Eskom has successfully appealed a high court judgment that set aside and declared unlawful tenders worth about R16 billion that were to provide maintenance and outage repair services at its 15 coal-fired power stations.
The tenders were awarded in October 2021 to Actom and Steinmller Africa.
The Supreme Court of Appeal (SCA) on Monday dismissed with costs an application by Babcock Ntuthuko Engineering to review, set aside and declare unlawful the contracts awarded in October 2021 to Actom and Steinmller Africa and to set aside the November 2022 judgment by Judge Anthony Millar in the High Court in Pretoria.
BackgroundThe high court and SCA judgments followed Eskom on 6 August 2018 publishing a request for froposals (RFP) inviting tenders for maintenance and outage repair services for boiler pressure parts and high outage repair services for pressure pipework at its 15 coal-fired power stations.
Babcock submitted its proposal by the extended deadline of 24 October 2018 but was disqualified because it failed to submit a current ISO 3834 certificate that verifies that a company has the requisite resources, systems and personnel to weld to a required quality and standard.
The RFP listed Certification to ISO 3834 as a mandatory returnable for evaluation and specified that failure to comply with that condition would result in disqualification at the tender evaluation stage.
Eskom on 7 October 2021 awarded the tender jointly to Actom and Steinmller Africa, with Actom appointed to provide maintenance and outage services at seven of the 15 power stations and Steinmller at eight.
Babcock was aggrieved by its disqualification and launched an application in the High Court in Pretoria seeking to review and set aside the tender awards, claiming the decisions to disqualify it at the evaluation stage and to split the tender award between Actom and Steinmller were irrational, unlawful, and invalid.
The judgment by Judge Millar upholding Babcocks contentions in respect of its disqualification found that Babcocks interpretation of the tender condition was to be preferred, which was that the condition did not require the submission of an ISO certificate but merely a statement by a bidder that it had been certified.
The high court additionally found that the requirement regarding the ISO certification was ambiguous, and Eskom was thus obligated to allow disqualified bidders to comply by submitting the certificate after the deadline.
Its failure to do so rendered Babcocks disqualification procedurally unfair in terms of the Promotion of Administrative Justice Act.
The court consequently reviewed and set aside the tender awards, declared the contracts concluded related to the tender unlawful, and ordered Eskom to conduct a fresh tender process within stipulated time frames.
However, the court suspended the order declaring the contracts entered into between Eskom, Actom and Steinmller invalid, subject to compliance with its directives regarding the finalisation of the fresh tender process.
RFP unambiguousThe SCA judgment written by acting judge John Smith, with judges Yvonne Mbatha, Nolwazi Mabindla-Boqwana, Sharise Weiner and acting judge Nobulawo Mbhele concurring, said the RFP was unambiguous regarding the requirements in respect of mandatory documents or mandatory returnables and the fate of tenders that did not include them.
Judge Smith said the RFP specified that the ISO certification was a mandatory returnable for evaluation and repeatedly cautioned bidders they would be disqualified if mandatory returnables are not submitted on or before the stipulated deadlines.
He said the Standard Conditions of Tender also specified that mandatory returnables must be submitted by the stipulated deadline, and failure to do so would render the tender non-responsive.
Smith added that the tender conditions explicitly stated that the mandatory tender returnables will not be requested and may not be submitted after tender submission deadline.
He said the RFP also stated that a clarification meeting with Eskom representatives would take place on 20 August 2018. That meeting clarified what exactly was meant by the term Certification to ISO 3834 mentioned in the RFP, particularly whether bidders were required to submit a certificate or merely confirm that they had been duly certified.
He said the minutes of the meeting show that bidders were told they were required to submit an ISO 3834 certificate and were reminded that [t]enderers who do not submit mandatory tender returnables as at stipulated deadlines will be disqualified.
Smith said it is common cause that at least two other bidders were disqualified because they also failed to submit ISO 3834 certificates.
He said Babcock contends it should have been treated differently because it was an incumbent c
