Ekurhuleni Metropolitan Municipality (the Municipality) released an invitation to tender in 2020 for the management of electricity and water meter readings and credit control processes in two separate geographical areas.

The closing date was 11 June 2020. The bids had a validity period of 120 days after the closing date, ending on 9 October 2020.

The Municipality emailed all bidders at 11h47 on 9 October 2020, to inquire whether they would accept an extension until 31 December 2020. The Municipality required confirmation “on or before 9 October 2020”. An incorrect email address led to the notification not being delivered to one of the bidders (Aurecon). It was re-sent at 15h32 on the 9th of October to the correct email address. On 12 October 2020, some three days after the bid validity period expired, Aurecon responded and agreed to the extension.

Aurecon and Ntiyiso were awarded the contracts on 24 November 2020 and notified of their appointment on 17 December 2020.

The High Court (Johannesburg)

Takubiza Trading & Projects CC (Takubiza), one of the unsuccessful bidders, filed an urgent review application in the Gauteng Division of the High Court in Johannesburg.

The main thrust of Takubiza’s application was that the award to each of Aurecon and Ntiyiso had been made after the tender validity period had already lapsed.

Takubiza’s counsel referred to a series of cases. These included one where Telkom published a request for proposals to appoint service providers. By the time the tender validity period expired, a decision had not been made, nor had the tender validity period been extended. Despite this, Telkom continued to evaluate and shortlist bidders. E-mails were sent to the 15 shortlisted bidders only after the tender validity period had expired asking them to agree to an extension.

The Judge in the Telkom matter stated: “As soon as the validity period of the proposals had expired without the applicant awarding a tender, the tender process was complete – albeit unsuccessfully – and the applicant was no longer free to negotiate with the respondents as if they were simply attempting to enter into a contract.”

The precedent established with the Telkom case, was applied in the Searle matter, involving the Road Accident Fund. It was followed in several subsequent matters that came before the courts.

The Johannesburg High Court agreed and set aside the award of the tender to both Aurecon and Ntiyiso, but suspended the declaration of invalidity for a period of 150 days to enable the Municipality to commence with a new tender process.

The Matter in the SCA

The Metro did not agree with this decision and takes the matter to the Supreme Court of Appeal.

The Municipality argued that in all of these previous matters, the extension notification was only given AFTER the tender validity had expired, whereas Ekurhuleni sent their notice BEFORE the validity period had expired (at 11:47 on 9 October 2020).

The SCA did not agree with this contention, and reasoned as follows:

1. The notification required ‘confirmation’ from all bidders ‘on or before 9 October 2020’, but this did not occur. In Telkom, Searle and the cases that followed them, the notification is only sent by the organ of state after the specified period has expired. However, both stand on the same fundamental basis, and both must inevitably lead to the same result. If an organ of state does not receive a favourable response before a validity period expires, then it is the same as one that issues a notice only after the validity period expires.

2. According to the Preferential Procurement Regulations, a tender is a written offer made in response to a request by an organ of state to provide services, works, or goods, through price quotations or competitive tendering processes. As a result, if the tender isn’t accepted in time without an extension, the offer falls away. Consequently, from the 10th of October, the Municipality had no valid bid from Aurecon to accept.

3. All participants in the tender process must consent to the extension of the tender validity period. The tender will come to an end unless an extension request is submitted in time and all tenderers respond favourably before the end of the validity period.

4. Aurecon’s confirmation on 12th did not somehow turn back the clock to 9th and breathe new life into the process retroactively. By the expiration date of the tender validity period, nothing could be done because the tender process had already been concluded, albeit unsuccessfully.

Outcome of the matter in the SCA

Not surprisingly, the SCA dismissed the appeal and awarded costs to Takubiza. 

Key considerations: 

1. A tender is an offer that is open for acceptance until the end of the validity period.
2. In order to extend the tender validity period, the consent of all the tender participants is required.
3. The request for extension must be notified to all participants in good time before the validity expiry date.
4. The favourable response from all tender participants must be received before the validity date expires.