Minister of International Relations and Co-operation and Others v Simeka Group (Pty) Ltd and Others

The Department of International Relations and Cooperation (DIRCO) issued a Request for Proposals (RFPs) on 4 March 2016 for the appointment of a development partner to design, construct, finance, operate, and maintain office and residential accommodation for South African diplomatic missions in Manhattan, New York. The RFPs required the successful bidder to: (a) provide audited financial statements for three years; (b) demonstrate ability to raise required funding; (c) acquire land and provide finance at their own cost. Only two bids were received. One consortium (Lephuthing/Menzibali Construction) was disqualified for failing to provide audited financial statements. The Joint Venture of Simeka Group and Regiments Capital also failed to provide complete audited financial statements but was recommended by the Bid Evaluation Committee (BEC) and Bid Adjudication Committee (BAC). The Director-General awarded the tender to the Joint Venture on 17 May 2016. Subsequently, through a Steering Committee and a Project Preparation Agreement (PPA) concluded on 25 March 2017, the project was fundamentally altered so that DIRCO (not the Joint Venture) would fund the land acquisition and construction. National Treasury refused to grant Treasury Approval III due to procurement irregularities and concerns about Regiments Capital's associations. The government parties instituted legality review proceedings on 10 October 2018 (approximately 29 months after the tender award). The high court dismissed the application solely on grounds of unreasonable delay.

• Whether the tender award complied with section 217 of the Constitution requiring fair, equitable, transparent, competitive and cost-effective procurement
• Whether the Joint Venture met the mandatory requirements of the RFPs, particularly regarding audited financial statements and proof of funding ability
• Whether the material deviations from the RFPs after the tender award rendered the procurement process unlawful
• Whether the delay in instituting the legality review was unreasonable
• If the delay was unreasonable, whether it should nevertheless be condoned in the interests of justice
• The proper approach to legality self-reviews by organs of state
• Whether the high court exercised its discretion judicially in refusing to condone the delay

The appeal was upheld with costs, including costs of two counsel. The high court order was set aside. In its place: (1) The late institution of the legality review application was condoned; (2) The tender award to the Joint Venture was declared constitutionally invalid and unlawful; (3) The tender award was reviewed and set aside; (4) The Project Management Agreement between DIRCO and Lemascene was declared to be of no legal force and effect, reviewed and set aside; (5) The respondents were ordered jointly and severally to pay costs, including costs of two counsel.

The binding legal principles established are: (1) Section 217 constitutional procurement requirements are not merely internal prescripts that may be disregarded at whim - they are legally required constitutional imperatives; (2) In legality reviews (unlike PAJA reviews), while proceedings must be brought without unreasonable delay, there is no fixed time limit and courts have broader discretion to condone delay; (3) Whether delay is unreasonable is a factual inquiry; whether unreasonable delay should be condoned involves a value judgment considering all circumstances; (4) Relevant factors for condoning delay in legality reviews include: nature and extent of illegality, interests of justice, prospects of success, prejudice, explanation for delay, public interest in finality versus clean governance; (5) Tender requirements serve the constitutional purposes of fairness, equality of treatment, transparency, competitiveness and cost-effectiveness - material deviations from these requirements that cannot be shown to substantially achieve the purposes they serve render procurement decisions unlawful; (6) Where bid evaluation committees deviate from mandatory tender requirements without lawful basis, particularly by treating bidders unequally or waiving requirements for some but not others, the resultant award is constitutionally invalid; (7) Post-award fundamental variations to tender terms that alter the competitive basis of procurement (such as shifting financial responsibility from tenderer to procuring entity) constitute material illegality warranting setting aside; (8) When conduct is found inconsistent with the Constitution, courts must declare it invalid under section 172(1)(a) - this is mandatory, not discretionary; (9) The more egregious the breach of procurement prescripts and the greater the financial implications, the more courts should incline toward condoning delay to enable substantive review of legality.

The Court made several non-binding observations: (1) It acknowledged widespread academic criticism of the Gijima decision regarding the distinction between PAJA and legality reviews, but stated it was unnecessary to address this debate for present purposes; (2) The Court noted that bureaucratic machinery is notorious for moving slowly, though this reality does not excuse laxity and is antithetical to constitutional values of responsive and accountable public administration; (3) The Court observed that public administration in South Africa "has over time been allowed to slide to a quagmire of inefficiency" - a state of affairs antithetical to constitutional values; (4) The judgment expressed regret for the inordinate delay in finalizing the judgment due to various factors, taking full responsibility while noting this was inconsistent with the Court's abiding traditions; (5) On costs of multiple counsel, the Court reiterated that costs of four counsel will only be allowed in exceptional cases of extraordinary difficulty or complexity, and that a reasonable litigant test applies; (6) The Court noted that although corruption, collusion or fraud were disavowed in this case, "even innocent counterparties are not entitled to benefit or profit from an unlawful contract"; (7) The Court observed that corruption and malfeasance are often symptomatic of deviations from fair process, justifying insistence on procedural compliance; (8) The judgment noted that courts should be "slow to allow procedural obstacles to prevent it from looking into a challenge to the lawfulness of an exercise of public power" but equally should not tolerate undue delay.

This case provides important guidance on: (1) Legality self-reviews by organs of state and the proper approach to delay in such reviews; (2) The distinction between PAJA reviews and legality reviews - legality reviews are not subject to PAJA's 180-day time limit but must still be brought without unreasonable delay; (3) The broader discretion available to courts when considering whether to condone delay in legality reviews compared to PAJA reviews; (4) The multi-factor, context-sensitive approach to determining whether unreasonable delay should be condoned, weighing: the egregiousness of constitutional violations, interests of justice, prospects of success, potential prejudice, public interest in clean governance; (5) The imperative of strict compliance with section 217 constitutional procurement requirements - courts should not allow procedural formalities to be disregarded "at whim"; (6) The principle that material deviations from tender requirements that subvert fair, competitive procurement processes render awards constitutionally invalid; (7) The need to balance delay against the seriousness of illegality - the more egregious the constitutional breach, the more courts should incline toward overlooking delay; (8) The importance of treating bidders equally and not waiving mandatory requirements for some but not others; (9) Courts must be vigilant to ensure self-reviews promote accountable government rather than officials evading consequences of decisions, but should not allow this concern to prevent remedying serious constitutional violations.