THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Case No: 199/10
In the matter between:
GAUTENG MEC FOR HEALTH
Appellant
and
3P CONSULTING (PTY) LTD
Respondent
Neutral Citation:
Gauteng MEC for Health v 3P Consulting (Pty) Ltd

(199/10) [2010] ZASCA 156 (1 December 2010)
Coram:
Heher, Van Heerden, Mhlantla, Tshiqi JJA and

Bertelsmann AJA
Heard:
12 November 2010
Delivered:
1 December 2010
Summary:
Services agreement between provincial department
and private company – renewal thereof – whether
original services agreement and/or renewed services
agreement void for want of legality and/or authority,
alternatively void on the application of private law
principles – whether order for specific performance of
renewed services agreement appropriate remedy

ORDER

On appeal from: South Gauteng High Court, Johannesburg (Lamont J
sitting as court of first instance):

The appeal is dismissed with costs, including the costs of two counsel.

JUDGMENT

VAN HEERDEN JA (HEHER, MHLANTLA, TSHIQI JJA AND
BERTELSMANN AJA concurring):
Introduction
[1] In 2007, the respondent, 3P Consulting (Pty) Ltd (‘3P Consulting’),
a management consulting company specialising in providing public sector
reform solutions, allegedly entered into a services agreement with the
appellant, the Gauteng Department of Health (‘the Department’), for an
initial period of two years, renewable for a further period of two years. In
2009, the parties allegedly agreed to extend the services agreement for a
period of three years to 31 May 2012. In July 2009, the Department
repudiated the services agreement as extended.
[2] On application by 3P Consulting to the South Gauteng High Court,
Lamont J granted a declaratory order to the effect that the services
agreement between the parties had been duly renewed by agreement

between the parties for a further period of three years. The high court also
ordered the Department to implement the renewed services agreement and
to allow 3P Consulting to do so. Hence this appeal by the Department,
which serves before us with the leave of the court below.
Factual background
[3] Towards the end of April/beginning of May 2007, the Department
published advertisements calling for proposals by service providers to draft
and facilitate the implementation of a so-called ‘turnaround strategy’ for
the Department. The terms of reference for this strategy did not stipulate
the expected duration of the proposed agreement.
[4] On 25 May 2007, 3P Consulting submitted its proposal to the
Department. This proposal was for a project duration of an initial period of
two years, renewable for a further period of two years. According to the
proposal, the renewable element was ‘to ensure the optimum skill transfer,
protection of intellectual property and to ensure continuity’. The proposal
continued –
‘It is anticipated that the entire team . . . will reduce on an annual basis by
approximately 20% per annum as the capacity support programmes enable the GDoH
[Gauteng Department of Health] internal staff to be trained to sufficient levels. It is
therefore a major objective for the PMU [Project Management Unit] to undertake
extensive capacity support.’
[5] Accordingly, the term of the Project Management Unit (‘PMU’)
proposed by 3P Consulting was an effective four years. That this was
understood by the Departmental Acquisition Council (‘DAC’), the
procurement decision-making body of the Department, is clear from the

Minutes of the DAC meeting held on 4 June 2007, during which the DAC
considered the ‘[r]equest of the GSSC [Gauteng Shared Services Centre]
for Health DAC approval of the award [to 3P Consulting] in respect of the
request for proposal for the establishment of a Project Management Unit
for a period of two years’. Notwithstanding the reference to a period of two
years, the DAC, in approving the request, commented (as it put it, ‘for
clarity’) that –
‘The planned Health Agency will function in managing high cost assets/resources and
leveraging funding sources. Core high level staff will be transferred from the PMU;
gradually escalating migration of staff with a view of changing the structure over 4
years from predominantly external to internal staff.’ (Emphasis added.)
[6] On 5 June 2007, the Department informed 3P Consulting that its
proposal ‘for the establishment of a Project Management Unit for a period
of 2 years has been approved, subject to the signing of a service level
agreement’. (Emphasis added.) On 2 July 2007, the Director-General of the
Department, who is also the Chair of the DAC and the accounting officer
of the Department, and Mr Richard Payne, the Managing Director of 3P
Consulting, signed the services agreement. The relevant clauses of this
agreement read as follows:
‘2.2   Notwithstanding the date of signature, the Agreement shall commence on 5th June
2007 and shall terminate on 4 June 2009, unless extended as contemplated in 2.3
. . . below.
2.3 The Department agrees to renew this Agreement for a further period of two years
on substantially the same terms as this Agreement, it being agreed that 6 (six)
months prior to 5th June 2009, the parties shall have afforded each other an
opportunity to negotiate any matters relating to the renewal referred to herein
(except for the renewal itself).’ (Emphasis added.)

[7] 3P Consulting duly discharged its obligations in terms of the
services agreement.
[8] In about October/November 2008, 3P Consulting and the
Department entered into negotiations for the renewal of the services
agreement, as foreshadowed in clause 2.3 of the agreement. On about 4
December 2008, 3P Consulting submitted a proposal to the Department, in
which it motivated an extension of the services agreement (of the
‘operational mandate’ of the PMU) for a period of three years to 2012. This
was followed by a letter dated 12 February 2009, addressed to the Chair of
the DAC by Mr Payne, in which ‘the reason for requesting the extra year’
was stated to be that several specified PMU projects required the support
and expertise of 3P Consulting over the course of the next three years. This
letter was accompanied by a final proposal for such extension dated 23
January 2009.
[9] After various internal Departmental procedures had been followed,
Mr Ramaano, the Director of Supply Chain Management in the
Department, in his capacity as Head of Procurement, wrote to 3P
Consulting on 23 March 2009 as follows:
‘The Gauteng Department of Health hereby informs 3P Consulting that your proposal
for the extension of the renewal of the PMU contract has been approved by the
Department for a period of three years ending 31st May 2012 for the contract value of
R273 366 500.
Please contact the Project Management Office for further information.’
[10] After the April 2009 general elections, a new Member of the
Executive Council (‘MEC’) for Health was appointed for Gauteng. During

June 2009, the Department began refusing to allow 3P Consulting’s
employees and sub-contractors access to its premises to perform their work
under the renewed services agreement. When 3P Consulting addressed
letters to the Department to highlight these breaches, the Department
simply failed to respond.
[11] Eventually, on 1 July 2009, the Department wrote to 3P Consulting
and informed it that ‘the Department will no longer perform in terms of the
purported extension of the contract’. The reason given for this stance was
that –
‘[W]hen the tender was initially advertised, it was indicated that the contract would be
for a period of 2 years . . . .
However, in implementing the award of the tender to your company, the Department
signed a contract in terms of which it bound itself to renew the contract for a further
period of 2 years. On or about 17 February 2009, the DAC approved a period of 3 years
for the extension of the contract.
. . . .
The tender document indicated to would-be tenderers that the tender was for a period of
two years which the Department could not vary after the award of the tender.
Accordingly, when the Department took the decision to extend the contract for a further
period of 3 years, it acted arbitrarily and failed to take into account relevant
considerations like the provisions of the law and the expectations of other potential
service providers.
From a point of view of administrative justice and the public, the Department’s decision
to extend the contract was wrongful and irregular. It is clearly reviewable by [a] Court
of competent jurisdiction.’
When 3P Consulting instituted proceedings against the Department,
however, the Department back-tracked from its previous position and

admitted that the original tender document did not in fact limit the project
to a two year period.
Discussion
[12] The Department contended that both the original and the renewed
services agreements were void for want of legality and/or authority. It
relied on certain irregularities which had allegedly occurred in the tender
process both prior to and after the conclusion of the original services
agreement with 3P Consulting. The Department also sought to impugn the
validity of the renewal agreement on certain private law grounds, which –
with one exception – it had not raised in its answering affidavit.
[13] As regards the validity of the agreements on public law principles,
3P Consulting countered the contentions of the Department by arguing that
the Department’s decisions to enter into the original services agreement
with 3P Consulting and to renew the agreement in March 2009 constituted
administrative action on the part of the Department. Accordingly, in order
for the Department to avoid the consequences of these agreements, it had to
apply to court to review and set aside the decisions. Furthermore, any
review application by the Department, being made more than two years
since the original services agreement was concluded and more than 180
days after the renewed services agreement was concluded, would be
grossly out of time, in breach of the requirements of ss 7 and 9 of the
Promotion of Administrative Justice Act 3 of 2000 (‘PAJA’) and highly
prejudicial to 3P Consulting.
[14] In the light of the view that I take in respect of the validity of both
the original services agreement and the renewed services agreement, it is

not necessary to canvass the arguments relating to review of administrative
action.
Validity of the original services agreement
[15] In arguing that the original services agreement was void, the
Department relied on various statutory provisions. First, s 217(1) of the
Constitution and s 38(1)(a)(iii) of the Public Finance Management Act 1 of
1999 (‘the PFMA’), both of which provide that, when an organ of state
contracts for goods or services, it must do so in accordance with a system
which is fair, equitable, transparent, competitive and cost-effective.
Second, in terms of s 76(4)(c) of the PFMA –
‘(4)   The National Treasury may make regulations or issue instructions applicable to all
institutions to which this Act applies [including provincial departments – see s 3
of the PFMA, read with the definition of ‘department’ in s 1 of the Act]
concerning –

. . . .
(c) the determination of a framework for an appropriate procurement and
provisioning system which is fair, equitable, transparent, competitive and cost-
effective.’
[16] Pursuant to s 76(4)(c) of the PFMA, a Framework for Supply Chain
Management was promulgated in Government Gazette No 25767 of 5
December 2003 as Treasury Regulations. In accordance with this
Framework, the National Treasury is required and authorised to issue
instructions to accounting officers/authorities in respect of the appointment
of consultants. This it does by way of practice notes. In this regard,
National Treasury Supply Chain Management Practice Note No SCM 3 of
2003 provides that –

‘Consultants should be appointed by means of competitive bidding processes, whenever
possible.
. . . .
1.3 For the purpose of this practice note, the term consultant includes, among others,
consulting firms . . . .’
[17] Relying on Municipal Manager: Qaukeni Local Municipality &
another v FV General Trading CC 1  and Eastern Cape Provincial
Government & others v Contractprops 25 (Pty) Ltd, 2  the Department
argued that failure to comply with any of the abovementioned
constitutional and legislative provisions renders any contract concluded in
contravention thereof void ab initio. The court does not, so the argument
went, have a discretion whether or not to enforce a contract which does not
comply with the prescribed procedures.3
[18] With reference to various documents, the Department contended
that, despite the fact that 3P Consulting’s proposal was for a contract
duration of two years renewable for a further period of two years, the
Department had, after a due and proper tender process, given approval for a
two year contract only. Thus, according to the Department, any attempt by
the parties to circumvent that approval by concluding a contract for a
longer period was unlawful.

1 2010 (1) SA 356 (SCA) para 16.
2 2001 (4) SA 142 (SCA) paras 8 and 9.
3 Municipal Manager: Qaukeni Local Government v FV Trading CC para 14.

[19] As pointed out by counsel for 3P Consulting, however, the
Department conveniently ignores certain parts of those documents and, in
any event, fails to put them in their proper context. It is common cause that
the DAC is the supreme procurement decision-making body of the
Department. It is therefore documents emanating from the DAC which
must be scrutinised to determine the ambit of the approval given by it.  It is
clear from the Minutes of the DAC meeting held on 4 June 2007, that the
DAC was fully aware of the fact that the term of the PMU proposed by 3P
Consulting was an effective period of four years – the Minutes expressly
record that the project would require a gradually escalating migration of
staff over a period of four years. The Director-General of the Department
signed the DAC Submission Approval Form accompanying these Minutes
in her capacity as Chair of the DAC.
[20] The subsequent appointment letter dated 5 June 2007 made the
approval of 3P Consulting’s ‘proposal for the establishment of a Project
Management Unit for a period of two years’4 subject to the signing of a
service level agreement. This condition was fulfilled by the conclusion on 2
July 2007 of the services agreement, signed on behalf of the Department by
the Chair of the DAC. The services agreement reflected the parties’
understanding – as this appeared from the proposal itself and the
abovementioned comment by the DAC in approving the proposal – by
providing for an initial contract period of two years and a renewal for a

4 As stated above, the proposal by 3P Consulting was in fact for a project duration of an initial period of
two years, renewable for a further period of two years: see para 4 above.

further period of two years subject to any amendment the parties might
agree to make.5 That agreement contains an ‘entire agreement’ clause.6
Thus, the period for which the DAC approved the contract depends on what
the written agreement says and, by application of the parole evidence rule,
any extrinsic evidence on the meaning of the relevant clause of the
agreement would be precluded.7
[21] The Department also submitted that, as the contract which the
Department was authorised to conclude with 3P Consulting was for two
years only, the Department’s Director-General and Chair of the DAC who
signed the services agreement on behalf of the Department lacked the
authority to do so. Not only was this denial of authority not raised at all in
the Department’s answering affidavit, but it is also untenable given the
facts set out above.
[22] It follows from the above that there was no failure by the
Department to comply with the constitutional and legislative provisions

5 The renewal itself was non-negotiable – see clause 2.3 of the services agreement, as quoted in para 6
above.
6 Clause 17.2 which provides that ‘[t]his agreement contains all the express provisions agreed upon by the
Parties with regard to the subject-matter of the Agreement and the Parties waive the right to rely upon any
alleged express provision not contained in the Agreement’.
7 See Johnston v Leal 1980 (3) SA 927 (A) at 942H-943C. See further Schalk van der Merwe, LF van
Huyssteen, MFB Reinecke & GF Lubbe Contract General Principles 3ed (2007) pp 173-176 and the
other authorities there cited.

relied on by the Department8 and that its attack on the validity of the
original services agreement must fail.
The validity of the renewal of the services agreement
[23] The Department contended that the purported renewal of the
services agreement for three years (one year longer than previously agreed)
and at increased contract values per annum9 occurred without following a
public bidding process and in a manner which could not be said to be ‘fair,
equitable, transparent, competitive and cost-effective’. Hence the approval
by the DAC purporting to extend the period and to increase the value of the
services agreement, as well as any contract which might have flowed from
this approval, was unlawful and invalid.  Once again, the Department relied
for this contention on s 217(1) of the Constitution and s 38(1)(a)(iii) of the
PFMA.
[24] In dealing with this contention, the High Court relied on Regulation
16A6.4 of the Treasury Regulations published under s 76 of the PFMA in
Government Gazette No 27388 dated 15 March 2005 (GN R225), which
expressly provides for an exemption from the competitive bid requirement
which must usually accompany appointments of consultants 10 in cases
where it is impractical to engage in a competitive tendering process.

8 See paras 15 and 16 above.
9 The initial contract was for R60 million per annum (excluding VAT). The renewal was approved at a
contract value of R273 366 500 for three years (including VAT), thus an average of more than R90
million per annum (including VAT).
10 See National Treasury Supply Chain Management Practice Note No SCM 3 of 2003, the relevant part
of which is quoted in para 16 above.

Lamont J held that ‘the only person reasonably possible to perform the
works is the applicant [3P Consulting], which was integrally involved with
the completion of the project, having been engaged in it for the initial
period of two years.’ Thus, according to the learned judge, the three year
renewal of the services agreement fell squarely within the ambit of this
regulation.
[25] Before this court, counsel for 3P Consulting also relied on this
regulation, despite the fact that it had not been mentioned in their papers. It
is, however, not give any further consideration to this finding of the court
below. It is clear that the renewal of the services agreement did not give
rise to a new services agreement; it simply extended the duration of the
services agreement for a period of three years. Properly interpreted, clause
2.3 of the agreement provides for a renewal for a period of two years on the
same terms as before subject only to such amendments as may be
negotiated and agreed between the parties. The negotiations between the
parties in late 2008 ultimately gave rise to an agreement that the services
agreement would be renewed for a period of three years, instead of the two
years provided for in clause 2.3, and that the contract value for each of the
remaining three years would be increased. The increases were described by
both the Department’s Programme Management Office and by the
Department’s Director of Supply Chain Management as ‘being ‘marginal
increases only allowing for inflation, and also taking cognisance of the
strategy to empower developing service providers in the body shop’. It is
clear that these increases properly flowed from the negotiations
contemplated in clause 2.3 of the services agreement. As there was no new
services agreement, there was no new procurement of goods or services and

it was therefore in my view not necessary to follow a competitive public
bidding process in this regard.
[26] It follows from the above that the Department’s attack on the
validity of the renewal of the services agreement on public law grounds is
without merit.
[27] In its Heads of Argument and in argument before us, the
Department sought to rely on a number of private law grounds for the
invalidity of the renewal of the services agreement. With one exception,
none of these grounds was raised by the Department in its answering
affidavit, but appeared for the first time in the Department’s Heads of
Argument.
[28] As was stated by Joffe J in Swissborough Diamond Mines (Pty) Ltd
& others v Government of the Republic of South Africa & others:11
‘It is trite law that in motion proceedings the affidavits serve not only to place evidence
before the Court but also to define the issues between the parties. In so doing the issues
between the parties are identified. This is not only for the benefit of the Court but also,
and primarily, for the parties. The parties must know the case that must be met and in
respect of which they must adduce evidence in the affidavits.
. . . .
An applicant must accordingly raise the issues upon which it would seek to rely in the
founding affidavit. It must do so by defining the relevant issues and by setting out the
evidence upon which it seeks to discharge the onus of proof resting on it in respect

11 1999 (2) SA 279 (T) at 323F-G.

thereof. As was held in Prokureursorde van Transvaal v Kleynhans 1995 (1) SA 839
(T) at 849B in regard to a constitutional issue:
“Dit is myns insiens vir die behoorlike ordening van die praktyk absoluut noodsaaklik
dat konstitusionele punte nie deur advokate as laaste debatspunt uit die mou geskud
word maar pertinent in die stukke as geskilpunt geopper word sodat dit volledig
uitgepluis kan word deur die partye ten einde die Hof in staat te stel on dit behoorlik te
bereg.”
The dictum is not only of application to constitutional issues – it applies to all issues.
Nor is the dictum only of application in the context of a founding affidavit – it applies
equally to answering affidavits and replying affidavits.’12
While it is so that a party in motion proceedings may advance legal
arguments in support of the relief or defence claimed by it even where such
arguments are not specifically raised in the papers, provided that all
relevant facts are before the court, 13 this will not be allowed if it causes
prejudice to the other party.14

[29] The only ‘private law grounds’ relied on by the Department which
can conceivably be said to raise legal issues are its contentions that clause
2.3 of the services agreement was either no more than an agreement to
negotiate between the parties and thus unenforceable, or that the said clause
constituted an option to renew the services agreement and was not
exercised timeously.

12 See also Government of the Province of KwaZulu-Natal & another v Ngwane 1996 (4) SA 943 (A) at
949B-D; Eskom Holdings Ltd & another v New Reclamation Group (Pty) Ltd 2009 (4) SA 628 (SCA)
para 17.
13 See, for example, Cabinet for the Territory of South West Africa v Chikane & another 1989 (1) SA 349
(A) at 360G-H.

[30] As I have already stated,15 it is clear from the initial proposal by 3P
Consulting 16  and the comment made by the DAC in approving the
proposal17 that clause 2.2 of the services agreement provided for an initial
contract period of two years, while clause 2.3 provided for an automatic
renewal for a period of two years subject only to such amendments as
might be negotiated and agreed upon between the parties. On this
construction, clause 2.3 constitutes neither an agreement to negotiate nor an
option to renew.
[31] From the above, it follows that the Department’s attempt to impugn
the validity of the renewal of the services agreement using private law
principles is unsustainable.
Relief
[32] As indicated above, the high court ordered the Department to
implement the renewed services agreement and to allow 3P Consulting to
do so. The Department contended that the services agreement and any
renewal thereof involved the rendering of consulting and personal services,
the quality of the performance of which would be impossible to gauge or
police. For this reason, submitted the Department, even if the renewal of
the services agreement was valid, the court below ought to have exercised
its discretion to refuse specific performance of such agreement.

14 See Minister van Wet en Order v Matshoba 1990 (1) SA 280 (A) at 285E-I.
15 See para 25 above.
16 See para 4 above.

[33] Once again, this is a contention which is conspicuously absent from
the papers. I agree with the submission made by counsel for 3P Consulting
that this omission is fatal to the Department’s contentions in this regard. It
has been stated by this court that the party seeking to avoid an order of
specific performance bears the onus of proving that there is an impediment
to the grant of specific performance: it is not ‘incumbent on a plaintiff who
claims specific performance, the grant or refusal of which is in the final
result in the discretion of the Court, to anticipate in his declaration the
possible grounds which a defendant may advance to induce the Court to
exercise its discretion against the grant of specific performance’.18 The
Department made no attempt in its papers to put up evidence to discharge
this onus. Moreover, there is in any event nothing in the papers to suggest
that the obligations of 3P Consulting are vague or imprecise or that, as
submitted by counsel for the Department, ‘lengthy disputes are likely to
occur in regard to whether the contract is in future being properly
performed’. The order for specific performance made by the court below
must therefore stand.

17 See para 5 above.
18 See Tamarillo (Pty) Ltd v B N Aitken (Pty) Ltd 1982 (1) SA 398 (A) at 442H-443B.

Conclusion
[34] Accordingly the appeal is dismissed with costs, including the costs
of two counsel.
______________________
B J VAN HEERDEN
JUDGE OF APPEAL

APPEARANCES
APPELLANT:
A GAUTSCHI SC (with him S GUMEDE)
Instructed by Biccari Bollo Mariano Inc,
Johannesburg;

Van der Merwe & Sorour, Bloemfontein.

RESPONDENT:
G MARCUS SC (with him K HOFMEYR)
Instructed by Eversheds, Johannesburg;

Matsepes, Bloemfontein.

REPUBLIC OF SOUTH AFRICA

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:

1 December 2010

Status:

Immediate

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

Gauteng MEC for Health v 3P Consulting (Pty) Ltd
(199/10) [2010] ZASCA 156 (1 December 2010)

Media Summary

The Supreme Court of Appeal today dismissed an appeal by the Gauteng Department of Health against a
judgment of the South Gauteng High Court in which that court had declared a services agreement between
the Department and a private consulting company, 3P Consulting (Pty) Ltd, to have been duly renewed by
agreement between the parties for a period of 3 years. The high court had also ordered the Department to
implement the renewed services agreement and to allow 3P to do so.

In April/May 2007, the Department called for proposals by service providers for the drafting and
implementation of a ‘turnaround strategy’ for the Department. The terms of reference issued by the
Department did not stipulate the expected duration of the proposed agreement.  3P then proposed a project
for an initial period of two years, renewable for a further period of two years. That this was understood by
the Departmental Acquisition Council (DAC), the procurement decision-making body of the Department, is
evident from the minutes of a DAC meeting held on 4 June 2007 to consider the proposed award of the
contract to 3P Consulting. On 5 June 2007, the Department informed 3P that its proposal ‘for the
establishment of a Project Management Unit for a period of two years had been approved, subject to the
signing of a service level agreement’. The services agreement subsequently signed by the parties provided
for a contract period of two years, renewable for a further period of two years subject to any amendment the
parties might agree to make.

In October/November 2008, 3P and the Department entered into negotiations for the renewal of the
services agreement. 3P submitted a motivated proposal for an extension of the services agreement for a
period of three years. After various Departmental procedures had been followed, the Department’s Director
of Supply Chain Management and its Head of Procurement informed 3P that its proposal had been
approved. However, after the April 2009 general elections and the appointment of a new MEC for Health for
Gauteng, the Department began refusing to allow 3P’s employees and subcontractors access to its
premises to perform their work. Eventually, on 1 July 2009, the Department repudiated the renewed
services agreement.

Before the SCA, the Department contended that both the original and the renewed services agreements
were void for want of legality and/or authority, relying on certain irregularities which had allegedly occurred

in the tender process both before and after the conclusion of the original services agreement. It also
attacked the validity of the renewed agreement on certain private law grounds. The Department referred to
section 217(1) of the Constitution and section 38(1)(a)(i) of the Public Finance Management Act 1 of 1999,
both of which require an organ of state, when contracting for goods and services, to do so in accordance
with a system which is fair, equitable, transparent, competitive and cost-effective. The Department argued
that it had, after a due and proper tender process, given approval for a two year contract only. Thus any
attempt to circumvent that approval by concluding a contract for a longer period was unlawful.

The SCA analysed the documents on which the Department relied and concluded that the services
agreement reflected the understanding by the DAC and 3P that the initial contract period was two years,
with a renewal for a further period of two years subject to such amendment the parties might agree to make.
This meant that there was no failure by the Department to follow the constitutional and legislative provisions
on which it relied and its attack on the validity of the services agreement had to fail. The SCA likewise
rejected the Department’s submission that the Chair of the DAC who signed the agreement on behalf of the
Department had no authority to do so, a contention that had not been raised in the Department’s answering
affidavit.

As regards the validity of the renewal of the services agreement, the Department contended that the
purported renewal for three years occurred without following a public bidding process and contrary to the
constitutional and statutory provisions referred to above. The SCA rejected this contention, holding that the
renewal of the services agreement did not give rise to a new services agreement, but simply extended the
duration of the agreement for a period of three years. As there was no new services agreement, there was
no new procurement of goods or services and it was thus not necessary for the Department to follow a
competitive public bidding process.

The Department’s reliance on certain private law grounds for the invalidity of the renewal of the services
agreement also failed. With one exception, none of these grounds had been raised by the Department in its
papers. Moreover, its contention that the renewal clause of the services agreement was either no more than
an agreement to negotiate between the parties and thus unenforceable, or that this clause constituted an
option to renew the services agreement and was not exercised timeously, was rejected by the SCA.

The Department’s final submission was to the effect that, because the services agreement and any renewal
thereof involved the rendering of consulting and personal services, the quality of the performance of which
would be impossible to gauge or police, an order of specific performance was not an appropriate remedy.
The SCA was not impressed with this submission. Not only was this contention conspicuously absent from
the papers, but also there was nothing in the papers to suggest that the obligations of 3P were vague or
imprecise and would give rise to lengthy disputes, as argued by the Department.

The Department’s appeal was thus dismissed with costs, including the costs of two counsel.

--- ends ---