tender awards by making unconditional awards and/or concluding unconditional contracts.

• with the result that rights will have accrued to the preferred bidder, which cannot be disturbed by an appeal under Section 62.


• Q, is whether municipalities are or should be under an obligation or duty bound to make tender awards conditional on a 21-day period, allowing unsuccessful bidders to appeal against the award decision.

• S62 is a general appeal provision and not strictly confined to municipal tender processes, municipalities are not duty bound to make conditional awards

• SCM Regs, on the other hand, make clear that muni’s "must" make provision in their supply chain management policies for the lodging of "complaints and objections" within a 14-day

EVALUATIONS ENHANCED PROPERTY v THE BUFFALO

CITY

• Applicant were verbally informed that the tender had been awarded to another bidder

• Applicant arguedo s62 requires “notification” of the decision. And having regard to the

importance of the right to fair administrative action conferred on Applicant by section 33 of the Constitution, informal or verbal notification is insufficient and it is a constitutional prerogative that the “notification” must be in writing.

o Second, s62(1) requires the Applicant to lodge the notice of appeal and written reasons for the appeal within 21 days of the “notification.”


CITY

• “35] It follows that having regard to all the usual and well-known rules and tenets of interpretation, including the object and purpose of these enactments, PAJA, PAIA and all other similar statutes must be interpreted like any other statute and subject to the Constitution. Where it falls short of the Constitution, or offends a constitutional right, that part of the statute may be struck down as unconstitutional. It also follows that the provisions of

• PAJA and PAIA cannot simply be ignored, qualified or interpreted beyond recognition of the clear grammatical meaning of the words used in the text.”


CITY

• Neither section 33 of the Constitution which creates the right to fair administrative action, nor the provisions of PAJA, prescribe by whom, when and in what manner the notification of the decision must be given

• both sections 5 and 7 of PAJA follow the source of the right contained in section 33 of the Constitution by repeating the requirement of written reasons for the decision, but not being prescriptive at all in regard to the manner of notification of the decision or that reasons must be given simultaneously with the decision.


CITY

• It is clear from sections 5(1) and 7(1) that such notification may reach the affected person in any manner and from whomever, not necessarily from the decision maker.

• It goes even further: the right to receive written reasons under section 33(2) of the Constitution is dependent upon the affected person requesting reasons

• Its Applicant’s own version, that it was notified of the decision on 21 August 2012 having been told by a senior Municipal Officer

• Court: these events constituted “notification” as envisaged by section 62(1) of the Systems Act read with section 5(1) of PAJA.


• legislature is not clear on the extent of the powers of the independent and impartial third party

• However courts have recently frown on muni’s that disregard the SCM legislation… even indicating that they will hold municipal officials personally liable

Case list • CC Groenewald v M5 Developments (283/09) [2010] ZASCA 47 31 March 2010• Koyabe v Minister for Home Affairs Case CCT 53/08 [2009] ZACC 23 25 August 2009• Loghdey v Advanced Parking Solutions CC Case 20766/2008 (W) [2009] ZAWCHC 15 25 February

2009 • Lohan Civil-Tebogo Joint Venture v Mangaung Plaaslike Munisipaliteit Case 508/2009 (O) [2009]

ZAFSHC 21 27 February 2009 (unreported)• M5 Developments (Cape) (Pty) Ltd v CC Groenewald NO Case 6277/08 [2009] ZAWCHC 3 12

February 2009• Mohammed Zunade Loghdey v City of Cape Town; Advanced Parking Solutions CC v City of Cape

Town Case 100/09 [2010] ZAWCHC 25 20 January 2010• Moseme Road Construction CC v King Civil Engineering Contractors (Pty) Ltd (385/2009) [2010]

ZASCA 13 15 March 2010• Municipality of the City of Cape Town v Reader 2009 1 SA 555 (SCA) • Nichol v Registrar of Pension Funds 2008 1 SA 383 (SCA)• Oudekraal Estates (Pty) Ltd v City of Cape Town 2004 6 SA 222• Reader v Ikin 2008 2 SA 582 (CPD)• Reed v Master of the High Court of South Africa [2005] 2 All SA 429 (E)• Robcon Civils/Sinawamandla 2 Joint Venture v Kouga Municipality 2010 3 SA 241 (ECP)• Syntell (Pty) Ltd v The City of Cape Town Case 17780/07 (CPD) [2008] ZAWCHC 120 13 March

2008 (unreported)• Total Computer Services (Pty) Ltd v Municipal Manager, Potchefstroom Local Municipality 2008 4

SA 346 (T)• Manana v King Sabata Dalindyebo Municipality (345/09) [2010] ZASCA 144 (25 NOVEMBER

2010)

Documents

MUNICIPAL TENDER AWARDS AND INTERNAL APPEALS BY UNSUCCESSFUL