The Special Conditions of Contract(SCC) in a Request for Bid (RFB) tender document should not be elevated into a mandatory requirement of the tender. This was the finding of a full bench of theHigh Court in the matter of In2ITTech v Gijima Holdings [2023] ZAGPJHC 478.
In September 2020, the State Information Technology Agency (SITA) published a tender on behalf of the South African Police Service (SAPS), in terms of which the SITA sought maintenance and support services for the Private Branch Exchange communication system (PBX system) of the SAPS, which is the system that facilitates phone calls. Two service providers submitted tenders to bid for the work – Gijima Holdings (Pty) Ltd (Gijima); and In2IT Tech (Pty) Ltd (In2IT). The latter was ultimately selected as the successful bidder.
Aggrieved by the decision, Gijima applied to the High Court in March 2021, seeking to review and set aside the SITA’s decision to appoint In2IT. Critical to the determination of the matter was the interpretation of a mandatory technical requirement requiring that the bidder be an Original Equipment Manufacturer (OEM) or a registered OEM partner in respect of the three ‘brands’ of PBX systems in use at SAPS sites throughout the country.
Gijima’s case was straightforward. Both bidders were OEM partners in respect of the ‘brands’, but Gijima was the only bidder that was an OEM partner of all ‘models’ of the brands. The SCC in the tender specifications stated that the successful bidder would be required to provide maintenance and support services in respect of specific ‘models’ of PBX equipment, one of which was a model that In2IT was not an authorised representative of.
According to Gijima, In2IT therefore did not comply with the mandatory requirements of the bid, and the decision to appoint it was accordingly unlawful in terms of the Promotion of Administrative Justice Act 3 of 2000 (PAJA). Gijima was successful in the Court a quo, but a full bench of the High Court overturned the judgment on appeal in May 2023.
In overturning the judgment, the full bench found that the Court a quo had relied too heavily on the terms of the SCC, elevating them to a mandatory requirement. The full bench further held that the Court a quo’s interpretational approach was not appropriate, as it failed to properly consider the ‘stopgap’ purpose of the tender (SAPS was phasing out the equipment, which was now obsolete technology).
Despite not being licensed to maintain and support certain ‘models’ of the PBX systems, the full bench found that In2IT was still able to render the services required, as they were not precluded from obtaining the necessary licensing if it became necessary, which, given that “obsolete machines are generally not kept on software life support,” was very unlikely. In any event, the full bench held, the terms of the SCC made it clear that SITA had the right to waive any of the conditions of the signed contract.
The full bench further held that it “must be accepted that a tender document, more than is the case with other instruments, should be interpreted in a way that remained faithful to its text and apparent purpose.” In this regard, it was confirmed that “the mandatory requirements are the rules of the game, whereas the special conditions, in contrast, are contractual clauses that SITA may enforce through usual contractual remedies if the successful bidders do not comply…the point is simply that a special condition of contract cannot be a mandatory requirement of an RFB if the organ of state is free to waive it.” The full bench found that the interpretation contended for by SITA was correct, as it remained true to the text, and in the context of the tender and services sought, made commercial sense.
The judgment is instructive as it confirms that the terms of the SCC do not constitute a mandatory requirement. The judgment also clarifies that if a bidder wishes to challenge the terms of an RFB on the basis that there is a fatal contradiction between the mandatory requirements and the SCC terms, the appropriate process is to launch an attack challenging the bid documents at the time they are issued, and not belatedly against the decision once the award has been made.