This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
Recent legal decisions from Kenya and South Africa highlight the importance of properly enforcing tender compliance requirements since the defensibility of a tendering process often turns on the validity of a purchasing institution’s tender compliance assessments.
For example, in its September 2020 decision in Guardforce Group Limited v. Public Procurement Administrative Review Board, the High Court of Kenya upheld the rejection of a non-compliant bid. The dispute dealt with a security services solicitation. The applicant’s bid was rejected for failing to submit a required certificate confirming the payment of employee health benefits. The applicant’s subsequent bid protest was rejected by Kenya’s Public Procurement Administrative Review Board. The applicant appealed the Board’s decision to the Court.
However, the Court rejected the appeal after finding no reason to overturn the Board’s ruling or the original decision to reject the bid as non-compliant. As the Court stated, “the aspect of compliance with the mandatory requirement of the tender document aims to promote fairness, equal treatment, good governance, transparency, accountability and to do away with unfairness” since the failure to enforce compliance “translates to unequal and unfair treatment of other tenderers and, if allowed, may encourage abuse of power and disregard of the law by not only bidders, but also procuring entities.” As this case illustrates, enforcing bid compliance serves as an essential cornerstone of the public tendering process.
Similarly, in its November 2021 decision in Roadmac Surfacing (PTY) Ltd v. Johannesburg Roads Agency (Soc) (Pty) Ltd, the High Court of South Africa upheld the decision to reject a bid as non-compliant due to that bidder’s failure to meet the past experience requirements in the bid solicitation. The dispute dealt with a solicitation for road surfacing tenders in the City of Johannesburg. While the applicant challenged the government’s rejection of its bid, the Court upheld that rejection after finding that the bidder failed to meet the minimum technical score since it lacked the required five years experience and was only able to show three years and five months experience performing the required work. The Court upheld the Agency’s decision to reject the bid and dismissed the legal challenge.
Further, in its June 2022 decision in SMEC South Africa (Pty) Ltd v. The City of Cape Town, the High Court of South Africa upheld the rejection of a counter-offer bid. The dispute dealt with two solicitations issued by the City of Cape Town for transportation engineering, planning, and management services and for the management of railway sidings. The complainant bid on both opportunities and challenged the rejection of both of its bids for non-compliance. The Court upheld the bid rejections, finding that both bids contained qualifications to the proposed contract terms that purported to limit the bidder’s liability for non-performance. As the Court stated, these proposed changes would shift greater risk from the bidder to the City and constituted a material deviation that rendered the bids non-responsive. The Court upheld the City’s decision to reject both bids and dismissed the legal challenge.
Finally, in its July 2022 decision in Xoliskwa Tini Facilities Management Services (Pty) Ltd v. Minister of Public Works and Infrastructure, the High Court of South Africa struck down a contract that was awarded to a non-compliant bid. The dispute dealt with the solicitation of office rental space and related parking. A losing bidder alleged that the government awarded the contract to a non-compliant bid. The Court agreed. While the solicitation stated that “bids that are not accompanied by written proof that the bidder is authorised to offer the accommodation for leasing will not be considered”, the Court found that the government awarded the contract to a bid that contained a condition sale agreement rather than a firm arrangement for the required space. After finding that the sale had not yet been perfected, but was subject to a “suspensive condition”, the Court found that the bid failed to meet the compliance requirement and should have been rejected. The Court set aside the resulting contract award as legally invalid.
As these cases illustrate, purchasing institutions should ensure that they enforce their tender compliance requirements with a high degree of precision since tender compliance assessments remain a high-risk target for legal challenge.
