South Africa: South African State Tenders And The Constitutional Right To Information

Last Updated: 1 December 1999

November 1999

A number of South African corporations derive a substantial amount of business and profits from participating in government contracts. Recognising the importance of these contracts in a modern society and in order to promote fairness and accountability in the award of such contracts, it has long been accepted in South Africa, as in numerous other countries, that such contracts should only be awarded after all competing parties have had the opportunity of tendering, on an equal basis, therefor. Section 217(1) of the Constitution of the Republic of South Africa, 1996 ("the Constitution") accordingly provides that:

"When an organ of state in the national, provincial or local sphere of government, or any other institution identified in national legislation, contracts for goods or services it must do so in accordance with a system which is fair, equitable, transparent, competitive and cost-effective."

Unsuccessful tenderers sometimes claim that their case has not been adequately examined. This experience may, in certain circumstances, be ameliorated by the assertion of one's constitutional rights. These rights may provide meaningful procedural protection to unsuccessful tenderers by insisting that government is accountable for, and must explain, its decisions. This constitutional protection includes the right of access to information (section 32 read with section 23(2)(b) of schedule 6 of the Constitution) and the right to written reasons (section 33 read with section 23(2)(a) of schedule 6).

THE RIGHT OF ACCESS TO INFORMATION

Section 32(1) of the Constitution, as currently formulated, provides that:

"Every person has the right to access to all information held by the state or any of its organs in any sphere of government insofar as that information is required for the exercise or protection of any of their rights."

A person is, therefore, entitled to enforce his or her right to information against the state or any organ of state. An "organ of state" is defined in section 239 of the Constitution as, inter alia, "any other functionary or institution...exercising a public power or performing a public function in terms of any legislation". The right of access to information can, therefore, be asserted not only against state departments but also against parastatals and other entities performing a public function. For example, our courts have held that Telkom is an organ of state for the purposes of the Constitution as it performs a public service under the control of the executive (Directory Advertising v Minister for Posts and Telecommunications 1996 (3) SA 800 (T) 809-11).

Section 32(1) of the Constitution contemplates access to information which is "required for the exercise or protection of any of [a person's] rights". According to our courts, the word "required" should be read to mean "reasonably required" (Aquafund (Pty) Limited v Premier of the Province of the Western Cape 1997 (7) BCLR 907 (C) at 913). Although the Transvaal Provincial Division in Directory Advertising, op cit, 812-3 initially held that "rights" was limited to fundamental rights protected in the Bill of Rights, our courts have subsequently held that this decision was "clearly wrong" and that "rights" includes all rights – legislative, contractual and delictual (Van Niekerk v City Council of Pretoria [1997] 1 All SA 305 (T)).

Generally speaking, an unsuccessful tenderer will, in my view, reasonably require the production of the following documents, if applicable:

  • the tender evaluation report;
  • all reports, minutes or other documents recording the valuation of the tenders;
  • the proposed contract of the successful tenderer; and
  • all tenders received in response to the invitation to tender.

(See ABBM Printing & Publishing (Pty) Limited v Transnet Limited [1997] 4 All SA 94 (W) at 106)

In my view, the production of these documents will often be reasonably necessary in order that an unsuccessful applicant may establish whether the tender process was lawful and therefore whether it has a right to exercise or protect. The rights which may be relevant, include the right to lawful and procedurally fair administrative action as well as any other legislative rights which a particular tenderer may have.

This view is supported by the decision in the ABBM case, in which the applicant successfully claimed the above categories of documentation from Transnet in relation to a tender for which the applicant had been rejected. The following dictum of Schwartzman J at 102 is particularly relevant:

"The applicant clearly requires the documents...in order to determine whether the tender process complied with the requirements of [the administrative justice clause]. Until it has had sight thereof, it cannot decide whether it has any claim for relief against the respondent. Sight of the documents could well result in forestalling any further litigation which is in itself a good reason for ordering their production at this stage."

Nevertheless, it should be noted that the relevant organ of state may legitimately refuse access to those portions of the tender documentation which are confidential and thus protected from disclosure (ABBM, op cit, 105). Save for in exceptional circumstances, the State may not, however, make a blanket claim that the tender documentation is confidential and thus may not be disclosed in its entirety. As Schwartzman J remarked at 105:

"In my judgement it would be counter-productive and contrary to the Constitution to allow the respondent to hide behind an unsubstantiated blanket claim to confidentiality on behalf of tenderers or the express undertaking of confidentiality given to all tenderers."

In another case, Cameron J, discussing the claim of a local authority that certain relevant documentation was confidential, stated:

"In my view, recourse to legal professional privilege as a defence to [freedom of information] should be carefully scrutinised....[A] public authority must have a good rationale for refusing to supply a member of the public with information such as the report in this case." (Van Niekerk, op cit, 314-5)

THE RIGHT TO WRITTEN REASONS

Section 33(c) of the Constitution provides that:

"Every person has the right to...be furnished with reasons in writing for administrative action which affects any of their rights or interests unless the reasons for the action have been made public...."

This right accordingly applies to "administrative action", which includes the process of consideration and the decision to award a tender to a particular party (Aquafund, op cit, 914; ABBM, op cit, 100-1). In addition, the right to written reasons applies only to administrative action which affects any "rights or interests".

In many instances the decision to award a tender to another will affect an unsuccessful applicant's rights. In any event, in my view, this decision will invariably affect such applicant's interests including, the economic benefit of obtaining a government contract. As Jonathan Klaaren remarks:

"In the administrative justice context, interest should thus be defined to include an economic interest implicated by the administrative action." (Klaaren "Administrative Justice" in Constitutional Law of South Africa Chaskalson et al eds (1996) at 25-5 but see Xu v Minister van Binnelandse Sake 1995 (1) SA 185 (T), which Klaaren considers was "clearly wrong").

In my view, an unsuccessful tenderer will therefore generally be entitled to demand written reasons for the rejection of its tender.

CONCLUSION

In the context of state tenders, the constitutional rights to access to information and written reasons can go a long way to fostering the "culture of justification" which the Constitution seeks to promote, that is, "a culture in which every exercise of power is expected to be justified" (E Mureinik "A Bridge to Where? Introducing the Interim Bill of Rights" (1994) 10 SAJHR 31 at 47). In the process, an unsuccessful tenderer can use these rights to establish whether it should take the decision to reject its tender on review. If this administrative action is in fact taken on review, the information obtained in the exercise of these rights may further be used to support the tenderer's challenge to the tender evaluation process.

Glenn Penfold

For further information, please contact us.

WEBBER WENTZEL BOWENS

The material contained in this article is provided for general information purposes only and does not constitute legal or other professional advice. We accept no responsibility for any loss or damage, which may arise from reliance on information contained in this article.

© Copyright Webber Wentzel Bowens 1999. All Rights reserved

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