Compliance is only part of public procurement. Credibility and integrity carry just as much weight.
We’re living in tender times, and no, not Otis Redding’s soft-hearted kind. We’re talking about a procurement landscape where being on the treasury’s restricted suppliers list (even temporarily) can be costly for your business (if you are a bidder).
Disqualification of a bidder from a tender can happen without an acknowledgment of non-compliance or wrongdoing on their part and failure to comply with tender validity periods can be detrimental to an organ of state’s procurement of goods and services needed for public service delivery.
A recent decision by the supreme court of appeal (SCA) in the case, Aventino Ecotroopers Joint Venture and Others vs MEC for Roads & Transport Gauteng and Others encapsulates this.
In this case, Aventino — which submitted bids in response to tenders advertised by the department of roads and transport — was excluded, despite being scored the highest by the bid evaluation committee.
Aventino challenged its exclusion on two fronts. First, it alleged that the extension of the bid validity period had not lawfully taken place and, because of this, the department’s tender had expired. Second, the unlawfulness of their disqualification from the tender on allegedly “unfounded allegations”, even though it was the highest scoring bidder.
Validity of bid period
A bid validity period refers to the time during which a bidder, having submitted a bid in response to an advertised tender, remains committed to that bid. During this period, the bidder cannot modify or withdraw their offer and their offer remains valid only for that bid validity period.
A bid validity period is granted so that the procuring entity can evaluate and identify their preferred bidder and award it accordingly. This period can be extended in accordance with the legal prescripts in applicable supply-chain management legislation or a procuring entity or institution’s policy.
The first argument posited by Aventino was that, if a bidder failed to respond to an invitation to extend the validity period of the tender, the department could not disqualify that bidder and then proceed to consider the bids of those who agreed to the extension (“the disqualification challenge”).
The tenders lapsed because the department failed to extend the bid validity periods in time (prior to the lapse thereof), and therefore any award made after the expiration of the bid validity period, were invalid. But the court rejected this.
The court found that the “disqualification challenge” cannot prevail because the exclusionary stipulation in clause 4.14 of the department’s supply-chain management policy created a regime that permitted the department to exclude bids from further consideration in the event that a bidder either declined to extend the bid validity period or failed to respond to the department’s invitation to extend.
All bidders must be invited to extend the period
Aventino attempted another argument, claiming that to validly extend the bid validity period, all bidders must be invited to extend the period. But the SCA rejected this argument, finding that the supply-chain management policy did not require unanimous consent, it only required that the proper process be followed, which it was.
Paragraph 4.14 of the supply-chain management policy stated that “[b]idders may either accept or reject the extended validity period and those who do not wish to extend the validity period would be regarded as non-responsive and would be excluded from further assessment”.
In other words, the supply-chain management policy simply allows bidders to accept or reject an extension individually. Those who reject the extension of the validity would be excluded from the tender process on the basis of being “non-responsive”, but the procurement process could continue for those who agree.
As such, the attempt by Aventino to have the tender award set aside based on the grounds relating to the validity of the bid was rejected by the SCA.
Disqualified due to prior misconduct
The real crux of the case was Aventino’s disqualification from being awarded the tender. Despite being ranked first by the bid evaluation committee among all the bidders, the department’s bid adjudication committee decided to exclude the company from further consideration based on findings made by the Special Investigating Unit. This recommendation ultimately led the Department to decide not to award the tender to Aventino.
The Special Investigating Unit found that Aventino had made misrepresentations in securing a contract related to a Limpopo housing project, particularly by falsely claiming to have assembled a qualified professional team for the project. The matter was subsequently referred to the Special Tribunal.
Aventino eventually settled the case without admitting guilt. However, the settlement included a consent order declaring the contract unlawful and void due to evidence against Aventino of misrepresentations to secure a tender, as well as an agreement to repay all money earned under the contract.
Although Aventino did not explicitly admit to any wrongdoing, the terms of the settlement were, in and of itself, damning. Aventino was subsequently placed on the treasury’s restricted supplier database but this listing was later removed on procedural grounds.
Underlying misconduct that gave rise to the listing
The bid evaluation committee flagged these findings for the bid adjudication committee, which in turn made it clear that its reasoning for not recommending Aventino was not solely based solely on the company’s listing on the treasury’s restricted supplier database. Rather, it was the underlying misconduct that gave rise to the listing.
This track record raised concerns about Aventino’s integrity and the bid adjudication committee was not prepared to recommend awarding a tender to a company implicated in credible allegations of dishonesty — even though the bid evaluation committee had ranked Aventino in first position.
The SCA agreed with the bid adjudication committee’s reasoning, holding that it was entitled to consider the evidence of serious misrepresentations even in the absence of a formal finding of guilt or a completed listing process. On this basis, the court found the bid adjudication committee’s decision to be reasonable, lawful and justified in the circumstances.
Credibility and integrity carry as much weight
The Aventino case is a reminder that in the world of public procurement, compliance of procurement prescripts is only part of the equation. Credibility and integrity carry just as much weight. Even the highest-ranked bidder can find themselves disqualified if their past conduct casts doubt on their trustworthiness to render public services at the cost of the public purse.
In an era of heightened scrutiny and accountability, bidders must not only tick the right procurement compliance boxes but also maintain a clean track record if they wish to secure public contracts. In the arena of procurement, these are tender times, indeed.
Roberto Oktober is a candidate attorney and Jaime-Lee Jacobs is a director at Herold Gie Attorneys.