Johannesburg Water tender awards declared invalid

A Johannesburg Water SOC Ltd tender award to two companies for the supply and delivery of potable water on an “as and when required” basis for a period of 36 months has been set aside and declared invalid by the High Court in Johannesburg.

Judge Evette Dippenaar ruled that Johannesburg Water’s tender lapsed before any award was made, and reviewed and set aside the award to Builtpro Construction (Pty) Ltd and Nutinox (Pty) Ltd, declaring it constitutionally invalid.

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Judge Dippenaar further declared that all and any service level agreements concluded between Johannesburg Water and Builtpro Construction and Nutinox related to the award of the tender are constitutionally invalid and set them aside.

However, she suspended the declarations of invalidity and the setting aside of the tender awards to the two companies and all service level agreements for a period of 150 calendar days to enable Johannesburg Water to commence and conclude a new tender process for appointing service providers.

Continuity of services

Judge Dippenaar said, despite the question marks surrounding the agreements with Builtpro Construction and Nutinox, the continuity of services to the communities served by Johannesburg Water remains a key consideration.

“The water issues experienced by consumers are well documented and require no repetition.

“Continuity of supply of the services forming the subject matter of the tender is of great importance to the public at large, and specifically to the communities involved,” she said.

Judge Dippenaar added that, in considering a just and equitable remedy, it is necessary to take the matter’s past history into account.

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She said Johannesburg Water had to seek various extensions of the bid validity period, and for present purposes, it is irrelevant whether those extensions were validly sought or not.

“History has proved that the 90-day bid period was insufficient.

“It would ultimately leave vulnerable recipients of the potable water services at risk if an unrealistic period for completion of the tender process is set.

“On the other hand, the first respondent [Johannesburg Water] cannot simply be afforded the luxury of time, given the conclusion that the process was unlawful.

“Taking all factors into account, specifically the needs of those members of the communities who are dependent on the services, a period of 150 days should be afforded to the first respondent [Johannesburg Water] to complete a further tender process,” she said.

Costs were awarded against Johannesburg Water.

Bid validity extensions disputed

The judgment, handed down this month, follows an application lodged by unsuccessful tenderer LTC Holding CC, which had been providing services to Johannesburg Water on a month-to-month basis until 1 November 2024.

Johannesburg Water published an invitation to tender during July 2023, with an initial closing date and time of the tender was 10.30am on 31 August 2023.

It claimed the tender validity period was validly extended until 4 May 2024, but the validity of these extensions was disputed by the parties.

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Judge Dippenaar said it was undisputed that the last extension date expired on 4 May 2024, with LTC Holding CC claiming that a bid’s validity period cannot be extended without the consent or rejection of the parties before it lapses.

She said the process of bid validity extension must be completed before the bid evaluation process expires, if it is indeed allowed at all.

“If the extension is not agreed to before the lapse of the validity period, it is the end of the tender,” she said.

Judge Dippenaar said Johannesburg Water attempted to overcome this hurdle by relying on its supply chain management (SCM) policy.

The policy states that all bid validity extensions shall be requested in writing from all bidders before the expiry date, and that should any bidder fail to respond to the validity extension request within the stipulated period, these bidders would be deemed to have voluntarily withdrawn their bid.

Johannesburg Water claimed the relevant provisions of the SCM were referred to in the extension letters, and at the time the award was made on 4 May 2024, the bid valuation period had been validly extended.

Johannesburg Water further claimed a Supreme Court of Appeal (SCA) judgment confirming that the consent of all participants to a tender process is required to extend the tender validity period, does not apply to it, because of the deeming provision in its SCM, which entitled it to ignore a tenderer who failed to respond timeously to a request for an extension.

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But Judge Dippenaar said “this contention does not pass muster”, adding that the SCM in its terms confirms that it was required to seek all bidders’ consent for an extension.

She said the facts did not establish that Johannesburg Water had done so and its affidavit “fell short of the mark”.

“In the absence of proof that there was, after the expiry date, no longer any valid tender process, the tender falls to be set aside for this reason alone,” she said.

Communication of tender award after expiry

Judge Dippenaar said the further insurmountable hurdle facing Johannesburg Water is the answer to the question whether the tender was still valid at the time it was communicated to Builtpro Construction and Nutinox on 24 June 2024.

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She said Johannesburg Water did not provide any explanation as to why this communication was not sent to Builtpro Construction and Nutinox earlier.

Johannesburg Water claimed it was sufficient that the decision was made within the bid validity period.

Judge Dippenaar said communication by Johannesburg Water of its acceptance of the tenderer’s offer is important.

She ruled that Johannesburg Water’s contention that the tender award decision was finally taken, absent communication of that decision before the tender validity period lapsed, “does not bear scrutiny”.

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