THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case No.:  20384/2014

In the matter between:

AURECON SOUTH AFRICA (PTY) LTD

Appellant

and

CITY OF CAPE TOWN

Respondent

Neutral citation:   Aurecon South Africa (Pty) Ltd v City of Cape Town
(20384/2014) [2015] ZASCA 209 (9 December 2015)

Coram:

Maya ADP, Lewis, Bosielo, Petse and Willis JJA

Heard:

21 August 2015

Delivered:          9 December 2015

Summary: Administrative review – respondent seeking review and setting aside
of its own decision to award tender for the decommissioning of Athlone Power
Station to appellant – 180 day time limit envisaged in s 7(1) of the Promotion of
Administrative Justice Act 3 of 2000 not met – no fraud or corruption involved in
procurement process and irregularities, if any, not material – no case made out for

the extension of time limit under s 9(1) of the Act.

ORDER

On appeal from: Western Cape Division of the High Court, Cape Town (Yekiso
J sitting as court of first instance):

1 The appeal is upheld with costs.
2 The order of the Western Cape Division of the High Court, Cape Town is set
aside and replaced with the following:
„1 The application is dismissed with costs.
2 Aurecon South Africa (Pty) Ltd (Aurecon) was, and is, not precluded, in terms
of clause 95 of the City of Cape Town‟s Supply Chain Management Policy, the
Supply Chain Management Regulations made in terms of s 168 of the Local
Government: Municipal Finance Management Act 56 of 2003 or for any reason,
from bidding for the City of Cape Town‟s Tender 459C/2010/2011 or for any
tender pertaining to the decommissioning of the Athlone Power Station which is
based on the draft scope of work prepared by the joint venture between Aurecon
Engineering International (Pty) Ltd and ODA (Pty) Ltd.
3 The City of Cape Town is ordered to pay the costs of Aurecon‟s counter-
application.‟

JUDGMENT
_________________________________________________________________
Maya ADP (Lewis, Bosielo, Petse and Willis JJA concurring):

[1] This is an appeal against the judgment of the Western Cape Division, Cape
Town (Yekiso J). The court a quo reviewed and set aside the decision of the City
of Cape Town (the City)1 to award Tender No. 459C/2010/11: Provision of
Professional Services: Decommissioning of Athlone Power Station (the tender) to
the appellant, Aurecon South Africa (Pty) Ltd, a provider of engineering,
management and specialist technical services (Aurecon), and any contract which
may have come into existence between the City and Aurecon as a result of the
tender award.   The court a quo further dismissed Aurecon‟s counter-application
for a declaratory order that it is not precluded, under paragraph 95 of the City‟s
Supply Chain Management Policy (the SCMP), the Supply Chain Management
Regulations (the regulations),2 or for any other reason, from bidding for any tender
pertaining to the decommissioning of the Athlone Power Station (the power
station) which was based on the draft scope of work prepared by the joint venture
between Aurecon Engineering International (Pty) Ltd and ODA (Pty) Ltd.

[2] The litigation was instituted by the City which sought a judicial review of
its own decision on the basis that reviewable irregularities occurred in the course
of the evaluation of the tenders submitted to it and in the ultimate award of the
tender. The irregularities were said to arise from its officials‟ „ignorance as to the
requirements of the various stages of the consideration and award of tenders‟ and
did not entail „any fraudulent, dishonest or corrupt behaviour on the part of the

1 A metropolitan municipality as defined in s 1 of the Local Government: Municipal Structures Act 117 of 1998.
2 Made in terms of s 168 of the Local Government Municipal Finance Management Act 56 of 2003.

City, any of its officials or [Aurecon]‟.

[3] The background facts are briefly these. In 2008 the City appointed a joint
venture (the JV) comprising Aurecon Engineering International (Pty) Ltd,3 and
ODA Consulting (Pty) Ltd4 to conduct a high level prefeasibility study into the
redevelopment of the defunct power station‟s site.5 The JV‟s brief involved a study
of the site, the feasibility of its development and the process necessary to prepare
the site for redevelopment, as well as the compilation of a scope of work and
specifications for the decommissioning of the power station. In 2010 the JV
submitted a draft scope of work in collaboration with the City‟s Electricity
Services Directorate.

[4] Around this time, the City considered expanding the JV‟s brief to include
the preparation of the tender documents for the decommissioning of the power
station. The idea was, however, aborted because some of the City‟s officials took
the view that the City had the necessary skills to perform the task internally. The
JV therefore did not assist in the compilation of the tender documents. It appears,
though, that it was expected by relevant City officials that Aurecon would tender
for the project management of the decommissioning works. At a meeting held in
the City‟s Electrical Services Department on 1 April 2010 and in subsequent email
correspondence, the City‟s head of Electricity Generation (Mr J Davidson)
informed Aurecon‟s project manager (Mr J Webb) of such an assumption on his
part and expressed the view that this would not give rise to any conflict of interest
provided that Aurecon did not provide any input concerning the „structure of
preference‟, ie „functionality vs price‟, and was not represented on the City‟s Bid

3 Aurecon‟s wholly-owned subsidiary then known as Africon Engineering International (Pty) Ltd).
4 A multi-disciplinary, non-engineering firm.
5 Athlone Power Station has not functioned since 2003.

Evaluation Committee (the BEC) or Bid Adjudication Committee (the BAC).

[5] An invitation for tenders was duly advertised on 11 February 2011 as tender
number 266C/2010/11. This bid was withdrawn on 13 May 2011 owing to queries
raised about the tender document and a revised tender addressing those concerns
was re-advertised as tender number 459C/2010/11. Aurecon tendered for the
project on both occasions. In addition to Aurecon‟s tender, the City received five
other tenders which were found non-responsive by the BAC (on the BEC‟s
recommendation) for failure to comply with the relevant tender criteria. Only
Aurecon‟s tender was considered to be responsive.

[6] On 31 October 2011 the BAC resolved to accept Aurecon‟s tender „in the
amount of R9 748 973. 15 (excl. VAT), from the date of commencement of
contract until a date to be determined during the Section 33 [of the Local
Government Municipal Finance Management Act 56 of 2003] (MFMA) process‟
and duly notified Aurecon of its decision.6 Thus, the award of the tender was final,
but subject to the fulfilment of the requirements of s 33 of the MFMA. These
regulate the conclusion of long-term contracts which will impose financial
obligations on a municipality beyond a financial year. The award was also subject
to a 21 day appeal period envisaged in the Municipal Systems Act7 after which
Aurecon would be notified if any appeals had been lodged against the decision. A
few days later, Aurecon received word that an appeal had been lodged against the
award, which was being resolved, and that it would be informed of the
commencement date of the contract once that process was finalised.

[7] On 17 January 2012 Aurecon received two letters from the City‟s Director:

6 On 4 November 2011.
7 The Local Government: Municipal Systems Act 32 of 2000.

Supply Chain Management (Mr L Shnaps). The first one advised that the appeal
against the award of the tender had been resolved and that it would be contacted
by the project manager for implementation of the project. The other reiterated that
the commencement of the contract was subject to the conclusion of the process
under s 33 of the MFMA and that Aurecon would be notified in due course when
the said process had been completed. All was quiet and Aurecon did not hear from
the City for several months. On 29 August 2012, the approval of the award served
before the City‟s council meeting at which concerns, which were later widely
reported in the media, were raised by some council members that the tender
process was tainted by corruption and irregularities. The concerns arose from
Aurecon‟s involvement in the prefeasibility study and drafting the applicable
scope of work which was alleged to have given it unfair advantage over the other
tenderers. These developments prompted the City‟s mayor to commission auditors
Ernst & Young8 to investigate, mainly, the process followed in Aurecon‟s
appointment and whether it complied with the relevant legislation and the City‟s
procurement policies and to make appropriate recommendations.

[8] The auditors‟ forensic report, which was submitted on 22 October 2012,
recorded a number of irregularities which allegedly took place during the
procurement process. Its conclusion, which prompted the review proceedings, was
that Aurecon had been afforded an unfair advantage over the other tenderers
which took part in the procurement process for the following reasons:

the final scope of work that formed part of the bid specifications for the
tender was based directly on the draft scope of work prepared by the JV in 2010,
allegedly in contravention of clause 95 of the SCMP and regulation 27(4);

Aurecon was included in internal City email communication concerning the
pending tender;

8 Ernst &Young Fraud Investigation & Dispute Services, a Division of Ernst & Young Advisory Services Ltd.


the BEC did not meet as a collective to evaluate the functional scoring of
the bidders as required and this omission compromised the validity of any
decisions taken during this process;

an unauthorised member of the BEC9 participated in the scoring in breach of
the Rules of Order;

the correct evaluation stages were not adhered in scoring the bids as the
Price and Historically Disadvantaged Individual equity ownership eligibility
criteria were impermissibly scored first and submitted for technical evaluation in
breach of MFMA Circular No. 53;10

the BEC meeting of 5 August 2011 had no chairperson and was therefore
not properly constituted in breach of clause 200 of the SCMP;

Aurecon was permitted to withdraw a qualification contemplated in
Schedule 15 of the bid document ie its initial refusal to submit audited financial
statements, which impermissibly rendered its non-responsive bid responsive, in
breach of clause F.3.8.2 of the SCMP which obliges the BEC to reject a non-
responsive tender offer and not allow it to be made responsive by correction or
withdrawal of the non-conforming deviation or reservation;

the BEC evaluated Aurecon‟s bid after the bid validity period had expired
as the SCM department allowed the period to be irregularly extended  in breach of
clause 140 of the SCMP, which permits the chairperson of the BEC to extend the
period only where the original bid validity has not expired and all the bidders are
given the opportunity to extend the period;

the BEC‟s report to the BAC contained material factual errors without
which the BAC may not have made the award.

[9] Upon receipt of the report, the City furnished Aurecon with a copy thereof

9  Mr Eybers, the City‟s Mechanical Maintenance Manager, Electricity Generation.
10 Issued by National Treasury on 3 September 2010 to provide a guideline in respect of bids that include
functionality as a criterion and prescribes the two stages in which the evaluation of bids must be conducted.

and informed it that it was precluded from bidding for the tender and any future
tender based on the draft scope of work prepared by the JV. The City further
invited Aurecon‟s representations as to why the award should not be invalidated.
Aurecon submitted its representations, to which there was no response, on 31
January 2013. What followed instead, on 16 April 2013, was the launch of the
review proceedings.

[10] The court a quo found that in terms of clause 95 of the SCMP and
regulation 27(4) Aurecon‟s prior involvement in the preparation of the draft scope
of works precluded it from bidding for the tender. In the court‟s view, the
inclusion of its tender rendered the procurement process unfair and constituted a
ground for review under s 6(2)(c) of the Promotion of Administrative Justice Act
3 of 2000 (PAJA).11 The court held that the defects discovered by the auditors,
even if immaterial and which could therefore have been condoned,12 were not
brought to the BAC‟s attention and were therefore not waived. Thus the BAC
failed to take relevant considerations into account when it considered the tender
and its decision accordingly fell to be reviewed and set aside in terms of s
6(2)(e)(iii) of PAJA.13 The court further set aside „any contract that may have
come into existence between the City and [Aurecon] as a result of the award‟.

[11] In response to the City‟s prayer for condonation „to the extent necessary‟ of
its failure to adhere to the 180 day period stipulated in s 7 of PAJA for the
institution of review proceedings, the court a quo reasoned that the time limit ran
only from the date on which the City learnt of the „full extent of the reasons for
the award of the tender‟ from the auditors‟ report. And as the review proceedings

11 Section 6(2)(c) of PAJA vests a court with „the power to judicially review an administrative action if … the
action was procedurally unfair‟.
12 Under clause 296 of the SCMP.
13 Section 6(2)(e)(iii) of PAJA empowers a court or tribunal to „judicially review an administrative action if … the
action was taken … because irrelevant considerations were taken into account or relevant considerations were not
considered‟.

were launched within the contemplated period from that date, they did not fall
foul of the statutory provisions. On these bases the review application was granted
and Aurecon‟s counter-application accordingly refused.

[12] On appeal before us, Aurecon contested all the findings made by the court a
quo and the charge that it had enjoyed an unfair advantage over the other
tenderers. On the other hand, it was contended on the City‟s behalf that it had
made out a proper case for an extension of the time period prescribed in s 7 of
PAJA under s 9 of this Act. The City also supported the court a quo‟s
interpretation of regulation 27(4)14 and clause 95 of the SCMP as disqualifying
Aurecon from bidding for the tender because of its previous involvement in the
prefeasibility study. It was further contended that, in any event, the irregularities
in the procurement process warranted the review and setting aside of the tender.

Delay
[13] I deal first with the issue of delay. Section 7(1) of PAJA prescribes the time
frames within which judicial review of administrative action may be instituted. It
reads:
„Any proceedings for judicial review in terms of section 6(1) must be instituted without
unreasonable delay and not later than 180 days after the date–
(a)
subject to subsection (2)(c), on which any proceedings instituted in terms of internal
remedies as contemplated in subsection (2)(a) have been concluded; or
(b)
where no such remedies exist, on which the person concerned was informed of the
administrative action, became aware of the action and the reasons for it or might reasonably
have been expected to have become aware of the actions and the reasons.‟
On the other hand, s 9 provides:
„(1) The period of –
(a) …

14 Municipal Supply Chain Management Regulations GN R868, GG 27636, 30 May 2005.

(b) 90 days or 180 days referred to in sections 5 and 7 may be extended for a fixed period,
by agreement between the parties or, failing such agreement, by a court or tribunal on
application by the person or administrator concerned.
(2) The court or tribunal may grant an application in terms of subsection (1) where the interests
of justice so require.‟

[14] The wording of these provisions is clear. In terms of s 7(1) judicial review
proceedings must be instituted without undue delay and before the expiry of 180
days from the date of the administrative action in issue. However, s 9 empowers a
court to extend the stipulated period if the interests of justice so require.   As
stated above, the impugned administrative action – the decision to award the
tender to Aurecon – was made on 31 October 2011. The reasons therefor are
contained in the BEC‟s report of the same date which was adopted by the BAC
without qualification. The City‟s review application was launched 532 days
thereafter, on 16 April 2013.

[15] The City‟s counsel conceded that it could not be argued that it was unaware
of Aurecon‟s involvement in the prefeasibility exercise from the onset and that its
application was brought out of time. The concession was, in my view, properly
made. But he argued that it was nonetheless in the interests of justice, in light of
the glaring irregularities in the procurement process and the City‟s obligation to
comply with s 217 of the Constitution (which obliges organs of state to contract
for goods or services „in accordance with a system which is fair, equitable,
transparent, competitive and cost-effective‟), to grant it an extension of the 180
day period under s 9(1)(b) of PAJA.

[16] The decision challenged by the City and the reasons therefor were its own
and were always within its knowledge. Section 7(1) unambiguously refers to the
date on which the reasons for administrative action became known or ought

reasonably to have become known to the party seeking its judicial review. The
plain wording of these provisions simply does not support the meaning ascribed to
them by the court a quo, ie that the application must be launched within 180 days
after the party seeking review became aware that the administrative action in issue
was tainted by irregularity. That interpretation would automatically entitle every
aggrieved applicant to an unqualified right to institute judicial review only upon
gaining knowledge that a decision (and its underlying reasons), of which he or she
had been aware all along, was tainted by irregularity, whenever that might be. This
result is untenable as it disregards the potential prejudice to the respondent (the
appellant here) and the public interest in the finality of administrative decisions
and the exercise of administrative functions.15  Contrary to the court a quo‟s
finding in this regard, the City far exceeded the time frames stipulated in s 7(1)
and did not launch the review proceedings within a reasonable time. In that case, it
clearly needed an extension as envisaged in s 9(1)(b) without which the court a
quo was otherwise precluded from entertaining the review application.16

[17] The question then is whether the City made out a case for such an
extension. Whether it is in the interests of justice to condone a delay depends
entirely on the facts and circumstances of each case.17 The relevant factors in that
enquiry generally include the nature of the relief sought, the extent and cause of
the delay, its effect on the administration of justice and other litigants, the
reasonableness of the explanation for the delay which must cover the whole period

15  Gqwetha v Transkei Development Corporation Ltd & others 2006 (2) SA 603 (SCA) paras 22 to 23; Harnaker v
Minister of the Interior 1965 (1) SA 372 (C); Khumalo & another v Member of the Executive Council for
Education: KwaZulu-Natal  [2013] ZACC 49; 2014 (5) SA 579 (CC) paras 45 to 52.
16  Opposition to Urban Tolling Alliance & others v The South African National Roads Agency & others [2013] 4
All SA 639 (SCA) para 40.
17  Van Wyk v Unitas Hospital (Open Democratic Advice Centre as Amicus Curiae) [2007] ZACC 24; 2008 (2) SA
472 (CC) para 20.

of delay,18 the importance of the issue to be raised and the prospects of success.19
The grounds upon which the City‟s application for the extension was based, to
which Aurecon strenuously objected, were scanty, at best. It merely acknowledged
that the relevant time frames had expired and that it consequently required an
extension under s 9(1); made a bare allegation that the interests of justice would be
served if the extension was granted and the matter was allowed to proceed and
then asserted that condonation may in fact not be necessary because it became
aware of the full extent of the reasons for the award when it received the forensic
report on 22 October 2012 and accordingly brought its review application
timeously.

[18] Among its objections, Aurecon raised the obvious fact that the City must
have had knowledge of the decision, and the reasons for it, by 31 October 2011
and of the alleged irregularities, before it commissioned the forensic audit. It also
pointed out that the City‟s founding affidavit gave no information about the date
on which the auditors were appointed, the nature of the prior complaints received
by it and when it received them and provided no reasonable explanation for the
lengthy delay in launching the review application. The City‟s response to the
objections was as terse as its initial explanation. It disclosed only that the auditors
were appointed in August 2012 following allegations of corruption in the award of
the tender and that it had „some relevant information at its disposal pursuant to
which it appointed‟ the auditors but was unaware of „any reviewable irregularities‟
at that stage. The exact nature of that information, when it came to its knowledge
and its source were not revealed.

18  Ethekwini Municipality v Ingonyama Trust [2013] ZACC; 2014 (3) SA 240 (CC) para 28.
19 Van Wyk v Unitas Hospital paras 20, 22; Camps Bay Rate Payers’ and Residents Association v Harrison [2010]
ZASCA 3; [2010] (2) All SA 519 (SCA) para 54.

[19] Thus the period of a whole year between the date of the award (31
October 2011) and the submission to the City of the forensic report (22 October
2012) was barely accounted for. And the further two and a half month delay
between the submission of Aurecon‟s response to the report (31 January 2013) and
the institution of the proceedings on 16 April 2013 was not explained at all. The
information furnished by the City for its delay was manifestly inadequate and
simply did not provide any basis on which to determine the reasonableness
thereof. And its terseness seems deliberate in light of the pertinent objections
raised about the scantiness of its founding affidavit in this regard. One is left
wondering why the City was not candid with the court. The delay was inexcusable
and for this reason alone the court a quo should not have granted the application
for review.

[20] Despite this finding, it is necessary to deal with the alleged irregularities,
with which the City persisted on appeal so as to assess if the fair process
demanded by the constitutional and legislative procurement framework to ensure
even treatment of all the tenderers and the best outcome was followed.20 As stated
above, the City‟s counsel relied on what he labelled „glaring irregularities in the
procurement process and the City‟s obligation to comply with s 217 of the
Constitution for his submission that the interests of justice warranted the grant of
the extension of the 180 day time limit. The approach to be followed in this
exercise has recently been formulated by the Constitutional Court as follows in
AllPay Consolidated v Chief Executive Officer, SASSA:21
„The proper approach is to establish, factually, whether an irregularity occurred. Then the
irregularity must be legally evaluated to determine whether it amounts to a ground of review
under PAJA. This legal evaluation must, where appropriate, take into account the materiality of

20  AllPay Consolidated v Chief Executive Officer, SASSA [2013] ZACC 42; 2014 (1) SA 604 (CC) paras 24, 38 to
40. See also Steenkamp NO v Provincial Tender Board, Eastern Cape [2006] ZACC 16; 2007 (3) SA 121 (CC)
para 60.
21 Ibid, paras 28 and 29.

any deviance from legal requirements, by linking the question of compliance to the purpose of
the provision, before concluding that a review ground has been established. … Once that is
done, the potential practical difficulties that may flow from declaring the administrative action
constitutionally invalid must be dealt with under the just and equitable remedies provided for by
the Constitution and PAJA.‟

The extension of the validity period of Aurecon’s bid
[21] Clause 140 of the SCMP provides for the extension of the validity period of
tenders by the chairperson of the BEC, provided that the original validity period
(60 days in this case) has not expired, that all tenderers are given an opportunity to
extend it and that the extension is agreed to by the tenderer in writing. It was not
disputed that the purpose of these provisions is to ensure that tenders are accepted
while they are still open for acceptance by permitting the extension of the validity
period thereof. And the extension is required to be in writing to provide proof that
the extension has actually been agreed to by the relevant tenderer.

[22] In this regard, the complaint was that Aurecon and the other tenderers were
not officially requested to extend the validity period of their tenders. What had
happened is this. On 26 August 2011, the power station‟s project manager, Mr van
Rooi, who was also a member of the BEC, instructed his colleagues, Ms J Parks
and Ms N Gaffoor, by an email also copied to the BEC‟s chairman, to request an
extension of Aurecon‟s bid which was about to expire on 11 September 2011. Mr
van Rooi wrote to them again on 1 September to check if the extension had been
obtained. This correspondence was forwarded to Mr Webb who duly offered the
required extension by a period of 60 days by return email to Mr van Rooi and Ms
Gaffoor on 2 September 2011. None of the other tenderers (who had already been
found ineligible) were invited to extend their tenders. The complaint therefore was
that Aurecon made its offer to extend by responding to an internal email. In
respect of the other tenderers, it was contended that the SCM department had

allowed the tender to expire without inviting them, to their prejudice, to extend
the period for making their bids, as the tender should have been taken as non-
responsive and fresh tenders invited.

[23] It is unnecessary to require a „formal‟ request from the tenderer in the
present circumstances. Clause 140 merely requires an agreement by the affected
tenderer in writing, and a decision by the chairperson before the expiration date,
both of which were achieved in this case. In any event, if the procedure followed
was irregular and the City should have issued a formal request to Aurecon, such
irregularity is trifling and is purely a matter of form. And the complaint relating to
the other tenderers has no merit whatsoever for the simple reason that they had
already been found ineligible at that stage and were out of the picture.
Significantly, the only appeal brought by one of the unsuccessful tenderers was
dismissed by the City‟s delegated appeal authority and those findings have not
been impugned.

The withdrawal of Aurecon’s tender qualifications
[24] The tender document listed returnable documents to be completed by the
tenderers. Among these documents was schedule 15 dealing with „Proposed
Amendments and Qualifications by Tenderers‟ which provided that
„The Tenderer should record any proposed deviations or qualifications he may wish to make to
the tender documents in this Returnable Schedule. Alternatively, a tenderer may state such
proposed deviations and qualifications in a covering letter attached to his tender … The
Tenderer‟s attention is drawn to clause F.3.8 of the Standard Conditions of Tender referenced in
the Tender Data regarding the Employer‟s handling of material deviations and qualifications‟.
Clause F.3.8 of the contract document sets out the test for responsiveness of
tenders, which includes a requirement „to clarify or submit any supporting
documentation within the time for submission stated in the employer‟s written
request‟, failing which the tender will be considered non-responsive. In terms of

clause F.3.8.2 of the Standard Conditions of Tender, the employer must „[r]eject
a non-responsive tender offer, and not allow it to be subsequently made responsive
by correction or withdrawal of the non-conforming deviation or reservation‟.

[25] Tenderers were therefore invited in terms of these provisions to record any
proposed deviations or qualifications they wished to make to the tender
documents. Aurecon accepted the invitation and proposed certain additions to the
documents including a clause in terms of which the City would indemnify it
against liability resulting from exposure to hazardous substances such as asbestos.
The BEC rejected the proposed qualification and asked Aurecon to withdraw it,
failing which its tender would be considered non-responsive. Aurecon acceded to
the request and unconditionally withdrew the proposed qualification. The City
objected to this conduct on the strength of the auditors‟ finding that it afforded
Aurecon an unfair advantage over other tenderers as they were not given a similar
opportunity to amend their tender documents.

[26] In view of clause F.3.8.2, I agree with Aurecon‟s argument that the only
valid criticism that may possibly be levelled against the BEC in this instance is
that it did not reject its tender, as it had done with the other tenders, on the basis
that the proposed qualifications rendered it non-responsive.  In terms of clause
F.2.8.2 of the Standard Terms of Contract, a responsive tender is one that
conforms to all the terms, conditions and specifications of the tender documents
without material deviation. Whether or not a deviation or qualification is material
is obviously a question to be determined by the BEC in its discretion taking into
account the eligibility criteria set out in the Standard Terms of Contract and the

Tender Data. It would appear from the BEC‟s conduct that it did not consider the
proposed qualification to be of a disqualifying nature.22

[27] Importantly, clause F.4.2 of the Standard Terms of Contract makes
provision for negotiations with preferred tenderers and permits the employer „to
negotiate the final terms of the contract with tenderers identified through a
competitive tendering process as preferred tenderers provided that such
negotiation: a) does not allow any preferred tenderer a second or unfair
opportunity; b) is not to the detriment of any other tenderer; and c) does not lead
to a higher price than the tender as submitted.‟ The similarly worded clause 231 of
the SCMP grants the City Manager the same right. These provisions make clear
that the mere proposal of qualifications cannot in itself render a bid non-
responsive. It was common cause that when Aurecon was asked to withdraw its
qualifications it had become the City‟s preferred tenderer. In that case the City
was entitled to negotiate the final terms of the contract with it.  Needless to say,
the other tenderers had already been eliminated from the process in the initial
evaluation for failing to meet the relevant eligibility criteria. There would,
therefore, have been no room to negotiate anything with them. In any event, it is
not known what amendments they should have been allowed to make so it is not
possible to determine if the BEC could have exercised its discretion in their
favour.

Aurecon’s ‘refusal’ to provide its annual financial statements
[28] Clause F.2.18.1 of the contract enjoins a tenderer to provide „on written
request by the Employer, where the tendered amount inclusive of VAT exceeds

22 Mr Davidson‟s concern about the qualification and his proposal to consider another tenderer, Kayad Knight
Piesold (Pty) Ltd, which had been disqualified because it was not registered with the Engineering Council of South
Africa, as was required in the bid specifications, seems to have fallen by the wayside.

R10 million … audited annual financial statements for 3 years, or for the period
since establishment if established during the last 3 years, if required by law to
prepare annual financial statements for auditing‟.  In terms of F.2.17 a tender may
be rejected as non-responsive if the tenderer fails to comply with this request. The
object of the provisions is obviously to enable the employer to assess the
tenderer‟s financial credentials and its commercial capacity to execute a large
contract.

[29] On the basis of these provisions Aurecon was asked to furnish the BEC with
its audited financial statements. Citing confidentiality concerns, Aurecon offered
to submit only summarised audited financial statements but tendered to make the
required documents available for perusal „around the table by the relevant parties
at your convenience‟. Thereafter, in a letter signed by a Mr Bindeman on behalf of
Mr Shnaps, Aurecon was informed that its tender was deemed non-responsive for
its failure to comply with the request. Preparations were set in motion to cancel
and reissue the tender. However, Aurecon wrote back and lodged its objection to
this decision. It argued that it had not refused to give the City access to the
required information, had now reviewed its policy and was willing to accede to the
City‟s request. It was then allowed to submit the documents and did so. As it
subsequently turned out, Mr Bindeman, who wrote the letter merely to serve as a
threat to Aurecon and get it to comply, was not a BEC member and neither had
any involvement with the evaluation process nor any authority to act on the BEC‟s
behalf. In fact Mr Shnaps disagreed with the contents of the letter purportedly
issued in his name.

[30] The City‟s argument, based on the auditors‟ findings in this regard, was that
once Aurecon‟s tender was deemed non-responsive it could not be revived and
that the City officials, who allowed the submission of the financial statements,

acted in breach of clause F.3.8.2. That breach, it was contended, founded basis
for the review of the award of the tender in terms of s 6(2)(b),23 (c) and (e)(iii) of
PAJA. This argument has no merit in view of Mr Bindeman‟s lack of authority to
issue the „deeming‟ letter in the first place; the purpose of clause F.2.18.1; the use
of the permissive word „may‟ in clause F.2.17 and the simple fact that Aurecon
did not refuse to comply with the City‟s request. And even if it had, the BEC
allowed the submission of the relevant documents in the exercise of its clear
discretion which was not criticised in any manner in the papers.

(a) BEC members did not evaluate the functional scoring of the tenders as a
collective; (b) a non-member of the BEC participated in the scoring in breach
of the Rules of Order; and (c) the meeting of 5 August 2011 was not properly
constituted
[31] The City complained that the BEC had not complied with its Rules of
Order24 which, in its view, require it to conduct bid evaluations as a collective and
convene properly constituted meetings and that a non-member of the BEC
participated in the scoring process. This was so, it was contended, because the
administrative evaluation for price and HDI (Historically Disadvantaged
Individual) criteria had been conducted by one member, Ms Park. The
functionality technical evaluation was done in part by Mr Eybers, who was not a
member of the BEC, on the instructions of the chairperson, Mr Davidson, who
merely checked the scoring sheet. The City argued that once the tenders passed
administrative evaluation, the BEC should have scored the functionality of the
tenderers as a group and their failure to do so breached clause 5.3.3(f)  of the

23 In terms of s 6(2)(b) of PAJA „[a] court or tribunal has the power to judicially review an administrative action if
… a mandatory and material procedure or condition prescribed by an empowering provisions was not complied
with‟.

24 The City of Cape Town Terms of Reference, Rules of Order and Implementation Guidelines Regulating the
Conduct of meetings of Bid Specification, Evaluation and Adjudication Committees.

Rules of Order,25 compromised the validity of the award and constituted a
reviewable irregularity in terms of s 6(2)(b) and (c) of PAJA.

[32] Regarding complaint (a) the first point is that the Rules of Order merely
provide that quorums do not apply and that no decision of a Bid Specification,
Evaluation or Adjudication Committee will be valid if the relevant committee is
not properly constituted.26 They contain no provisions which require the BEC to
act as a collective when evaluating tenders. Interestingly, clause 201 of the SCMP
provides that the Responsible Agent (ie internal project managers who are City
officials or external consultants appointed by the City responsible for the
administration of a project or contract),27 shall carry out a preliminary evaluation
of all valid tenders received and shall submit a draft tender evaluation report to the
BEC for evaluation.  Furthermore, rule 14.2 contemplates matters being decided
„by a supporting vote of a majority of the members present‟ where decisions
cannot be made by consensus. These provisions show beyond doubt that it was not
envisaged that the BEC would perform the entire evaluation process as a
collective. In any case there was only one eligible tenderer here which was
nonetheless scored for quality and met the requirements even after the other
tenders were found non-responsive. Therefore the fact that the BEC did not score
and evaluate the tenders as a collective did not amount to an irregularity.

[33] As for complaint (b), no provision in the Rules of Order or any other
relevant document precludes a non-member of the BEC from participating in or
advising the BEC in connection with the scoring process or attending committee

25 The clause stipulates that where points are allocated for functionality, each member of the BEC must, during the
evaluation, consider the score allocated to each tenderer, whether functionality was scored by the BEC members or
by an advisor/technical person assisting the BEC.
26 Clause 13.
27 As defined in clause 1.48 of the SCMP.

meetings in an advisory capacity. Instead, clause 198 of the SCMP allows that
„[w]here appropriate, a representative of Internal Audit and/or Legal Services may
form part of [the BEC], which may also include other internal specialists/experts
as necessary … [e]xternal specialists/experts may advise [the BEC], as required‟.
And clause 5.1.4 of the Rules of Order provides that „[w]hen appropriate, a
representative of Internal Audit and/or Legal Services may assist the BEC, which
may also include an internal or external specialist expert, when necessary. The
regulatory framework therefore allows participation by non-members of the BEC
in the evaluation of tenders and Mr Eybers‟ involvement in the scoring process
was not irregular.

[34] The validity of the BEC meeting of 5 August 2011 was challenged on the
basis that its constitution was irregular as Mr Davidson was absent and a non-
member of the committee, Mr Tshivase, attended as an observer in the company
of Ms Park and Mr van Rooi. I have already dealt with the right of non-members
to participate in the business of the BEC and nothing more need be said in this
regard. As for the absence of the chairperson, it appears that the meeting was not
legally required anyway and that there would have been no cause for complaint if
it had not been held as long as the BEC performed its functions, which it did. At
worst, the resolutions taken there would not be invalid. The next meeting of 25
August 2011 was, however, attended by all the BEC members and the proceedings
of the previous meeting were unanimously adopted. Importantly, the decision to
make the recommendations contained in the BEC‟s report to the BAC, signed by
all its three members to signify their agreement with its contents, was taken by
consensus reached at the properly constituted meeting of 25 August 2011 in
accordance with the provisions of rule 14.1 of the Rules of Order.28 The
chairperson‟s absence at the earlier meeting was thus of no moment.

28  Which enjoins the committees to attempt to take decisions by consensus.

Aurecon had access to information not provided to other tenderers
[35] There was another complaint that was not raised in argument, but that was
not expressly abandoned, that Aurecon, by virtue of its involvement in the pre-
feasibility study, was in possession of a compact disc which contained additional
information not contained in the tender documents which was not provided to the
other bidders who were thus unfairly prejudiced. It was argued that Aurecon
enjoyed an unfair advantage over the bidders in that it had been placed in
possession of pertinent information relating to the tender even before the formal
initiation of the tender. However, Aurecon‟s version that such information was not
relevant for the tender and was in fact offered to tenderers for a different, though
related contract, and prospective tenderers were supplied with all the necessary
information, was not placed in dispute in the affidavits and that puts paid to the
complaint.

Were clause 95 of the SCMP and regulation 27(4) contravened?
[36] The City‟s real complaint, and the only one of substance, was that Aurecon
was precluded from bidding for the tender or any tender pertaining to the
decommissioning of the power station which is based on the draft scope of work
prepared by the JV. For its view, the City relied on clause 95 of the SCMP read
with regulation 27(4).

[37] The City argued that because the JV‟s draft scope of work was incorporated
almost in its entirety into the final scope of work prepared by the City‟s Bid
Specification Committee (the BIC) Aurecon was „involved with the bid
specification committee‟ and was therefore disqualified from bidding for any
tender connected with the decommissioning of the power station. It was argued

that it was not necessary, for purposes of these provisions, to show that a
tenderer actively participated in the actual proceedings of the BIC, or actively
attempted to influence the design or content of the specification, or even that the
tenderer intended or hoped to influence the outcome of the tender process, or that
the resultant outcome was indeed so influenced. This was so because the ambit of
the relevant provisions, read against the backdrop of s 217 of the Constitution, is
sufficiently wide that it need merely be shown that the tenderer was afforded an
unfair advantage over the other tenderers who participated in the procurement
process, so continued the argument.

[38] The court a quo favoured this line of argument. In its view „to allow a party
to bid for a contract, the specifications of which are to a significant extent
determined by the same party, is inconsistent with the values underpinning
fairness‟ even if the BIC and BEC may have bona fide believed that this conduct
was lawful. The court a quo concluded that allowing Aurecon to tender rendered
the procurement process unfair and constituted a ground for review in terms of s
6(2)(c) of PAJA.

[39] The provisions relied upon by the City form part of a framework with which
municipal supply management policies must comply. To comply with s 111 of the
MFMA, which requires each municipality and each municipal entity to implement
a supply chain management policy, the City adopted the SCMP which reads in
relevant part:
„81. Bid specifications must be drafted in an unbiased manner to allow all potential suppliers to
offer their goods and services. . . .
89. All bid specifications and bid documentation must be compiled by an ad-hoc bid
specification committee constituted for each project or procurement activity.
90. The Bid Specification Committee shall be comprised of at least three City officials, an
appointed Chairman, a responsible official and at least one Supply Chain Management

Practitioner of the City.
91. Where appropriate a representative of Internal Audit and/or Legal Services and/or an
external specialist advisor may form part of this committee.
94. The City Manager, or his delegated authority, shall, taking into account section117 of the
MFMA [which bars councillors from serving on municipal tender committees], appoint the
members of the Bid Specification Committees.
95. No person, advisor or corporate entity involved with the bid specification committee, or
director of such corporate entity, may bid for any resulting contracts. [My emphasis.] . . .
102. The bid documentation and evaluation criteria shall not be aimed at hampering
competition, but rather to ensure fair, equitable , transparent, competitive and cost effective
bidding, as well as the protection or advancement of persons, or categories of persons, as
embodied in the preferential procurement section of this Policy.‟

[40] Regulation 27 sets out the requirements with which municipal supply chain
management policies must comply. It reads:
„(1) A bid specification committee must compile the specifications for each procurement of
goods or services by the municipality or municipal entity.
(2) Specifications–
(a) must be drafted in an unbiased manner to allow all potential suppliers to offer their goods or
services;
(b) must take account of any accepted standards such as those issued by Standards South Africa,
the International Standards Organisation, or an authority accredited or recognised by the South
African National Accreditation System with which the equipment or material or workmanship
should comply;
(c) where possible, be described in terms of performance required rather than in terms of
descriptive characteristics for design;
(d) may not create trade barriers in contract requirements in the forms of specifications, plans,
drawings, designs, testing and test methods, packaging, marking or labelling of conformity
certification;
(e) may not make reference to any particular trade mark, name, patent, design, type, specific
origin or producer unless there is no other sufficiently precise or intelligible way of describing
the characteristics of the work, in which case such reference must be accompanied by the words

“equivalent”;
(f) must indicate each specific goal for which points may be awarded in terms of the points
system set out in the supply chain management policy of the municipality or municipal entity;
and
(g) must be approved by the accounting officer prior to publication of the invitation for bids in
terms of regulation 22.
(3) A bid specification committee must be composed of one or more officials of the
municipality or municipal entity, preferably the manager responsible for the function involved,
and may, when appropriate, include external specialist advisors.
(4) No person, advisor or corporate entity involved with the bid specification committee, or
director of such corporate entity, may bid for any resulting contracts‟.

[41] In order to give meaning to clause 95 of the SCMP and regulation 27(4)
regard must be had to their wording, read in context, and having regard to their
purpose and the background to the preparation and production of the SCMP.29 The
key words „involved with‟ are not defined either in the SCMP or in the
Regulations. Their ordinary grammatical meaning is „connected, engaged typically
in an emotional or personal relationship‟.30 Read against this backdrop, the plain
wording of the relevant provisions and the scheme of regulation 27, which deals
mainly with the composition of the bid specification committee, make clear that
the provisions were meant to ensure a fair, equitable, transparent, competitive
procurement process by combating corruption and nepotism. The wide meaning
ascribed to the provisions by the City, which would preclude a prospective
tenderer who has no personal connection whatsoever to the committee from
bidding, does not make commercial sense and goes against standard engineering
practice. This was attested to by Mr H Silbernagl, an engineer with extensive
consulting engineering experience and knowledge of the accepted norms and
practices in the consulting engineering industry. None of Mr Silbernagl‟s evidence

29  Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA) paras
17 –26.
30 Oxford University Press The Concise Oxford English Dictionary 10 ed (2002) at 746.

was gainsaid. He expressed the view that barring engineers with intimate
knowledge of a particular project because of their prior involvement therewith
from tendering would lead to unnecessary and wasteful expenditure, and would
not be in the best interests of taxpayers and organs of state, and that they should
rather be encouraged to tender and put such knowledge to good use. Indeed, his
evidence finds support in the Treasury Guidelines which, inter alia, approve the
appointment of consultants for tasks that flow from previous work carried out by
them, and state that such consultants should be permitted to participate in any
competitive process for „downstream‟ assignments if they express interest.31

[42] The BEC did not act unreasonably by accepting Aurecon‟s tender offer as
was found by the court a quo. The court, whose task was to determine whether the
BAC‟s decision fell within the bounds of reasonableness and fairness, as required
by the Constitution,32 misinterpreted and misapplied the provisions of clause 95 of
the SCMP and regulation 27(4) and, in that course, impermissibly usurped the
BAC‟s function by making the order it granted.

[43] It is clear from the above discussion that none of the so-called irregularities
constituted irregularities at all. In any event, it is firmly established in our law that
administrative action based on formal or procedural defects is not always invalid
and that legal validity is concerned not with technical but also with substantial
correctness which should not always be sacrificed to form.33 I do not understand
AllPay to overturn this principle.  There the Court pointed out that
„Once a particular administrative process is prescribed by law, it is subject to the norms of
procedural fairness codified by PAJA. Deviations from the procedure will be assessed in terms

31 For example, paragraph 5.9.5.5 of the National Treasury MFMA Circular No 53: Amended Guidelines in respect
of Bids that include Functionality as a Criterion for Evaluation dated 3 September 2010.
32  Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Tourism & others [2004] ZACC 15; 2004
(4) SA 490 (CC) para 45.
33 Baxter Administrative Law (1984) at 446.

of those norms of procedural fairness. That does not mean that administrators may never
depart from the system put in place or that deviations will necessarily result in unfairness. But it
does mean that, where administrators depart from procedures, the basis for doing so will have to
be reasonable and justifiable, and the process of change must be procedurally fair.‟34

[44] It bears repeating that Aurecon‟s tender was found to be the only responsive
one among all those which were submitted (the other tenders having been
disqualified for non-compliance with the tender requirements) and that the alleged
irregularities occurred after the other tenders had been found ineligible. So no
other tenderer could have been prejudiced in any event, having regard also to the
City‟s own disavowal of fraud or corruption in the procurement process,
Aurecon‟s evaluation for quality even after the other tenders were disqualified,
and the BEC‟s uncontested conclusions that its price was reasonable, that it has
the necessary experience, competence and resources to successfully complete the
project. Aurecon is the only party which has suffered prejudice in the process, for
the City‟s missteps which were seemingly challenged not to protect the public
interest but solely for political expedience (as it was described in the affidavits).

[45] The public interest would undoubtedly be best served by bringing this long
outstanding matter to finality for the benefit of the community; holding the City to
the contract it concluded freely and voluntarily with Aurecon, an entity that has
demonstrated its ability to provide the services required in a competitive tender
process, and avoiding the potential prejudice arising from reputational damage to
the innocent tenderer.35 Aurecon has had to contend with baseless imputations of
impropriety against it. The City simply did not make out a case for an extension in
terms of s 9(1) and in fact failed to establish any basis for the review application at
all. The court a quo should have dismissed its application on this basis and grant

34  At Paragraph 40.
35 Moseme Road Construction CC & others v King Civil Engineering Contractors (Pty) Ltd & another [2010]
ZASCA 13; 2010 (4) SA 359 (SCA) paras 15-17.

the counter-application.

[46] In the result, the following order is made:
1 The appeal is upheld with costs.
2 The order of the Western Cape Division of the High Court, Cape Town is set
aside and replaced with the following:
„1 The application is dismissed with costs.
2 Aurecon South Africa (Pty) Ltd (Aurecon) was, and is, not precluded, in terms
of clause 95 of the City of Cape Town‟s Supply Chain Management Policy, the
Supply Chain Management Regulations made in terms of s 168 of the Local
Government: Municipal Finance Management Act 56 of 2003 or for any reason,
from bidding for the City of Cape Town‟s Tender 459C/2010/2011 or for any
tender pertaining to the decommissioning of the Athlone Power Station which is
based on the draft scope of work prepared by the joint venture between Aurecon
Engineering International (Pty) Ltd and ODA (Pty) Ltd.
3 The City of Cape Town is ordered to pay the costs of Aurecon‟s counter-
application.‟

____________________

MML MAYA

Acting Deputy President

APPEARANCES

APPELLANT:

A G Sawma SC

Instructed by:

Weavind & Weavind Attorneys, Pretoria

Spangenberg Zietsman & Bloem, Bloemfontein

RESPONDENT:
I Jamie SC (with PS van Zyl)

Instructed by:

Cliffe Dekker Hofmeyr, Cape Town

Honey Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

FROM

The Registrar, Supreme Court of Appeal

DATE

9 December 2015

STATUS

Immediate

Please note that the media summary is for the benefit of the media and does not form part of
the judgment.

Aurecon South Africa (Pty) Ltd v City of Cape Town (20384/2014) [2015] ZASCA 209 (9
December 2015)

MEDIA STATEMENT

Today, the Supreme Court of Appeal (SCA) upheld an appeal by Aurecon South Africa (Pty) Ltd, a
provider of engineering, management and specialist technical services (Aurecon) and dismissed the
order of the Western Cape Division of the High Court, Cape Town against the City of Cape Town (the
City).

In the court a quo, the City had launched judicial review proceedings against its own decision to
award a tender to Aurecon in 2011 for the Provision of Professional Services: Decommissioning of
Athlone Power Station (the tender). The tender flowed from the draft scope of work (or prefeasibility
exercise) prepared by Aurecon Engineering International (Pty) Ltd, Aurecon’s wholly-owned
subsidiary, and ODA (Pty) Ltd as a joint venture. The court a quo reviewed and set aside the decision
of the City to award the tender, and set aside any contract which may have come into existence
between the City and Aurecon as a result of the tender award. The court a quo also dismissed
Aurecon’s counter-application for a declaratory order that it was not precluded from bidding for any
tender.

The issue before the SCA was whether the City had, in awarding the tender, committed procedural
and substantive irregularities in contravention of the provisions of the Promotion of Administrative
Justice Act 3 of 2000 (PAJA). The court also had to determine, firstly, whether the court a quo was
correct in its finding that it was in the interest of justice to provide the City an extension in terms of s
9(1) of PAJA, where the City exceeded the 180 days’ time limit for lodging judicial review proceedings
stipulated in s 7(1) of PAJA.

The SCA, in rejecting the City’s arguments and upholding Aurecon’s contestations, held that the
City’s explanation for its delay was inadequate, did not make out a case for an extension of the time
limit in terms of s 9(1) of PAJA, and failed to establish any basis for the review application.
Accordingly, the SCA upheld Aurecon’s appeal and ordered that Aurecon was not precluded from
bidding for the awarded tender, or for any tender pertaining to the decommissioning of the Athlone
Power Station based on the draft scope of work prepared by the joint venture between Aurecon
Engineering International (Pty) Ltd and ODA (Pty) Ltd.

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