BHISHO – The Eastern Cape High Court in Bhisho has delivered a ruling setting aside a public construction tender for the Taylor Bequest Hospital.

The judgment by Acting Judge M. Tsele emphasises that organs of state may not elevate form over substance when evaluating tenders.

The case stems from an application by Sinclair Gersahn Troskie Construction CC (SGT). SGT, an unsuccessful bidder, challenged the award of a tender for the construction of staff accommodation at the Taylor Bequest Hospital in Mount Fletcher. The tender was awarded on 18 September 2023 by the Department of Public Works and Infrastructure to a joint venture consisting of SNZN Construction CC and Imbumba Developments CC.

SGT, however, submitted the lowest bid of R176,174,474.25, which was significantly lower than the department’s budget of R197,894,734.75, as well as the joint venture’s price of R178,660,900.52. In the final scoring, SGT scored 97.00 points, whilst the successful joint venture received 97.24 points. SGT thus lost the tender by a narrow margin of 0.24 points.

Local content scoring dispute

It emerged that this small difference was solely due to the department’s decision not to award a specific point for local content compliance to SGT. SGT had left the relevant self-scoring box on page 30 of the SBD 6.1 form blank. SGT’s attorneys argued, however, that their substantive compliance was documented beyond doubt in the rest of their bid.

SGT explicitly declared on page 32 that they complied with the 100% local content threshold, fully completed nine pages of local content schedules, and signed the required declaration. Even the Bid Adjudication Committee acknowledged in their minutes that SGT complied substantively, but still withheld the point on purely formalistic grounds.

Judge Tsele found that this decision was mechanical, irrational, and based on a material mistake of fact. “To withhold the point under those circumstances was to take into account an irrelevant consideration (the empty box) and ignore a relevant one (the documented compliance),” the judge found.

Tax compliance irregularities and final ruling

Furthermore, the court found that the department’s handling of the joint venture’s tax status was unlawful. Both members of the joint venture were tax non-compliant on the national database on 20 and 21 July 2023. The tender rules allowed a seven-day period to rectify this, which expired on 31 July 2023. Whilst SNZN complied within the timeframe, Imbumba Developments failed to do so. The department, however, granted Imbumba an unauthorised extension until late August.

The court held that organs of state may not bend rules for one bidder, as this violates the principle of equal treatment under Section 217 of the Constitution. The court set aside the award of the tender to the joint venture. In a unique “conditional substitution order,” the court directed that if the department decides to proceed with the construction project, the tender must be awarded to SGT.

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