SKG Africa (Pty) Ltd v South African Local Government Association and Another

SALGA advertised a tender for office accommodation in East London on 17 November 2022, subject to the PPPFA, Preferential Procurement Regulations 2017, and SALGA's Supply Chain Management Policy. After querying SALGA, SKG submitted four bids: two for premises at Waverley Office Park (each priced at R10,802,113) and two for premises at Beacon Bay Crossing (each priced at R11,134,712). On 30 May 2023, SALGA informed SKG its proposal was unsuccessful and awarded the tender to Sthathu at R12,518,992. Initially, both SKG and Sthathu achieved the functionality threshold of 70 points, but the BEC recommended cancellation of the tender. The BAC referred the matter back to the BEC for re-evaluation. On 17 May 2023, the BEC revised scores: Sthathu received 88 points and SKG received 55 points, disqualifying SKG. SKG challenged the decision, alleging that the BEC evaluated only its Beacon Bay Crossing bids and ignored the Waverley Office Park bids. By the time of litigation, SALGA and Sthathu had already concluded a five-year lease effective 1 June 2023, with Sthathu having incurred R677,790 in tenant installation and fit-out expenses.

• Whether SKG's submission of multiple bids was lawful
• Whether SALGA properly evaluated and adjudicated all of SKG's bids
• Whether SALGA's failure to evaluate the Waverley Office Park bids constituted a reviewable irregularity under PAJA
• What would constitute a just and equitable remedy under section 172(1)(b) of the Constitution
• How costs should be allocated given the various procedural applications

The court ordered: (a) SALGA's failure to evaluate and adjudicate SKG's bids for Waverley Office Park is reviewed and set aside; (b) SALGA's award of the tender and lease agreement with Sthathu are reviewed and set aside; (c) the matter is referred to SALGA to commence a new procurement process within six months; (d) the orders in (a) and (b) are suspended until the new tender is awarded or six months expire, whichever is sooner; (e) regarding costs: (i) each party pays its own costs for the urgent interim relief application; (ii) each party pays its own costs for the application to compel filing of the record; (iii) the respondents are ordered to pay costs of the main review application on scale B, jointly and severally.

The binding legal principles established are: (1) Multiple or alternative bids are not prohibited in public procurement under the PPPFA framework, provided the opportunity is clearly communicated to all potential bidders and each responsive bid is properly evaluated and adjudicated. (2) An organ of state's failure to evaluate and adjudicate all responsive bids that comply with tender specifications constitutes material non-compliance with section 2(1) of the PPPFA and regulation 5 of the Preferential Procurement Regulations, establishing a ground of review under sections 6(2)(b) and 6(2)(e)(iii) of PAJA. (3) Once a ground of review is established, the decision must be declared unlawful under section 172(1)(a) of the Constitution; procedural irregularities cannot be overlooked on the basis that a certain outcome was inevitable. (4) A just and equitable remedy under section 172(1)(b) must fit the injury, vindicating the right violated while being fair to all affected parties; this may include suspending the effect of a declaration of invalidity to preserve rights already accrued to an innocent third party that has performed under an invalid contract, while requiring re-tender for future performance.

The court made several non-binding observations: (1) The definition of 'acceptable tender' in section 1 of the PPPFA and in SALGA's SCMP is wide enough to encompass multiple or alternative bids unless expressly prohibited. (2) Bolton's commentary that alternative bids should not differ substantially or materially from tender specifications remains relevant, though the strict approach in Dr JS Moroka Municipality v Betram has superseded the flexible approach in Millennium Waste Management regarding what constitutes an 'acceptable tender'. (3) Organs of state have a constitutional duty under section 195(1)(g) to play open cards and provide timely, accessible, and accurate information; tactical withholding of information to gain litigation advantage is unacceptable. (4) The court noted that neither the PFMA, Treasury Regulations, nor National Treasury guidelines adequately address the subject of multiple bids, though the guidelines briefly contemplate 'alternative bids'. (5) The court suggested that permitting multiple bids would enhance competitiveness and cost-effectiveness in public procurement.

This judgment makes important contributions to South African procurement law. It clarifies that multiple or alternative bids are permissible in public procurement, provided the opportunity is transparently communicated to all bidders. It reinforces that organs of state must evaluate all responsive bids submitted, even when part of a multiple bid submission, and that failure to do so constitutes material non-compliance with the PPPFA framework. The case demonstrates the strict application of AllPay principles: once a ground of review is established, courts must declare the conduct unlawful without shying away from irregularities, regardless of whether the outcome seems inevitable. The judgment also illustrates the flexible application of just and equitable remedies under section 172(1)(b), balancing the need to vindicate constitutional procurement principles with fairness to innocent third parties who have performed under invalid contracts. Finally, it emphasizes organs of state's constitutional duty under section 195(1)(g) to provide timely, accurate information, and the consequences of failing to play open cards in litigation.