Metro Projects CC and African Unity Developers CC v Klerksdorp Local Municipality and Others

The appellants and the second to twelfth respondents tendered for the development of 1,333 stands in Jouberton extension 10 within the jurisdiction of Klerksdorp Local Municipality. Each tenderer was required to provide developmental services and construct a top-structure (house) on each stand, with a grant of R18,400 available per stand. Tenderers were required to submit plans showing the floor area of the proposed houses. The ninth respondent's tender plan proposed a house of only 30.2 sq m, which compared poorly to other tenderers (including the appellants who proposed 37 sq m or larger). The city civil engineer, Mr Els, recommended the ninth respondent's tender but omitted the floor area from his schedule, instead noting that 'the house size and layout to be discussed with community'. After the mayoral committee requested clarification on the ninth respondent's floor area, Els submitted a plan for 34.3 sq m (prepared on 9 May 2001, after the tender closing date of 20 April 2001) without disclosing this was not the original tender plan. Els also failed to disclose a further plan for 38 sq m also dated 9 May 2001. The tender was awarded to the ninth respondent based on this misrepresentation. The appellants sought review of the award.

• Whether the tender award process complied with the fairness requirements mandated by section 10G(5)(a) of the Local Government Transition Act 209 of 1993 and section 217(1) of the Constitution
• Whether the tender process complied with the procedural fairness requirements under section 3(2)(a) of the Promotion of Administrative Justice Act 3 of 2000
• Whether it was permissible for a tenderer to augment its tender after the closing date and for that augmented offer to be presented as the original tender
• Whether misrepresentation of tender information to the decision-making body constituted a breach of the essential fairness required in tender procedures
• What constitutes an 'acceptable tender' under the Preferential Procurement Policy Framework Act 5 of 2000

The appeal succeeded with costs. The order of the court a quo was replaced with an order setting aside the award of tender CCE9/2001 to the ninth respondent, and ordering the first respondent to pay the costs of the application.

A tender process conducted by a local authority must comply with the fairness, transparency, competitiveness and cost-effectiveness requirements mandated by section 10G(5)(a) of the Local Government Transition Act and section 217(1) of the Constitution, as well as the procedural fairness requirements of section 3(2)(a) of the Promotion of Administrative Justice Act. Where a municipal official allows a tenderer to augment its tender after the closing date, and then misrepresents that augmented offer to the decision-making body as being the original tender, this constitutes a fundamental breach of fairness that invalidates the tender award. Subterfuge and deceit that subvert the essence of a tender process strip it of the essential element of equal evaluation of tenders, causing prejudice to all competing tenderers. An 'acceptable tender' under the Preferential Procurement Policy Framework Act requires compliance with the specifications and conditions of tender as set out in the tender document; an offer that was not made in the original tender and was not elicited by the tender specifications cannot constitute an acceptable tender.

The court noted, citing Logbro Properties CC v Bedderson NO and Others 2003 (2) SA 460 (SCA), that invitations to tender by organs of state and the awarding of tenders constitute administrative action subject to the Promotion of Administrative Justice Act. The court observed that fairness is an 'ever-flexible duty' that must be decided on the circumstances of each case. The court noted that it may in given circumstances be fair to ask a tenderer to explain an ambiguity, to allow correction of an obvious mistake, or to request clarification or details required for proper evaluation, particularly in complex tenders, provided such actions do not cause the process to lose the attributes of fairness, transparency, competitiveness and cost-effectiveness. The court commented that there are degrees of compliance with any standard and it is notoriously difficult to assess whether less than perfect compliance falls on one side or the other of the validity divide, though this difficulty did not arise in the present case given the fundamental nature of the breach.

This case is significant in South African administrative and tender law for establishing strict requirements of fairness, transparency and equal treatment in public procurement processes. It demonstrates that while tender processes may permit some flexibility for clarification or correction of obvious errors, fundamental principles of fairness cannot be compromised. The case emphasizes that misrepresentation of tender information to decision-makers, and allowing post-tender augmentation of offers that are then presented as original tenders, constitutes a material breach of constitutional and statutory fairness requirements. It reinforces the binding nature of section 217(1) of the Constitution, the Local Government Transition Act, and the Promotion of Administrative Justice Act in the context of local government procurement. The judgment provides important guidance on the limits of permissible flexibility in tender processes and the consequences of procedural unfairness that prejudices all competing tenderers.