Maximum Profit Recovery (Pty) Ltd v Sakhisizwe Local Municipality and Another

The Sakhisizwe Local Municipality invited tenders (Tender SLM/SCM/22/2022/23) for the appointment of a service provider to render revenue expert services for three years. Maximum Profit Recovery (Pty) Ltd (the applicant) and Andrews Incorporated (the second respondent) submitted bids. The tender was to be evaluated in three stages: administrative compliance, functionality (minimum 70%), and final scoring under the 80/20 preference point system. The applicant was disqualified at the functionality stage after being scored 60 points, allegedly for failing to meet certain functionality criteria, and the tender was awarded to the second respondent. The applicant challenged the award, alleging that the Municipality failed to consider relevant documents, irrationally deducted functionality points (particularly relating to tax practitioners and methodology), acted unfairly and arbitrarily, and thereby contravened section 217 of the Constitution and PAJA.

The Municipality’s decision to award the tender to the second respondent was declared constitutionally invalid and set aside. Any service level agreement concluded pursuant to the award was set aside. The matter was remitted to the Municipality for reconsideration and proper re-scoring of the applicant’s bid. The Municipality was ordered to pay the applicant’s costs, including costs of two counsel.

The case reinforces the duty of organs of state to comply strictly with PAJA and section 217 of the Constitution in procurement processes. It clarifies that municipal tender awards made by municipal managers under the MFMA constitute exercises of original power, rendering section 62 internal appeals inapplicable. The judgment underscores that failure to consider relevant tender documents and failure to give reasons for scoring decisions renders procurement decisions unlawful.