City of Tshwane Metropolitan Municipality v Nambiti Technologies (Pty) Ltd

Nambiti Technologies provided SAP support services to the City of Tshwane from August 2009 to December 2012. In October 2012, the City issued tender CB204/2012 for provisioning on-site and off-site SAP support services for a three-year period. Nambiti submitted a tender. In November 2012, the City appointed a new Group Chief Information Officer, Mr Otumile, who reviewed the tender specifications. After determining that the tender did not align with the City's needs, the Bid Adjudication Committee decided on 7 December 2012 to cancel the tender. On 11 December 2012, Nambiti was informed of the cancellation. On 18 December 2012, formal notification was given, and by 20 December 2012, Nambiti's services were terminated and replaced by EOH Mthombo Limited. Nambiti challenged both the cancellation of the tender and the appointment of EOH through judicial review proceedings, seeking to have the cancellation set aside and the City compelled to adjudicate the original tender.

• Whether the cancellation of a tender before adjudication constitutes administrative action reviewable under the Promotion of Administrative Justice Act (PAJA)
• Whether a decision not to procure services has direct, external legal effect on tenderers
• Whether the City's decision to cancel tender CB204/2012 was unfair or unreasonable
• Whether a court can compel an organ of State to proceed with adjudication and award of a cancelled tender
• Whether such an order infringes the separation of powers doctrine
• The application and scope of regulation 10(4) of the Procurement Framework Regulations 2011

The appeal was upheld with costs, including costs for two counsel. The High Court's order was set aside and replaced with an order dismissing the application with costs.

The cancellation of a tender before adjudication is not administrative action reviewable under PAJA because: (1) it does not constitute a decision of an administrative nature - it is a decision about what to procure, not implementation of policy; (2) it does not have direct, external legal effect - tenderers have no legal right to have their tenders considered once a tender is cancelled; they only have such a right while the tender remains extant. A decision not to procure services is fundamentally different from administering a procurement process. Where tender conditions expressly reserve the right to cancel a tender, the organ of State is exercising a contractual right, not exercising administrative power. Courts cannot compel organs of State to proceed with procurement of goods or services through cancelled tenders, as this would impermissibly infringe on executive authority and violate the separation of powers doctrine embedded in the Constitution.

Wallis JA commented on the difficulties with interpreting regulation 10(4) of the Procurement Framework Regulations 2011, which lists grounds for cancelling tenders. The Court questioned what constitutes 'changed circumstances' and whether the regulation is intended to be restrictive or merely permissive. The judgment suggested that there are policy reasons why organs of State should retain flexibility to cancel tenders - for example, when political control changes and new priorities emerge. The Court noted that in this case there were changed circumstances (the City's requirements had changed), so it was unnecessary to resolve whether the regulation is exhaustive. The judgment observed that while there may be instances where a decision not to do something constitutes administrative action (such as failure to issue a passport), inaction is not ordinarily to be equated with action, and even less so with administrative action. The Court also commented that judges do not ordinarily have qualifications to make judgments on technical and strategic decisions in specialized fields like information technology without expert testimony.

This is the first reported South African case dealing with judicial review of a decision to cancel a tender. It establishes important principles about the limits of judicial intervention in procurement decisions by organs of State. The judgment clarifies that cancellation of a tender before adjudication does not constitute administrative action under PAJA, as it lacks direct, external legal effect and is a decision about what to procure rather than implementation of policy. The case reinforces the separation of powers doctrine by holding that courts should not compel organs of State to procure specific goods or services through cancelled tenders, as such decisions fall within executive authority. The judgment provides guidance on the interpretation of regulation 10(4) of the Procurement Framework Regulations regarding grounds for tender cancellation, though it leaves some questions open. It emphasizes that disappointment by tenderers does not translate to infringement of legal rights.