Special Investigating Unit and Another v Engineered Systems Solutions (Pty) Ltd

The Department of Correctional Services initiated a procurement process in 2011 to introduce an Electronic Monitoring System (EMS) to monitor parolees. A pilot tender was awarded to ESS in December 2011 at R6,510,375, which was extended three times until June 2014 at a total cost of R14,678,269. A final tender was awarded to ESS in April 2014 and a Service Level Agreement (SLA) valued at R301,611,772 was concluded in May 2014. In August 2016, the Department stopped paying ESS, and in March 2017 cancelled the SLA citing various alleged irregularities. The President issued a proclamation in April 2016 authorizing the SIU to investigate irregularities in the Department's procurement of the EMS. ESS brought an urgent application to enforce the SLA, which was referred to arbitration. The arbitrator ruled in favor of ESS in November 2017. The SIU and Department brought a review application in March 2018 (approximately 7 years after the pilot tender and 4 years after the final tender) seeking to set aside the tender awards and contracts based on alleged irregularities including non-compliance with the SITA Act, the PSIR Act, and alleged fronting regarding a subcontractor, Ekasi.

• Whether the delay in bringing the legality review was unreasonable
• Whether unreasonable delay should be overlooked in the interests of justice
• Whether the procurement process violated the State Information Technology Agency Act (SITA Act)
• Whether the procurement violated the Private Security Industry Regulation Act (PSIR Act)
• Whether ESS made fraudulent misrepresentations regarding its partnership with Ekasi (fronting)
• Whether organs of state can apply for review of their own decisions under PAJA
• The application of section 172(1)(a) of the Constitution to set aside unlawful conduct despite delay

The appeal was dismissed with costs, including costs of two counsel. The high court's order dismissing the review application was upheld.

In legality reviews, delay is assessed by first determining whether it is unreasonable (considering the explanation for the entire period of delay), and if unreasonable, whether it should be overlooked in the interests of justice considering: (1) potential prejudice to affected parties; (2) the nature and merits of the impugned decision; and (3) the conduct of the applicant. Organs of state have heightened duties to ensure effective oversight of procurement processes and cannot rely on ignorance of irregularities they should have detected. An explanation for delay must account for the entire period from when the organ of state became aware or ought reasonably to have become aware of the irregularities. The Gijima principle under s 172(1)(a) requiring courts to declare unconstitutional conduct invalid despite delay applies narrowly and restrictively only where unlawfulness is clear and undisputed. Organs of state cannot use PAJA to review their own administrative decisions.

The Court criticized the "sloppy method" of adducing evidence through hearsay allegations supported only by confirmatory affidavits, noting that where evidence is crucial, the actual witness with personal knowledge should depose to facts under oath. The Court observed that organs of state "ought to become aware much sooner" of irregularities in their own procurement processes and "must have effective structures and mechanisms in place to ensure proper oversight." The Court noted that it would have been helpful to have expert evidence from SITA regarding whether the EMS services fell within the statutory definition of "information technology." The Court also observed that the requirement for security personnel to be registered under the PSIR Act applies when services are actually rendered, not at the bidding stage, and that bidders cannot be expected to employ and register staff in anticipation of tenders that may not be awarded. The Court left open the question of whether one organ of state in a position akin to a private person may use PAJA to review decisions of another organ of state, expressing doubt about this possibility.

This case provides important guidance on legality reviews by organs of state against their own procurement decisions. It emphasizes: (1) Organs of state cannot use PAJA to review their own decisions (following Gijima); (2) Even in legality reviews without the 180-day PAJA limit, unreasonable delay will not be condoned absent compelling reasons; (3) Courts will scrutinize the conduct of state organs who fail to exercise proper oversight and then seek to set aside contracts years later; (4) The explanation for delay must cover the entire period and cannot rely solely on later investigations when the organ of state should have known of irregularities earlier; (5) Weak merits, prejudice to third parties, and poor state conduct will weigh heavily against condoning delay; (6) The Gijima principle under s 172(1)(a) requiring courts to declare unconstitutional conduct invalid applies narrowly and only where unlawfulness is clear and undisputed; (7) State organs have heightened duties of accountability and cannot approach courts as "bewildered litigants" seeking procedural lifelines. The case reinforces proper procurement oversight and timely enforcement of procurement law.