Head of Department, Mpumalanga Department of Education v Valozone 268 CC

In August 2013, the Head of Department of Education of Mpumalanga Province invited bids for tender EDU/069/13/MP for the implementation and management of the National School Nutrition Programme. The tender required service providers to operate warehouses and supply bulk dried food and fresh vegetables/fruit to schools in eight municipalities in Mpumalanga for three years with a two-year extension option. The tender closed on 11 September 2013, and was awarded to seventeen tenderers, including the eighth respondent. The first to seventh respondents were unsuccessful and challenged the award on grounds of various irregularities. In a judgment dated 26 May 2014, Janse van Nieuwenhuizen J reviewed and set aside the award and ordered the appellant to reconsider and readjudicate the bid within one month. The appellant appointed a Bid Evaluation Committee (BEC) and Bid Adjudication Committee (BAC) for reconsideration. Out of 1099 bids received, the BEC disqualified 575 bids for failure to submit compulsory documents, leaving 522 qualifying bids. However, the BEC noted possible irregularities in approximately 30 bids and recommended re-advertising the tender to avoid litigation. On 23 June 2014, the appellant accepted this recommendation and decided to re-advertise the tender while contracting the seventeen previously successful tenderers on a month-to-month basis. The first to seventh respondents challenged this decision.

• Whether the order of Janse van Nieuwenhuizen J obliged the appellant to adjudicate and award the tender and prohibited re-advertising
• Whether the decision to cancel and re-advertise the tender complied with regulation 8(4) of the Preferential Procurement Regulations, 2011
• Whether the decision to cancel and re-advertise the tender was irrational within the meaning of section 6(2)(f)(ii) of the Promotion of Administrative Justice Act 3 of 2000

The appeal was dismissed with costs, including costs of two counsel. Paragraphs 2 and 3 of the High Court order were deleted and substituted with: 'The respondent is ordered to consider and adjudicate all qualifying bids in terms of the evaluation methodology prescribed in paragraph 9 of the bid document, within 30 (thirty) days of the granting of this order.'

1. A court order remitting a tender for reconsideration does not obligate the award of the tender - it requires reconsideration with due regard to the judgment without excluding legitimate options available to the decision-maker. 2. A tender properly issued may not be cancelled without good reason under a fair, equitable and transparent procurement system as required by section 217 of the Constitution. 3. Regulation 8(4) of the Preferential Procurement Regulations, 2011 sets out exhaustive grounds for cancellation of a tender prior to award: (a) changed circumstances eliminating the need for services; (b) unavailability of funds; or (c) no acceptable tenders received. Fear of possible litigation is not a valid ground for cancellation. 4. An administrative decision is irrational under section 6(2)(f)(ii) of PAJA when it is not rationally connected to the purpose of the decision-maker's powers or the information before the decision-maker. Cancelling a tender where 522 acceptable bids exist based on illusory fear of litigation regarding possible irregularities in approximately 30 bids is irrational.

The court observed that regulation 8(4)(b) clearly refers to the total expenditure envisaged in respect of the implementation of the tender itself, not to costs associated with potential litigation. The court also noted that the implementation of the tender was intended to serve the desperate needs of poor children, contextualizing the importance of proper administration. The court remarked that the irrationality of the decision was made worse by awarding the tender on a month-to-month basis to four bidders who had been disqualified by the BEC. Van der Merwe JA also commented that possible irregularities affecting some thirty odd bids appeared, on the face of it, attributable to minor administrative failings, and that only the first to seventh respondents challenged the award while the seventeen successful tenderers did not oppose that challenge and accepted that reconsideration was appropriate.

This case is significant in South African public procurement law as it clarifies the requirements for cancelling a tender under regulation 8(4) of the Preferential Procurement Regulations, 2011. It establishes that a tender may only be cancelled on one of the three specified grounds, and fear of possible litigation is not a valid ground. The case reinforces the constitutional requirements of a fair, equitable and transparent procurement system under section 217 of the Constitution and applies the rationality test under PAJA to administrative decisions in the procurement context. It also provides guidance on the interpretation of court orders remitting matters for reconsideration, clarifying that such orders do not necessarily mandate a particular outcome but require proper reconsideration in accordance with legal principles. The case emphasizes that administrative convenience or fear of litigation cannot override legal requirements, particularly where vulnerable populations (poor schoolchildren) are affected.