Lepogo Construction (Pty) Ltd v The Govan Mbeki Municipality

The Govan Mbeki Municipality invited tenders for the construction of a 10ML post-tensioned water reservoir. Lepogo Construction submitted an original and an alternative tender. Following internal procurement processes involving the Bid Evaluation Committee (BEC) and Bid Adjudication Committee (BAC), a memorandum reflecting a conditional recommendation in favour of Lepogo’s alternative tender was improperly communicated to the municipality’s consulting engineer, Bigen Africa. Acting on this, Bigen Africa issued a letter on 29 January 2009 purporting to appoint Lepogo as contractor. However, prescribed procurement and contractual formalities—particularly the completion and signing of the formal ‘offer and acceptance’ document—were not complied with, and the municipal manager later withdrew the award after uncovering irregularities and lack of budget approval. Lepogo sued the Municipality for damages alleging repudiation of a binding construction contract.

The appeal was dismissed with costs, confirming the High Court’s dismissal of Lepogo’s claim for damages.

The case affirms the strict application of procurement and contractual formalities in public tender processes. It underscores that organs of state are bound by constitutional and statutory procurement frameworks, and that failure to comply with prescribed procedures prevents the formation of a binding contract, even where a contractor subjectively believes it has been appointed.