This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its September 1987 decision in G&L Builders CC v. McCarthy Contractors Ltd., the South East Cape Local Division Court found that the government had properly rejected a tender that contained a counter-offer. The case dealt with a tender call issued by the South African Department of Education and Training for the erection of additional classrooms at various schools in Port Elizabeth and neighbouring districts. The tender call specified that “only conventional brick-type structures were to be erected.” The low bidder submitted a tender based on an alternative “Tuffwall” system that featured a simulated face brick finish. Its tender was rejected in favour of the second-lowest bidder whose bid complied with the specifications.
The low bidder sued, arguing that the government was required to award it the contract as low bidder. The Court disagreed, noting that the low bidder’s failure to follow the prescribed specifications entitled the government to reject the low bid. After noting that the tender call required a brick construction method and that the proposed “Tuffwall” method used precast panels for wall construction, the Court determined that the government was correct in rejecting the low bidder’s tender as unconventional.
As the Court concluded, by submitting a tender that fails to meet the specifications, a bidder “runs the risk of its tender failing on that ground alone.”
This case provides one of many examples of how the failure to meet the prescribed eligibility requirements can compel the rejection of a low bid. Purchasing institutions should therefore be careful when crafting their minimum standards, since those eligibility requirements may have the effect of eliminating the best price from the competition.
