The Western Cape Provincial Government (the Province) issued a tender (T002/23) for a two-year security services contract to protect its immovable properties, including services such as a control room, armed response, and eviction services. Fourteen bids were submitted. Only four bidders passed the functionality phase: the applicant (Seal Security), the tenth respondent (Royal Security, the incumbent), the eleventh respondent, and the twenty-second respondent (Tyte Security). All four passed price, preference, and risk assessment phases. The tender was awarded to Royal Security on 31 May 2023 because it submitted the lowest bid (R282 million), significantly below the other bidders and the Province's own estimate of R345 million. Seal and Tyte challenged the award. Seal alleged that Royal Security had been implicated in state capture, that Royal's letters of good standing had expired before bid submission, that Royal failed the functionality assessment, that the Province conducted an unfair 'second' operational risk assessment of Royal at its KZN head office, and that Royal's price was unsustainably low. The Province and Royal defended the award, arguing that all procedures were followed and that the challenges were based on immaterial irregularities.
1. The applicant's review application and the twenty-second respondent's counter-application for judicial review and setting aside of Tender T002/23 were dismissed. 2. The tenth respondent (Royal Security) was ordered to take over operations within one calendar month. 3. The applicant and twenty-second respondent were ordered to hand over operations and do everything necessary to enable the handover. 4. The applicant was ordered to pay the tenth respondent's costs of the review, including costs of two counsel. 5. The twenty-second respondent was ordered to pay the tenth respondent's costs of the counter-application, including costs of two counsel. 6. The applicant was ordered to pay the tenth respondent's costs of the urgent interdict application. 7. No further order as to costs.
Under the Promotion of Administrative Justice Act (PAJA) and section 217 of the Constitution, a tender irregularity is only reviewable if it is material. Materiality is assessed by linking the question of compliance to the purpose of the provision, not by applying a strict mechanical approach. A deviation from tender requirements that does not undermine the purpose of the provision is immaterial and does not constitute a ground of review. In an open national tender, an operational risk assessment may be conducted at a bidder's head office outside the province where services are to be rendered, provided this serves the purpose of evaluating the bidder's overall operational capacity.
The court observed that allegations of corruption or moral turpitude made by innuendo and suggestion have no place in review proceedings and are unfair and improper unless clearly articulated and substantiated. The court noted that while procuring bodies must consider only compliant tenders, they must prioritise substance over form when assessing compliance with tender terms, distinguishing between material deviations and procedural formalities. The court also observed that the determination of materiality may differ from one organisation to another or from one project to another, emphasising the need to review the specific tender documentation.
This case reinforces the Constitutional Court's approach in AllPay that not all tender irregularities warrant review — only material ones do. It confirms that the materiality enquiry requires evaluating whether the purpose of the tender requirement was achieved, rather than applying formalistic compliance standards. The case also affirms that procurement processes must be evaluated under the constitutional principles of fairness, equity, transparency, competitiveness and cost-effectiveness under section 217 of the Constitution, read with PAJA. It illustrates that lower pricing is a legitimate competitive advantage in public procurement and that unsubstantiated allegations of corruption have no place in judicial review proceedings.