Eskom Holdings SOC Limited v Babcock Ntuthuko Engineering (Pty) Ltd

Eskom issued a Request for Proposals in August 2018 for boiler maintenance and outage repair services at fifteen coal-fired power stations. The RFP required, as a mandatory returnable, submission of a valid ISO 3834 welding certificate, failing which bids would be disqualified. Babcock Ntuthuko Engineering submitted a bid but did not include the ISO 3834 certificate by the closing date, instead stating that it was certified. After a clarification meeting (which Babcock attended) confirmed that submission of the certificate was mandatory, Eskom disqualified Babcock. Eskom ultimately awarded the tender jointly to Actom and Steinmüller, splitting the work between them. Babcock successfully reviewed the award in the High Court, which found the ISO requirement ambiguous and held the disqualification unlawful. Eskom, Actom and Steinmüller appealed to the Supreme Court of Appeal.

The appeal was upheld with costs. The High Court’s order was set aside and replaced with an order dismissing Babcock’s review application, with Babcock ordered to pay the costs of the application, including the costs of two counsel where applicable.

The case clarifies that organs of state may insist on strict compliance with clearly defined mandatory tender requirements and that substantial compliance is not applicable where the tender expressly provides for disqualification and allows no discretion to condone non-compliance. It also affirms the lawfulness of splitting tender awards between multiple bidders where this is disclosed upfront and justified by objective procurement considerations, reinforcing principles under s 217 of the Constitution and the PPPFA.