Contour Technology (Pty) Ltd v Theewaterskloof Municipality and Another

The Theewaterskloof Municipality (first respondent) advertised Tender FIN 03/2022/23 for the provision and administration of an electricity prepayment vending system for the period 1 July 2022 to 30 June 2025. Contour Technology (Pty) Ltd (applicant) and Utilities World (Pty) Ltd (second respondent) were among seven bidders. The tender was evaluated using an 80/20 preference point system, with 80 points for price and 20 points for B-BBEE status. The Bid Evaluation Committee (BEC) recommended Utilities for the award, and the Bid Adjudication Committee (BAC) resolved to award the tender to Utilities. Contour, which ranked second, lodged an internal appeal that was dismissed. Contour subsequently sought and obtained some of Utilities' bid documents under PAIA and discovered that Utilities had submitted a sworn affidavit (rather than a verified B-BBEE certificate) claiming Level 2 B-BBEE status based on financial information from the 2020 financial year-end, despite the relevant financial year-end being 2022.

• Whether Utilities' B-BBEE sworn affidavit was valid and compliant with B-BBEE requirements at the relevant time, and whether the Municipality erred in awarding B-BBEE preference points on the basis of that affidavit
• Whether the defects in the B-BBEE sworn affidavit constituted material irregularities amounting to grounds of review under the Promotion of Administrative Justice Act 3 of 2000 (PAJA)
• Whether the court should substitute the Municipality's decision and award the tender to Contour, or remit the matter for reconsideration

1. The decision by the first respondent to award Tender FIN 03/2022/23 to the second respondent was reviewed and set aside. 2. The tender was remitted to the Theewaterskloof Municipality for reconsideration in terms of section 8(1)(c)(i) of PAJA, within 90 days. 3. The first and second respondents were held jointly and severally liable for the applicant's costs on the 'C' scale.

Where a bidder submits a B-BBEE sworn affidavit in support of a tender, the affidavit must reflect the true B-BBEE status of the measured entity at the relevant time (either at the closing date for tenders or at the time preference points are awarded). An affidavit based on outdated financial information that is two financial years old, which fails to identify the source of the financial information, and which has ambiguous commissioning dates, does not fulfil the purpose of providing assurance of B-BBEE compliance. Awarding B-BBEE preference points on the strength of such a defective affidavit constitutes a material irregularity that renders the decision unlawful and reviewable under PAJA sections 2(b), 2(e)(iii), and 2(i). In procurement matters, procedural requirements must be evaluated on their own merits and not through the lens of the final outcome; the fairness of the process and the optimality of the outcome cannot be severed.

The court noted that given the substantial cost savings in preparing a B-BBEE affidavit instead of obtaining independent verification, municipalities should be astute when evaluating a bidder's self-assessment for B-BBEE compliance. The court also noted the Municipality's Appeal Authority did not deal with the issues raised as grounds of appeal in its response. On remedy, the court observed that the Municipality acknowledged the limited timespan of Utilities' contract (from 1 December 2022 to 30 June 2025) and that remittal would still be a just and equitable remedy.

The judgment reinforces the strict compliance standard required for B-BBEE sworn affidavits in public procurement processes in South Africa. It clarifies that B-BBEE self-assessments must be based on current, identifiable financial information relevant to the procurement period, and that decision-makers in the supply chain management process must scrutinise such affidavits rather than accepting them at face value. The case affirms the Allpay principle that procedural requirements in tender processes must be evaluated independently of final outcomes, and it provides guidance on when substitution orders are inappropriate in favour of remittal, particularly where the decision involves technical complexity and polycentric considerations.