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IN THE HIGH COURT OF SOUTH AFRICA

NORTH WEST PROVINCIAL DIVISION, MAHIKENG

CASE NO: M253/15

In the matter between:

GROSS BORDER DEVELOPMENT CONSULTANTS (PTY) LTD 1ST APPLICANT

and

THE MEC: NORTH WEST PROVINCIAL GOVERNMENT: DEPARTMENT OF LOCAL GOVERNMENT AND HUMAN SETTLEMENTS 1ST RESPONDENT

HEINPRET NR t/a R S REKOPANE PROJECTS 2ND RESPONDENT

M CIVILS (PTY) LTD 3RD RESPONDENT

MASENO GENERAL TRADING 4TH RESPONDENT

WHITE LEOPARD TRADING 5TH RESPONDENT BARZANI 69 (PTY) LTD 6TH RESPONDENT

MALAPANE PROPERTY SERVICE AND DEVELOPMENT 7TH RESPONDENT

TSHIKAMOTHA TRADING & TRAINING 8TH RESPONDENT

TSWAING LOCAL MUNICIPALITY 9TH RESPONDENT

NALEDI LOCAL MUNICIPALITY 10TH RESPONDENT LEKWA-TEEMANE LOCAL MUNICIPALITY 11TH RESPONDENT

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Landman J:

Introduction

[1] On 4 August 2015 I handed down the following order:

‘1. The failure of the applicant to comply with the Rules and time Periods of this

court in launching this application is condoned.

2. The application for an interdict as regards the second, third, fourth, fifth and

sixth respondents is dismissed.

3. Pending the finalization of the review application to be launched as set out in

paragraph 5 below, the first, seventh and eighth respondents are interdicted and

restrained from in any way further implementing a purported decision taken by

the first respondent in or about April 2015, to award part of contract no. DH

36/14A (appointment of a turnkey contractor for the construction of cost houses

in Boitumelong Lekwa-Teemane Local Municipality) to the seventh and eighth

respondents.

4. The order granted in prayer 3 is to serve as an interim interdict with immediate

effect.

5. The applicant is ordered to institute proceedings, within 5 days after the

granting of this order, for the review and setting aside of the decision mentioned

in paragraph 3 above. Should the applicant fail to so institute the proceedings,

paragraph 3 and 4 of this order shall lapse.

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6. All costs are reserved for decision by the court hearing the review application.

7. Should the applicant fail to apply for the review of the decision to award

contracts DH 29/14, DH 34/14, and DH 35/14A within 10 days the applicant is to

pay the costs of the second, third, fourth and sixth respondents on a party and

party scale. In the case of the sixth respondent the costs will include the costs of

two counsel.’

I indicated that reasons would follow, these are my reasons.

[2] This is an application brought on an urgent basis by Cross-Border

Development Consultants (Pty) Ltd (the applicant) against the Member of the

Executive Council: North West Provincial Government: Department of Local

Government and Human Settlements (the Department) and ten others for a

temporary interdict pending the finalization of a review application which the

applicant intends launching. The application is opposed by all the respondents

with the exception of the fifth and eighth to the eleventh respondents. The ninth,

tenth and eleventh respondents are municipalities involved. No relief is sought

against them.

Background

[3] The applicant conducts business as a general building contractor. The

deponent to the founding affidavit became aware on or about 5 June 2015 of a

tender bulletin and supply chain management publication of the Department. The

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bulletin disclosed that four tenders were awarded by the Department in April

2015 as follows:

• DH29/14 to Heinpret trading as Rekopane Projects (second respondent) for

a Turnkey contract for the installation of reticulation and internal services

in Delareyville extension 8, worth R 61 080 978.

• DH34/14 to M Civils (Pty) Ltd (third respondent) for a Turnkey contract for

the installation of internal services in Dithakwani worth, R24 431 028.

• lDH35/14A to Maseno General Trading (fourth respondent) and White

Leopard Trading (fifth respondent) a Turnkey contract for the construction

of 1000 low-cost homes in Boitumelong, worth R55 473 500 each.

• DH36/14A to Barzani 69 (Pty) Ltd (sixth respondent), Malapane Property

Service and Development (seventh respondent) and Tshikamotha Trading

and Training (eighth respondent), worth R166 420 5000 to the sixth

respondent and R55 473 500 each to the seventh and eight respondents.

[4] The applicant instructed its attorneys to write a letter to the Department

on 8 June 2015. In the letter, it is pointed out that the Department is obliged to

follow a competitive bidding process that is fair, transparent and equitable prior

to the award of a contract to a service provider. The letter also refers to section

217 of the Constitution and the Preferential Procurement Policy Framework Act 5

of 2000. The Department was informed that the applicant intends to launch an

application to review and set aside the award of such “tenders”. The Department

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was requested to provide copies of certain documents relating to the tender

process.

[5] The Department did not reply to this letter. On 11 June 2015 a further

letter was sent to the Department setting out the details of the abovementioned

contracts that are the subject of this application. This letter also informed the

Department that on face value more than half of the appointed contractors did

not possess the requisite CIDB grading and their contracts stand to be reviewed

and set aside without further motivation. A request was made for information

and certain documents. The Department was requested to confirm by close of

business on Friday 12 June 2015 that the implementation of the awards of the so-

called tenders would be stayed pending the finalization of the applicant’s

intended application to review and set aside such appointments.

[6] Once more the Department did not reply to this communication.

Previous urgent application for reasons

[7] The applicant launched an urgent application in this court under case

number M 214/2015 in which it sought documents and the reasons for the award

of the contracts mentioned above. The Department belatedly filed an opposing

affidavit. In its affidavit the Department stated that it has a database, which

comprises legal entities that provide specialized civil engineering and construction

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services and who have been pre-approved or pre-qualified as service providers.

The Department on a rotational-basis, as and when needed, solicits bids from

these registered service providers.

[8] The Department also said that the applicant did not qualify for the projects

mentioned in the notice of motion because the projects are civil engineering

works for reticulation or bulk internal services whereas the applicant has been

listed on the database and qualifies for construction work only. As regards

contracts, DH29/14 and DH34/14, the Department says the qualifying companies

were sourced from the Department’s database and invited to submit proposal ‘in

response to engineer’s specifications which were approved on 16 February 2015’.

The Department also indicated that an engineer in its employ had already drafted

specifications for the works that were to be conducted.

[9] Two companies responded and both were recommended for appointment

by an evaluation and bid adjudication committee.

[10] The Department says in respect of contract DH35/14, that service providers

were likewise sourced from the database and only two companies were

recommended for appointment by the Department’s evaluation and bid

adjudication committee.

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[11] The Department explained that this process was followed because it is

permitted by a document entitled: ‘‘Supply Chain Management, a Guide for

Accounting Officers’. The relevant passage that reads:

‘Where goods or services or work of a technical/specialized nature are

required on a recurring basis, a list of approved suppliers for the supply of

goods and services or work may be established through the competitive

process. Once the list of suppliers has been approved only the successful

applicants are approached, depending upon the circumstances, either by

obtaining quotations on a rotational basis or according to the bid procedure

when goods, services or works are required.’

[12] On receipt of the answering affidavit. The application under case number

M214/2015 was removed from the roll.

This application for interim relief

[13] After receiving the Department’s affidavit the applicant launched this

application to secure interim relief pending an application to review and set aside

the Department’s decision to award the contracts mentioned above to the

respective contractors. The applicant sets out its complaint regarding the

Department’s procurement system and provides reasons for its complaints as

follows:

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(a) In so far as compliance with the ‘Guidelines for Accounting Officers’ is

concerned the applicant contends that construction relates to the building

of low cost housing and that there is nothing specialized about this service

or the construction process. Even the reticulation construction is not of a

specialized nature.

(b) The applicant says that it appears as if an engineer has already provided

specifications and the scope of the works to be performed. This led, as far

as the reticulation services and construction related thereto is concerned,

to a compulsory meeting that was apparently held.Services that could be

performed were accordingly and could not have been for a Turnkey

solution.

(c) The applicant says it is incorrect to state that the applicant could not have

qualified to submit a bid. The applicant provides engineering services,

consulting services, and attends to construction itself.

(d) The applicant says that procurement method PP2A was used to solicit bids

and appoint contractors but the works were clearly not simple in nature

and more essentially exceeded R500 000 in value.

(e) The applicant submits, with reference to the website of the CIDB that none

of the successful contractors are capable of performing the works at issue

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in terms of the CIDB regulations and sets out the grading applicable to the

second to eighth respondents and the value of work which may lawfully

awarded to them.

[14] The applicant submits that the decision to award state contracts

constitutes administrative action in terms of the Promotion of Administrative

Justice Act 3 of 2000 (PAJA) and administrative action remains valid until such

time as it is set aside. The applicant intends setting aside the decisions under

section 8 of PAJA. It seeks the cessation of the works pending the finalization of

the review application. It submits that the respondents are perpetuating the

unlawfulness and the illegal decision by their conduct daily. The applicant says

that it has little information, but believes that the contractors are to provide a

turnkey solution, and that this means that the successful contractors are already

in the design and planning phase.

[15] The applicant submits that the implementation must be urgently stopped if

the applicant is to have any chance of successfully and practically impugning a

decision to award the contracts. It submits that if, at the stage that the review is

heard, the works are at an advanced stage of implementation, a court will be

loath to order the Department to follow a proper procurement process from the

start. It says that it is for this reason that it is urgently necessary that the works be

stopped pending the finalization of the urgent review. The applicant states that it

has been advised that recent jurisprudence requires an applicant to seek an

interdict post haste.

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[16] The applicant says that as soon as it was apprised of what had happened it

immediately took steps to further investigate and instructed the counsel to draft

the present application. It submits that if the ordinary procedures were to be

followed it may well take a year before the matter is heard.

[17] The applicant submits that none of the respondents will be prejudiced in

the interim, because the review application will be launched on an urgent basis

and that, at worst, the works will be delayed for one or two months, pending the

outcome of the review. If the application is unsuccessful the successful

contractors and other respondents can continue the work unabated. But if the

applicant succeeds in the review its case under section 8 of PAJA will become

extremely difficult to acquire an order that a proper procurement process, the

place from the outset.

[18] Finally, the applicant submits that the successful contractors are most

probably entitled to the payment for services that they have already rendered. In

the work that has accordingly been done will probably already have been paid.

There is no harm to successful contractors, all the Department (or the

municipality) should the court order the cessation of the works in the interim.

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The test for interim relief against the exercise of statutory power ahead of final

adjudication

[19] Mr Makhari SC (with him Mr Tyatya), who appeared for the Department,

submitted that the applicant had not made out a case in accordance with the

judgment of the Constitutional Court in National Treasury and Others v

Opposition to Urban Tolling Alliance and Others (CCT 38/12) [2012] ZACC 18;

2012 (6) SA 223 (CC); 2012 (11) BCLR 1148 (CC) (20 September 2012) (the OUTA

judgment) and that the application should be dismissed on this basis. It is

therefore appropriate to investigate this aspect before burdening the judgment

with a description of the facts and submissions made by the respondents who

oppose the granting of interim relief.

[20] I have distilled from the OUTA judgment the following elements and

consideration regarding the test for interim interdicts where a temporary

restraint or interdict is sought against the exercise of statutory power well ahead

of the final adjudication of a claimant’s case and I have added some of the rules

regarding a court’s discretion in this context:

(a) The test is the well-known test set out in Setlogelo v Setlogelo 1914 AD

221, Webster v Mitchell 1948 (1) SA 1186 (WLD) and Gool v Minister of

Justice and Another 1955 (2) SA 682 (CPD). See also Molteno Brothers and

Others v South African Railways and Others 1936 AD 321 at 329 and 331;

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(b) The test requires that an applicant that claims an interim interdict must

establish (a) a prima facie right even if it is open to some doubt; (b) a

reasonable apprehension of irreparable and imminent harm to the right if

an interdict is not granted; (c) the balance of convenience must favour the

grant of the interdict and (d) the applicant must have no other remedy;

(c) ‘Courts grant temporary restraining orders against the exercise of statutory

power only in exceptional cases and when a strong case for that relief has

been made out.’ Beyond the common law, separation of powers is an even

more vital tenet of our constitutional democracy. This means that the

Constitution requires courts to ensure that all branches of Government act

within the law. However, courts in turn must refrain from entering the

exclusive terrain of the Executive and the Legislative branches of

Government unless the intrusion is mandated by the Constitution itself;

(d) The test must be applied cognizant of the normative scheme and

democratic principles that underpin our Constitution. This means that

when a court considers whether to grant an interim interdict it must do so

in a way that promotes the objects, spirit and purport of the Constitution;

(e) If the right asserted in a claim for an interim interdict is sourced from the

Constitution it would be redundant to enquire whether that right exists;

(f) When a court weighs up where the balance of convenience rests, it must

consider the probable impact of the restraining order on the constitutional

and statutory powers and duties of the state functionary or organ of state

against which the interim order is sought;

(g) The balance of convenience enquiry must now carefully probe whether and

to which extent the restraining order will probably intrude into the

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exclusive terrain of another branch of Government. The enquiry must,

alongside other relevant harm, have proper regard to what may be called

separation of powers harm;

(h) A court must keep in mind that a temporary restraint against the exercise

of statutory power well ahead of the final adjudication of a claimant’s case

may be granted only in the clearest of cases and after a careful

consideration of separation of powers harm. It is neither prudent nor

necessary to define ‘clearest of cases’. However one important

consideration would be whether the harm apprehended by the claimant

amounts to a breach of one or more fundamental rights warranted by the

Bill of Rights.

(i) Under the Setlogelo test, the prima facie right a claimant must establish is

not merely the right to approach a court in order to review an

administrative decision;

(j) The prima facie right is thus a right to which, if not protected by an

interdict, irreparable harm would ensue;

(k) An interdict is meant to prevent future conduct and not decisions already

made;

(l) Apart from the right to review and to set aside impugned decisions, the

applicant must demonstrate that the prima facie right that is threatened by

an impending or imminent irreparable harm. The right to review the

impugned decisions does not require any preservation pendente lite;

(m) There must be an alignment between the decisions the applicant seeks to

review and the source of the harm feared;

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(n) A court must be satisfied that the balance of convenience favours the

granting of a temporary interdict. It must first weigh the harm to be

endured by an applicant if interim relief is not granted as against the harm

a respondent will bear, if the interdict is granted. Thus a court must assess

all relevant factors carefully in order to decide where the balance of

convenience rests;

(o) A court must respect the separation of powers and thus as set out in the

International Trade Administration Commission v SCAW South Africa (Pty)

Ltd [2010] ZACC 6; 2012 (4) SA 618 (CC); 2010 (5) BCLR 457 (CC) and

Doctors for Life International v Speaker of the National Assembly and

Others [2006] ZACC 11; 2006 (6) SA 416 (CC); 2006 (12) BCLR 1399 (CC):

‘Where the Constitution or valid legislation has entrusted specific powers

and functions to a particular branch of government, courts may not usurp

that power or function by making a decision of their preference. That

would frustrate the balance of power implied in the principle of separation

of powers. The primary responsibility of a court is not to make decisions

reserved for or within the domain of other branches of government, but

rather to ensure that the concerned branches of government exercise their

authority within the bounds of the Constitution. This would especially be so

where the decision in issue is policy-laden as well as polycentric.’

(p) Organs of state are not immunised from judicial review only on account of

separation of powers;

(q) The exercise of all public power is subject to constitutional control. In an

appropriate case an interdict may be granted against it if the review court

in due course were to find that the organ of state acted outside the law

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then it is entitled to grant effective interdictory relief if the decisions are

contrary to the law and thus void;

(r) In evaluating where the balance of convenience rests, a court must

recognise that it is invited to restrain the exercise of statutory power within

the exclusive terrain of the Executive or Legislative branches of

Government. It must assess carefully how and to what extent its interdict

will disrupt executive or legislative functions conferred by the law and thus

whether its restraining order will implicate the tenet of division of powers.

Whilst a court has the power to grant a restraining order of that kind, it

does not readily do so except when a proper and strong case has been

made out for the relief and, even so, only in the clearest of cases;

(s) A court must carefully consider whether the grant of the temporary

restraining order pending a review will cut across or prevent the proper

exercise of a power or duty that the law has vested in the authority to be

interdicted. Thus courts are obliged to recognise and assess the impact of

temporary restraining orders when dealing with those matters pertaining

to the best application, operation and dissemination of public resources.

What this means is that a court is obliged to ask itself not whether an

interim interdict against an authorised state functionary is competent but

rather whether it is constitutionally appropriate to grant the interdict; and

(t) When the requirements for an interim interdict are met the court has a

discretion to refuse to grant an interim interdict even should the

requirements be met where the interests of justice require that an interdict

be refused. See Knox D’Arcy Ltd v Jamieson 1996 (4) SA 348 (A) at 361-362.

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See also the comments of Mia Swart and Thomas Coggin “The Road not Taken:

Separation of Powers, Interim Interdicts, Rationality and E-Tolling in National

Treasury v Opposition to Urban Tolling” Constitutional Court Review 5 2013 346-

365.

[21] The OUTA judgment does not alter the applicable law. It does shift the

approach to be adopted by emphazing the mindset to be adopted where the

temporary interdict is launched to curb a statutory power properly belonging to

another branch of government. But what serves to be emphasized is that where

the right allegedly infringed relates to a fair, equitable, transparent, competitive

and cost-effective tender process the purpose of an interim interdict is related to

securing space for an appropriate remedy in the main application. In Allpay

Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer,

South African Social Security Agency and Others [2014] ZACC 12; 2014 (4) SA 179

(CC); 2014 (6) BCLR 641 (CC) at paras 42 Froneman J stated that:

‘[T]here can be no doubt that the separation of powers attributes responsibility to the

courts for ensuring that unconstitutional conduct is declared invalid and that

constitutionally mandated remedies are afforded for violations of the Constitution. This

means that the Court must provide effective relief for infringements of constitutional

rights.’

[22] Without an interim interdict securing some space for a remedy the main

application may result in a hollow judgment. See the approach of the

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Constitutional Court in granting an interim interdict pending an appeal in South

African Informal Traders Forum and Others v City of Johannesburg and Others;

South African National Traders Retail Association v City of Johannesburg and

Others (CCT 173/13 ; CCT 174/14) [2014] ZACC 8; 2014 (6) BCLR 726 (CC); 2014 (4)

SA 371 (CC) (4 April 2014). Of course the preservation of the space for an

appropriate remedy is governed by the considerations set out in the OUTA

judgment.

[23] The effect of this is that considerations regarding the prospects of success

of a review of the alleged infringement i.e. the main application, contrary to the

submissions by the first respondent, remain relevant.

The procurement dispensation

[24] The procurement by the Provincial Governments of goods and services is

regulated by section 217 of the Constitution of the Republic of South Africa of

1996. This section provides that:

‘Procurement

217. (1) When an organ of state in the national, provincial or local sphere of

government, or any other institution identified in national legislation, contracts for

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goods or services, it must do so in accordance with a system which is fair, equitable,

transparent, competitive and cost-effective.

(2) Subsection (1) does not prevent the organs of state or institutions referred to in that

subsection from implementing a procurement policy providing for -

a. categories of preference in the allocation of contracts; and

b. the protection or advancement of persons, or categories of persons, disadvantaged

by unfair discrimination.

(3) National legislation must prescribe a framework within which the policy referred to

in subsection (2) may be implemented.’

[25] Relevant legislation includes the Preferential Procurement Policy

Framework Act 5 of 2000, the Construction Industry Development Board Act 38 of

2000 (the CIDB Act), regulations and good practice notes published thereunder

and Treasury Regulations. Guidelines also inform the use of these statutes.

[26] Treasury Regulations 16A6 of the PFMA provides that:

‘The 16A6.1 Procurement of goods and services, either by way of quotations or through

a bidding process, must be within the threshold values as determined by the National

Treasury.

16A6.2 A supply chain management system must, in the case of procurement

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through a bidding process, provide for –

(a) the adjudication of bids through a bid adjudication committee;

(b) the establishment, composition and functioning of bid specification, evaluation and

adjudication committees;

(c) the selection of bid adjudication committee members;

(d) bidding procedures; and

(e) the approval of bid evaluation and/or adjudication committee

recommendations.

16A6.3 The accounting officer or accounting authority must ensure that –

(a) bid documentation and the general conditions of a contract are in accordance

with –

(i) the instructions of the National Treasury; or

(ii) the prescripts of the Construction Industry Development Board, in the

case of a bid relating to the construction industry;

(b) bid documentation include evaluation and adjudication criteria, including the criteria

prescribed in terms of the Preferential Procurement Policy Framework Act, 2000 (Act

No. 5 of 2000) and the Broad Based Black

Economic Empowerment Act, 2003 (Act No. 53 of 2003);

(c) bids are advertised in at least the Government Tender Bulletin for a

minimum period of 21 days before closure, except in urgent cases when bids may be

advertised for such shorter period as the accounting officer or

accounting authority may determine;

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(d) awards are published in the Government Tender Bulletin and other media by means

of which the bids were advertised;

(e) contracts relating to information technology are prepared in accordance with the

State Information Technology Act, 1998 (Act No. 88 of 1998), and any regulations made

in terms of that Act;

(f) Treasury Regulation 16 is complied with when goods or services are procured

through public private partnerships or as part of a public private partnership;

and

(g) instructions issued by the National Treasury in respect of the appointment of

consultants are complied with.

16A6.4 …..

16.A6.5 The accounting officer or accounting authority may opt to participate in

transversal term contracts facilitated by the relevant treasury. Should the accounting

officer or accounting authority opt to participate in a transversal contract facilitated by

the relevant treasury, the accounting officer or accounting authority may not solicit bids

for the same or similar product or service during the tenure of the transversal term

contract.

16A6.6 The accounting officer or accounting authority may, on behalf the department,

constitutional institution or public entity, participate in any contract arranged by means

of a competitive bidding process by any other organ of state, subject to the written

approval of such organ of state and the relevant contractors.’

[27] A ‘Supply Chain Management, a Guide to Accounting Officers’ of 2004 upon

which the Department relies. See paragraph 11 above.

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[28] The Standard for Uniformity in Construction Procurement BM 12 of 2009

issued in terms of sections 4(f), 5(3)(c) and 5(4)(b) of the CIDB Act provides for a

nominated procedure as regards works of a value not exceeding R500 000

excluding VAT.

[29] In terms of regulation 25 issued in terms of the CIDB Act a tender may only

be validly accepted from a contractor who is registered in terms of the Act in the

required category and who may tender for the value of the tender, unless in

terms of regulation 25(7A) the employer exercises a discretion to award the

tender in the prescribed circumstances to a tenderer who has tendered outside

the range or value. See Moseme Road Construction CC and Others v King Civil

Engineering Contractors (PTY) LTD and Another (385/2009) 2010 (4) SA 359

(decided: 15 March 2010) at para 14.

[30] Treasury Instruction Note of 31 May 2011, applicable to Provincial

Departments, provides:

‘3.7.3 For bids relating to the construction industry, the prescripts of the Construction

Industry Development Board (CIDB) require that:

(a) Bids be advertised in the CIDB iTender System; and

(b) Bids be registered on the CIDB Register of Projects (RoP) on award and progressively

updated until project completion for the promotion, assessment and evaluation of best

practices on construction projects.’

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[31] Treasury Practice Note 8 of 2007/2008 (which took effect from 01

December 2007) provides that:

‘5 COMPILATION OF THE LIST OF PROSPECTIVE SUPPLIERS PER COMMODITY AND TYPE

OF SERVICE

5.1 Accounting officers / authorities should compile a list of prospective suppliers to be

used for the procurement requirements in terms of paragraphs 3.1 to 3.3 above. This list

should also be used effectively to promote Black Economic Empowerment through the

participation of black owned enterprises, black empowered enterprises, black women-

owned enterprises (as defined in the Strategy for Broad-Based Black Economic

Empowerment issued by the Department of Trade and Industry) as well as the

promotion of businesses owned by other Historically Disadvantaged Individuals (HDIs).

5.2 Accounting officers/authorities should at least once a year, through local

representative newspapers or by any other means, invite prospective suppliers to apply

for evaluation and listing as prospective suppliers. The list should be updated at least

quarterly in order to accommodate especially newly established black owned and

empowered businesses and other newly established HDI suppliers.

5.3 Once the list has been compiled per commodity and type of service, price quotations

should be invited there from. The invitation of price quotations from the compiled list of

prospective suppliers per commodity or service should be done on a rotation basis in

such a manner that ongoing competition amongst suppliers is promoted. Prospective

suppliers must be allowed to submit applications for listing at any time.’ (My emphasis.)

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Paragraphs 3.1 to 3.3 refer to transactions up to transaction values of R 2 000; R

10 000 and up to but not exceeding R 500 000 (including VAT in all amounts).

Urgency

[32] All the respondents who opposed the application submitted that the

application was not urgent. The difficulty the applicant faces as regards its

challenge to the lawfulness, fairness, equitability, transparency, competitiveness

and cost-effectiveness of the Departmental procurement system is that the

applicant has been a beneficiary of this procurement process and is currently

engaged in a contract awarded to it. The applicant has therefore known about the

Department’s procurement system for some time. But the applicant has chosen

to attack the system on an urgent basis in the course of seeking an interim

interdict. On the other hand the applicant gained notice of the tenders on or

about 5 June 2015 when it saw the tender bulletin and noted that the bulletins

referred to tenders awarded by the Department to the contractors listed as

respondents. These contracts had already been awarded in April 2015. At this

stage it was prudent for the applicant to ask the Department for an explanation. It

did so but without success and felt compelled to launch an application in this

court against the Department on 12 June 2015 in order to secure certain

information and documents. When the first applicant received the Department’s

answering affidavit it launched this application expeditiously. The applicant

alleges that the Department’s answer was to the effect that the contractors had

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not been appointed. It does not allege that this misinformation impacted on the

issue of urgency.

[33] I am of the view that the application is urgent for the reasons advanced by

the applicant which have been set out above.

The award of the contracts by the Department

[34] Mr Grobler, who appeared on behalf of the applicant, submitted that the

prima facie right of the applicant lay:

(a) in its right to participate in supplying goods and services to the Department

in a lawful public, competitive and fair bidding process and not to be

excluded by a closed bid data system;

(b) The Department has ignored certain statutory provisions relating to the

contracts awarded to the contractors cited as respondents.

I intend to deal with the complaints seriatim.

The alleged infringement of applicant’s right to a fair procurement process

[35] The following facts relate to the procurement system utilized by the

Department:

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(a) In February 2015 the Department was concerned with the construction of

low cost houses in the North West Province.

(b) The Department invited contractors from a database, which it kept of what

it termed ’various qualifying preapproved service providers’ to tender.

(c) The Department determined the value of the contracts.

(d) Other contractors, including the applicant were not asked to submit a bid.

(e) Thereafter tender clarification meetings were held.

(f) The chosen contractors submitted their bids.

(g) The Department evaluated the bids for responsiveness, functionality and

on the 90/10 point system.

(h) The contracts were not publicly advertised.

(i) The Department was of the opinion that the applicant did not qualify for all

the works and for this reason it was not invited to submit a bid.

(j) The Department has justified its decision not to invite other tenders on the

basis that certain service providers are invited (on a rotational basis) as and

when the need for provision of specialist civil engineering and construction

services are required.

(k) The contracts were awarded in late April or the beginning of May 2015.

[36] I am prima facie of the view that the applicant has shown that its right to

participate in a lawful, fair, equitable, transparent, competitive and cost-effective

procurement process has been infringed although this right is open to some

doubt. The main foundation for this assessment is:

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(a) that the Guidelines upon which the Department relies does not find

application to the facts and circumstances giving rise to the contracts in

issue;

(b) that the Guidelines issued in 2004 have probably been superseded by the

Treasury Instructions and Practice Notes that have since been issued;

(c) that the Guidelines do not take into account the requirements of open

bidding for contracts above R500 000;

(d) that the manner in applying the Guidelines does not take sufficient

cognizance of the constitutional imperatives; and

(e) that the Departments has not explained what, if any, steps are in place to

curb abuse.

[37] Before considering the other requirements of an interim interdict and the

injunctions set out in the OUTA judgment, it is preferable to consider whether the

contracts were lawfully awarded in accordance with the CIDB Act.

Award of contracts contrary to CIBD Act

[38] The applicant also founds its prima facie right (which may be open to some

doubt) to claim an interdict on a contravention by the Department and the

contractors of the CIDB Act.

27

[39] The applicant complains that the second respondent did not have the

necessary grading to tender for contract DH 29/14. Its is incorrect and moreover

this applicant itself has a grading of 8GB PE that disqualifies it from tendering for

civil engineering contracts. The applicant is limited to general building works.

[40] The applicant’s complaint that the third respondent did not have the

necessary grading to tender for contract DH 34/14 is also incorrect. The third

respondent has a CIDB grading of 8 CE PE. This registration and grading is current

and permits the third respondent to tender for civil engineering work of the value

concerned.

[41] Although the applicant may only provide general building works to the

State and not civil engineering work, the applicant submits that had the tender

been advertised it could have formed a joint venture with a qualified entity and

have tendered for the work. Therefore it is not disentitled to complain about the

unlawfulness of these two contracts.

[42] Significantly, the applicant does not say that, had it been aware of the

tender, it would have tendered in conjunction with a qualified partner for these

two contracts. There is no merit in this complaint.

[43] The applicant complains that the fourth respondent did not have the

necessary grading to tender for and be awarded contract DH35/14A. The fourth

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respondent alleges that it does not need a CIDB grading for low cost housing. It

does require registration with the National Home Builders Registration Council

and it is so registered. In any event it does have a CIDB grading of 7 GB PE and it

complies with the requirements specified for Potentially Emerging Enterprises for

work of the value awarded to it. I accept that the last averment casts serious

doubt on the applicant’s prima facie right. I do not accept that the CIDB Act is not

applicable.

[44] The applicant complains that the sixth respondent has a CIDB grading of 8

GB PE which does not permit it to contract for work of the value that it has

contracted in terms of contract DH36/14A. The sixth respondent’s CIBD grading

expired but it renewed its grading and a 7 GB PE grading was issued. The sixth

respondent points out that its grading of 7 GB PE was issued in February 2015 and

expires on 20 November 2015. It may validly be awarded a contract of one level

higher than its grading. The contract was validly awarded to it.

[45] I am not convinced that the applicant has made out a prima facie right

although open to some doubt on the CIDB grading complaint as regards the

second, third, fourth and sixth respondents.

[46] The applicant complains that the seventh respondent has a 5 GB PE and a 5

CE PE grading. This limits its contacts to work of R6.5 million and thus it may not

perform the work valued at R55 million awarded to it. The seventh respondent,

29

who was not represented during the hearing filed a “replying affidavit” and baldly

denies the aforementioned allegations.

[47] I turn to the respondents contractors that have not opposed the

application.

[48] The applicant levels the same complaint against the fifth respondent that it

leveled against the fourth respondent. Prima facie the fourth respondent’s

defence, to the extent that I have accepted it, also avails the fifth respondent.

[49] The eight respondent allegedly has a grading of 1 GB PE and 1 CE PE and

may only accept work to the value of R200 000 and not R55 million. This

respondent did not file an answering affidavit. Prima facie the work falls within

the scope of the CIBD and the seventh and eight respondents are not graded to

perform work of the value awarded to them. The Department simply denies the

applicant’s averments regarding the grading requirements. The bald denial does

not assist it nor does it assist these respondents.

[50] I am of the view that the applicant has established on a prima facie basis

that the decision to award contracts to seventh and eight respondents are

irregular and prima facie invalid. Apart from challenging the urgency and denying

almost all the allegations, the seventh applicant avers that an interdict will

operate to the prejudice of the community involved.

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[51] To the extent that the applicant is listed on the Department’s database it is

prima facie entitled to complain about the illegality and to have these contracts

set aside and remedied in the main application as it stands some chance to be

awarded these contracts. It is not possible to anticipate what the precise remedy

is likely to be.

Irreparable harm and separation of powers harm

[52] There is no doubt that the authority and competence to award contracts as

regards low costs housing resorts with the Department. This power must, of

course, be exercised in accordance with the law. Where there is prima facie

evidence that the constitutional right to participate in a lawful, fair, equitable,

transparent, competitive and cost-effective procurement process has been

infringed and a reasonable prospect that an application to review and set aside an

offending decision will be successful, a court will be inclined to interfere.

[53] Should an interim interdict be granted the two contractors will suffer

financial harm but prima facie they have brought that harm upon themselves by

their participation in the system. The averment by the applicant that they will be

entitled to be paid for the work done to date may be correct but it does not

hnecessarily follow that this is will be the case.

31

[54] It is probable that some of the first group of the respondents, some more

than others, will be put to expense to secure their respective sites pending the

finalization of the application for review.

[55] An interim interdict will interfere with the Department’s exercise of its

power to award contracts for low cost housing but not irreparably so.

[56] It is likely that there will be irreparable harm if the seventh and eighth

respondents are not interdicted. This is especially so as a complaint about the

legality of the award of part of a contract to these two respondents is met by a

bare denial or no response. Neither the Department nor these respondents have

set out any facts relating to this issue. Furthermore there is no information

available about the ability of these two respondents to perform the work. Where

work is awarded in breach of the CIBD dispensation, there must be some doubt

about this. The obligation and power to ensure that they have such ability is that

of the Department but again, prima facie, the Department has ignored the law.

Balance of convenience

[57] I acknowledge that in weighing up where the balance of convenience rests,

I must consider the probable impact of the restraining order on the constitutional

32

and statutory powers and duties of the Department against which the interim

order is sought. I must carefully probe whether and to which extent the

restraining order will probably intrude into the exclusive terrain of this branch of

Government. The enquiry must, alongside other relevant harm, have proper

regard to what may be called separation of powers harm.

[58] I am cognizant of the housing shortage in this province and the need to

provide low cost housing and that a temporary restraint against the exercise of

statutory power well ahead of the final adjudication of a claimant’s case may be

granted only in the clearest of cases and after a careful consideration of

separation of powers harm.

[59] I accept that the contracts of the second, third, fourth, fifth and sixth

respondents are far advanced; some more so than others and that the balance of

power favour these respondents.

Alternative relief

[60] Does the applicant have any other remedy? The applicant may secure

some remedy should it be successful on appeal and it of course may pursue that

remedy even if an interim interdict is refused. But this may prove in adequate on

the absence of a temporary interdict. I do not know how far the work as regards

the work on the contrasts of the seventh and eighth respondents has progressed

33

and therefore I am not able to assess the situation. This is partly the fault of the

Department and these respondents but the applicant could and should have

provided some information.

Conclusion regarding an interim interdict

[61] I am of the opinion that the applicant has not made out the clearest of

cases for an interdict as regards the contracts of the second to sixth respondents.

But I am satisfied that the prima facie glaring illegality as regards their part of

contract DH36/14A coupled with the other considerations outlined above means

that the applicant has shown the clearest case for interfering with the

Department’s decision regarding the award of part of the contract to the seventh

and eighth respondents.

Exercise of discretion

[62] There is nothing that persuades me that I should exercise my discretion

against grating interim relief regarding the seventh and eighth respondent’s share

of contract DH36/14A.

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Costs

[63] The application of the OUTA judgment has made it difficult for a litigant to

predict the outcome of an application for temporary relief. It is conceivable that if

a court of review should confirm an infringement of an applicant’s rights that it

may order those responsible to pay the applicant’s costs if allowed an opportunity

to do so. For this reason the costs are reserved for decision by the court hearing

the review application.

Order

[64] In the result I made the order set out in paragraph 1.

A Landman

Judge of the High Court

35

Appearances

Date of hearing: 26 July 2015

Date of judgment: 7 August 2015

For the Applicant: Adv Grobbler instructed

by Smit Stanton Inc

For the first Respondent: Adv Makhari SC and Mr Tyatya

instructed by the State attorneys,

Mafikeng

For the second Respondent: Adv Hitge instructed by Van Rooyen

Tlhapi Wessels Inc

For the third Respondent: Adv Klopper instructed by Maree and

Maree Attorneys

For the fourth Respondent: Adv T Manchu instructed by R S Tau

Attorneys

For the sixth Respondent: Adv Pistor SC instructed by Maree

and Maree Attorneys