South Africa: How To Challenge That Tender Awarded To A Third Party

Last Updated: 9 September 2014
Article by David Vlcek

Government entities are on a tender binge at the moment. With fresh budgets and post electoral hype filling the corridors of the organs of state that run our country, there is an unusually high number of tenders being advertised and awarded. If one simply looks at any Sunday newspaper it almost seems as if government tenders have replaced the classified section.

If you trade in the public procurement sphere and tender to provide goods and services to government entities you will no doubt have both won and lost a few tenders along the way. On each occasion you would have spent an inordinate amount of time and money compiling your bid and there would have most certainly been the last minute dash to get your tender into the designated tender submission box before the cut off time.

You would have then spent the date of the award of that tender eagerly awaiting the receipt of an email from the relevant government entity congratulating you on your appointment. But what if the email advises you that you have been unsuccessful or what if you receive no correspondence at all? Most tenderers simply do nothing because they are unaware of their rights. This is something that needs to change and tenderers need to start holding government entities to account.

A decision taken to award a tender to a third party or not to award a tender at all is legally referred to as "administrative action". Section 33 of the Constitution provides every person has the right to administrative action that is lawful, reasonable and procedurally fair. Section 33 also provides that if your rights have been adversely affected by administrative action you have the right to be given written reasons.

The legislature promulgated the Promotion of Administrative Justice Act, 2000 (PAJA) to give teeth to Section 33 of the Constitution. Section 6 (2) of PAJA lists various grounds for when the award of a tender can be challenged by an unsuccessful tenderer.

In order to challenge the award of the tender to the successful tenderer one has to base their challenge on one or more of those grounds. In order to do so, you need to secure the necessary evidence. When you submit your tender to the relevant government entity, you need to insert the award date into your diary together with the contact person's name and contact details at the government entity who is dealing with that tender (all of this information will be in the tender).

On the award date, you need to start communicating with the government entity. Government entities often forget to send out letters of non-award to unsuccessful tenderers. You should also check their websites to see whether they have published the award of the tender on their websites. Government entities often disclose the name of the successful tenderer on their website so this is a great place to start.

Once you know that the tender has been awarded and that you have been unsuccessful you must exhaust all of the internal remedies available to you to challenge the award of that tender. In the letter of non-award, the government entity is obliged to inform you of your right to challenge the award of the tender. The most common internal remedy takes the form of an appeal. It is an appeal to the government entity to which you tendered (it is not an appeal to court) and there are strict time limits within which to lodge your appeal. You must write to the government entity as soon as possible and notify it of your intention to appeal the award of the tender to the third party upon receipt of the letter of non-award.

In that correspondence ask the government entity to provide you with written reasons for why the tender was not awarded to you and why it was awarded to the successful tenderer. You must also ask the government entity for a full record of decision. A record is a bundle of all of the documents that the government entity used to make its decision. The successful tenderer's tender document always forms a part of the record. During this period, the government entity ought not to proceed with the tender but you must ask for an undertaking from it that it will not do so. In the event that it does you will need to rush to court to stop them.

Once you have the record and the written reasons, you can evaluate your prospects of success on appeal and decide whether you want to challenge the award of the tender or not. Getting to this stage is relatively inexpensive and it does not take a long time. If your merits are good and you succeed on appeal to the government entity, you can have the award of the tender set aside and even potentially awarded to you.

If you appeal and are unsuccessful, then your next step is to proceed to the high court and review the award of the tender before a judge.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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David Vlcek
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