21 May 2010 by

The relief available to disgruntled tenderers

In the circumstances where a tenderer is unsuccessful with its tender submission to an organ of state (whether national, provincial or local government and/or state owned enterprises) for the supply of goods or services, such a tenderer has the right to take the decision of the organ of state on judicial review.

However, the reasons for taking an organ of state's decision on judicial review should be well-founded on the grounds that the procurement process followed was not fair, equitable, transparent, competitive or cost-effective, as required in terms of the prevailing legislation governing government procurement.

If an unsuccessful tenderer believes that the reason its tender submission was not properly considered by the organ of state was as a result of the aforesaid grounds, it should immediately after becoming aware of the decision of the organ of state inform its attorneys to take the necessary legal steps to safeguard its rights.

It must be noted that tender submissions by tenderers to an organ of state to supply goods or services do not create any contractual relationship and no clear contractual right flows out of the tender submission. The remedies available to an unsuccessful tenderer are restricted to the South Africa public law being judicial review as provided for by the Promotion of Administrative Justice Act, 3 of 2000.

In order to safeguard an unsuccessful tenderer's right to a successful judicial review, the unsuccessful tenderer must immediately approach a court for an interim interdict suspending the conclusions of a contract or the commencement of work under the contract pending the outcome of the judicial review proceedings. An unsuccessful tenderer will, in order to be successful with an interim interdict, need to show the following to a court:

  • a clear right or, if not clear, that it has a prima facie right;
  • that there is a well-grounded apprehension of irreparable harm if the interim relief is not granted and the ultimate relief (by way of the review proceedings) is eventually granted;
  • that the balance of convenience favours the granting of an interim interdict; and
  • that the applicant has no other satisfactory remedy.
  • The unsuccessful tenderer should, immediately after becoming aware of the decision of the organ of state, proceed with an interim interdict to suspend the conclusion of a tender contract or the commencement of work under the tender contract. If not, the unsuccessful tenderer faces the real risk that a court could decline to set a side a clearly invalid administrative act as a result of the passing of time and due to the extent of the work already performed by the successful tenderer between the time the review proceedings were launched and when the court finally grants its order. The relief which the unsuccessful tenderer seeks from the court could then become incapable of practical implementation and merely be of academic interest only.

An unsuccessful tenderer, in exceptional circumstances, could have a claim for damages against the organ of state should the unsuccessful tenderer be able to prove fraud, corruption or dishonesty on the part of the organ of state or its employees.

Tayob Kamdar
Consultant
Dispute Resolution: Litigation, Arbitration and Mediation

and

Jackwell Feris
Senior Associate
Dispute Resolution: Litigation, Arbitration and Mediation

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