SAAB Grintek Defence (Pty) Ltd v South African Police Service

SAAB Grintek Defence (Pty) Ltd (SAAB) submitted a bid for an integrated mobile vehicle data command and control solution tender issued by the State Information Technology Agency (SITA) on behalf of the South African Police Service (SAPS) in 2010. SAAB was shortlisted along with another bidder. The bid evaluation committee, SITA's Executive, and various committees recommended that the tender be awarded to SAAB. Multiple extensions of the bid validity period were requested and agreed upon over a period extending from October 2010. On 28 May 2012, SAPS informed SITA of its decision to cancel the tender, citing the time lapse in the evaluation process and the need to review its business requirements. SAAB was only notified of the cancellation on 8 August 2012. SAAB launched an application to review and set aside the cancellation decision, arguing it constituted administrative action subject to PAJA and alternatively was subject to the principle of legality.

• Whether the decision to cancel the tender constituted administrative action subject to the Promotion of Administrative Justice Act 3 of 2000 (PAJA)
• Whether SITA (rather than SAPS) made a decision not to award the tender
• Whether the cancellation of the tender was procedurally fair and whether SAAB had a right to be heard before cancellation
• Whether there were valid substantive grounds for cancelling the tender
• Whether the decision to cancel the tender offended the principle of legality
• Whether the decision to cancel was rational

The appeal was dismissed with costs, including costs consequent upon the employment of two counsel.

A decision by an organ of State to cancel a tender before award, made in the exercise of executive authority to determine what goods and services are required to fulfill public obligations, does not constitute administrative action as defined in PAJA and is therefore not susceptible to review under PAJA. Such decisions are subject only to the principle of legality. The principle of legality requires that there be a rational connection between the decision and the reasons given for it, but does not necessarily require procedural fairness in the form of a hearing before the decision is made, particularly where the decision involves internal operational and executive considerations about changing requirements. Regulations such as the Preferential Procurement Regulations do not convert executive decisions about procurement into administrative action; they merely identify circumstances in which organs of State may exercise their discretion to cancel tenders. SITA's role under the State Information Technology Agency Act is facilitative only; the power to award or cancel tenders rests with the relevant accounting authority (in this case SAPS).

The court assumed without deciding that the extension of the bid validity period after its initial expiry was valid, as parties commenced argument on that basis. The court declined to express a view on whether decision-makers are bound by reasons given at the time of decision and cannot rely on new reasons raised for the first time in answering papers, although it noted obiter dicta from National Lotteries Board v South African Education and Environment Project on this point. The court noted that whether SAPS contemplated issuing a fresh tender after reviewing its business requirements was not clear from the papers. The court observed that information technology is regularly developed, updated and replaced, and that purchasing outdated technology or technology soon to be updated would constitute fruitless and wasteful expenditure. The court also noted that disappointment may be the sentiment of an unsuccessful tenderer, but their rights are not affected by a decision not to procure, as there can be no legal right to a contract.

This case is significant in South African procurement and administrative law for clarifying the boundary between administrative action under PAJA and executive decision-making subject only to the principle of legality. It establishes that decisions by organs of State to procure or not to procure goods and services, including decisions to cancel tenders before award, are exercises of executive authority falling outside the scope of PAJA. The judgment reinforces the distinction drawn in Tshwane City v Nambiti Technologies and clarifies the limited role of SITA as a facilitative agency rather than a decision-maker in procurement. It also provides guidance on interpreting reasons for administrative or executive decisions, requiring that such reasons be read holistically rather than parsed for standalone "bad" reasons. The case is important for understanding when procedural fairness requirements apply and when a hearing must be afforded before decisions affecting potential contractors are made.