Overstrand Municipality v Water and Sanitation Services South Africa (Pty) Ltd

Overstrand Municipality invited bids in 2014 to outsource the operation and maintenance of its bulk water and sewerage infrastructure. After a two-stage tender process (RFQ and RFP), Veolia Water Solutions and Technologies South Africa (Pty) Ltd was selected as the preferred bidder and later awarded the tender. Water and Sanitation Services South Africa (Pty) Ltd (WSSA), an unsuccessful bidder, challenged the award. WSSA alleged that Veolia’s bid did not comply with mandatory staffing requirements, particularly those prescribed by Regulation 2834 governing minimum numbers of qualified process controllers, and that Veolia failed to cost all required personnel, rendering price comparisons unfair. WSSA further contended that Veolia was impermissibly allowed to vary its bid during negotiations. The Western Cape High Court reviewed and set aside the tender award and remitted the matter for reconsideration. The Municipality appealed to the Supreme Court of Appeal.

The appeal was dismissed with costs, including the costs of two counsel. The tender award and resulting contract were set aside. The matter was remitted to the Municipality for a full new tender process commencing with a fresh RFQ. The setting aside of the contract was suspended for six months from the date of the SCA judgment or until the tender was re-awarded, whichever occurred first.

The case affirms strict compliance with tender specifications as a cornerstone of lawful public procurement and clarifies that bids must meet mandatory requirements at the time of submission. It is significant for confirming the continued operation of Regulation 2834 through statutory savings provisions and reinforcing the constitutional procurement principles of fairness, transparency and competitiveness under section 217 of the Constitution. The judgment cautions against post-bid negotiations that effectively allow bid modification.