The Chairperson: Standing Tender Committee and Others v JFE Sapela Electronics (Pty) Ltd and Others

The Department of Public Works (DPW) awarded three separate tenders to Nolitha Electrical & Construction (Pty) Ltd for repair and maintenance work at Drakenstein, Worcester and Helderstroom prisons in the Western Cape. JFE Sapela Electronics and JFE Power Distribution (t/a JFE Reticulation), who were unsuccessful tenderers, challenged these awards. In the Drakenstein tender, Nolitha quoted only R4,164 for steam generation repair work (R2 per item) compared to Reticulation's R455,719.78, because Nolitha knew a separate regional tender had already been awarded to replace the steam boilers with electric colorifiers, rendering the repair work unnecessary. Similarly, for the Worcester tender, Nolitha quoted only R1,606 for hot water generation work (R11 per item) compared to Sapela's R203,964.68, because a separate tender for new hot water installation had been advertised. For the Helderstroom tender, Nolitha misunderstood items requiring maintenance of a call centre and over-quoted, but the consulting engineer allowed Nolitha to reallocate costs to other under-quoted items after the tender closing date. The High Court set aside all three tender awards and declared the contracts null and void. The appellants appealed.

• Whether the tender awards complied with section 217 of the Constitution requiring a fair, equitable, transparent, competitive and cost-effective procurement system
• Whether Nolitha's tenders were 'acceptable tenders' within the meaning of the Preferential Procurement Policy Framework Act 5 of 2000
• Whether the modification of Nolitha's Helderstroom tender after the closing date violated principles of administrative fairness under PAJA
• Whether the court should exercise its discretion to decline setting aside invalid administrative acts where practical implementation is impossible due to effluxion of time
• Whether the respondents delayed unreasonably in bringing review proceedings

The appeal was upheld and the order of the High Court setting aside the tender awards was set aside. The application was dismissed. However, the first and second appellants were ordered to pay the costs of the first and second respondents in both the Supreme Court of Appeal and the High Court, including costs of two counsel.

1. An 'acceptable tender' within the meaning of the Preferential Procurement Policy Framework Act requires compliance with all specifications and conditions, interpreted in light of constitutional values of fairness, equity, transparency, competitiveness and cost-effectiveness in section 217(1). 2. A tender that prices entire sections of required work at nominal amounts based on speculation that the work will not be needed does not constitute an acceptable tender, as it gives the tenderer an unfair advantage over competitors who tender for all specified work. 3. Allowing a tenderer to modify its tender by reallocating costs between items after the tender closing date violates principles of administrative fairness as it results in acceptance of an offer different from that originally submitted. 4. Courts have discretion to decline setting aside invalid administrative acts where effluxion of time and practical considerations (such as substantial completion of work and impracticability of re-tendering) make implementation of such an order unjust, even where the applicant is not at fault for delay. 5. The discretion not to set aside invalid administrative acts serves two purposes: preventing prejudice to respondents and recognizing the public interest in finality of administrative decisions, including considerations of pragmatism and practicality.

The court observed that the doctrine of legality constrains the legislature and executive in all spheres to exercise only those powers conferred upon them by law. While the court noted a dispute about whether a document entitled 'Conditions Pertaining to Targeted Procurement' constituted the DPW's preferential procurement policy and what weight should be given to it (particularly its definition of 'responsive tender'), the court found it unnecessary to resolve this dispute as the statutory concept of 'acceptable tender' was the decisive threshold requirement. Scott JA noted that while it may in certain circumstances be fair to allow a tenderer to explain ambiguities, correct obvious mistakes, or provide clarification in complex tenders, such actions must not cause the process to lose the attributes of fairness, transparency, competitiveness and cost-effectiveness. The court also observed that the consulting engineers' draft reports had recommended against Nolitha in several instances, noting abnormally low rates and financial risks, but these concerns were omitted from final reports without adequate explanation.

This case is significant in South African procurement law for establishing important principles regarding tender acceptability and the exercise of judicial discretion in administrative law reviews. It clarifies that under the Preferential Procurement Policy Framework Act, an 'acceptable tender' requires tendering for the entirety of work specified, not merely pricing each item. The case demonstrates that tendering nominal amounts for substantial work sections based on speculation violates constitutional procurement values in section 217. It also establishes that post-closing date modifications to tenders breach administrative fairness. Importantly, it confirms that courts have discretion to decline setting aside invalid administrative acts where effluxion of time and practical considerations make implementation impossible, even where the applicant is not at fault for delay. The judgment balances the principles of legality against pragmatism and the public interest in finality of administrative decisions. It also demonstrates that costs may be awarded against a successful party in special circumstances where their conduct contributed to the problem.