IN THE HIGH COURT OF LESOTHO
(COMMERCIAL DIVISION)
HELD AT MASERU CCA/0115/2021
In the matter between:
FISCHER CONSULTING JOINT VENTURE APPLICANT
AND
MINISTRY OF PUBLIC WORKS
AND TRANSPORT 1ST RESPONDENT
ATTORNEY GENERAL 2ND RESPONDENT
ENGIDATA (PTY) LTD 3RD RESPONDENT
Neutral Citation: Fischer Consulting Joint Venture v Ministry of Public Works and Transport [2022] LSHC 312 Comm. (14TH DECEMBER 2022)
CORAM: MOKHESI J
HEARD: 27TH OCTOBER 2022
DELIVERED: 14TH DECEMBER 2022
SUMMARY
ADMINISTRATIVE LAW: Judicial review based on rationality of the decision of the 1st respondent to award the tender to the 3rd respondent despite critical shortcomings in its technical bid- Principles applicable to rationality review considered and applied.
ANNOTATIONS:
Cases
Albutt v Centre for the Study of Violence and Reconciliation and Others 2010 (3) SA 293 (CC)
Allpay Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer of the South African Social Security Agency and Others [2013] ZACC 42: 2014 (1) SA 604 (CC)
Chief Executive Officer of the South African Social Security Agency NO and Others v Cash Paymaster Services (Pty) Ltd [2011] ZASCA 13: 2012 (1) SA 216 (SCA)
Premier, Free State, and Others v Firechem Free State (Pty) Ltd [2000] (4) SA 413 (SCA)
Pharmaceutical Manufacturers’ Association of SA: in re ex parte President of the Republic of South Africa [2000] ZACC; 2000 (2) SA 674 (CC)
South African National Roads Agency Limited v City of Cape Town and Others; In Re: Protea Parkway Consortium v City of Cape Town and others [2014]4 ALL SA 497
Tšepe v Independent Electoral Commission and others LAC (2005 – 2006)
JUDGMENT
[1] Introduction
This is a review application by the applicant as one of the bidders in the bidding process for design, supply, installation and support of Lesotho Integrated Transport Information System (LITIS), conducted by the Ministry of Public Works’ Tender Panel. The applicant was excluded from the bidding process at the stage prior to its technical bid being evaluated, culminating in the 3rd respondent being the preferred bidder. The procurement process was done under the auspices of the World Bank Procurement Regulations for Investment Project Financing Borrowers (hereinafter “WB Regulations”). The Final Reliefs sought in the amended Notice of Motion were as follows:
“2. PART B: Final Relief
2.1 Reviewing and setting aside the decision of the 1st Respondent disqualifying the Applicants’ Technical Part bid at the first stage of the technical evaluation as irregular.
2.2 Finding that the Applicant’s Technical Bid was technically responsive and qualified for Economic Evaluation in terms of the Bidding document.
2.3 Directing that the 1st Respondent should evaluate the Applicant’s Financial submission and award the contract accordingly.
2.4 INTERDICTING the 1st Respondent from awarding the contract relating to LITIS to the 3rd Respondent.
2.5 Reviewing and setting aside the decision of the 1st Respondent to the effect that the 3rd Respondent’s Bid was technically responsive in terms of the bid document as unreasonable, irrational and unjustified in the circumstances.
2.6 REVIEWING and SETTING ASIDE the decision of the 1st Respondent to award the contract in relation to LITIS to the 3rd Respondent as unreasonable and irrational.
2.7 REVIWEING, SETTING ASIDE, and CORRECTING the 1st Respondent’s decision rejecting the Applicant’s Procurement-related complaint relating to award of contract to 3rd Respondent.
2.8 In the event that at the time the present matter is filed before court the 1st Respondent would have issued the letter of acceptance, awarded the contract to the 3rd Respondent and issued the contract Award notice, SETTIGN ASIDE the said Letter of Acceptance, contract award and Contract Award Notice, respectively.
2.9 ALTERNATIVELY, 2.3 above, DIRECTING that a Three-Member Independent Evaluation Panel appointed by the 1st Respondent to evaluate the Applicant’s Financial Part Bid and determine the Most Advantageous Bid for contract award by the 1st Respondent.
2.10 Finding and declaring that the 3rd Respondent was disqualified from the procurement process in terms of the bid document on account of its conflict of its conflict of interest in the procurement process.”
[2] Factual Background
Geared at developing and harmonizing road transport policies, laws, and standards for efficiency in cross-border transport and transit networks, transport and logistics, systems and procedures in the Common Market area for Eastern Southern Africa COMESA), the East African Community (EAC), and the Southern African Development Community (SADC), the European Union funded a project which is known as the Tripartite Transit Facilitation Programme (TTTFP). The aim of the project was to develop a more competitive, integrated and liberalized regional road transport market in the three economic zones mentioned in the preceding lines. Fischer Consulting which is a part of the Joint Venture (applicant) was the lead partner of the consortium of companies tasked with developing the economic zones (EA-SA) vehicle load management (VLM) strategy, vehicle regulation and standards for harmonizing EA-SA zone, pre-conditions for an operation EA-SA Transport Registers and Information Platform System (TRIPS).
[3] Consequent to the completion of the TTTFP project, Lesotho as the member country of SADC intend on implementing the TTTFP, of course subject to customization to suit local conditions and laws, sought and secured a loan from the World Bank (the Bank). In terms of the Agreement between the Bank and the Government of Lesotho, the procurement of goods, works, non-consulting services which are funded by the Bank (Procurement in Investment Project Financing -IFP) such as LITIS, should be conducted under the WB Regulations for IFP Borrowers.
[4] Bids were accordingly invited for supply, installation and support of LITIS with the aim of achieving the stated objectives of the TTTFP. The applicant (hereinafter “JV”) and the 3rd respondent were bidders in the bidding process, with the latter coming out successful and the former being eliminated at the stage prior to technical evaluation of its bid. After several unsuccessful request by JV to be provided with the Evaluation documents and unsuccessful protestation against its elimination from the bidding process, it launched the current application. Particularly relevant to the present proceedings, the 1st respondent, on 04 August 2021, informed the applicant through an email that its bid was unsuccessful for failure to meet the requirements of the bidding document, and that the envelop marked “Financial Part” would be returned to it.
[5] On 10 August 2021, following a written complaint by the applicant on being excluded from the procurement process, the 1st respondent explained why the applicant’s Technical Part Bid was excluded. It stated that its bid was eliminated because the applicant failed to meet the bid document requirements in the following respects (where relevant):
“However, your technical bid failed to meet that instruction as tabulated below:
Form FIN – 2.3.1: Historical Financial Performance – Form submitted and filled as required, however, Fischer Consulting JV was not compliant with Historical Financial Performance as its JV member (Sumo Inc.) did not meet the required criteria of at least three (3) years to demonstrate the current soundness of the Bidders financial position and its prospective long-term profitability as SUMO is newly established company in 2019 as per the information provide (sic) in ELI 2.1.2. The criteria that each JV members must meet the requirements.
Form ESP – 2.4.1: General Experience – Form submitted, however, Fischer Consulting JV was not compliant with General Experience as its JV member (Sumo Inc.) did not meet the experience under information system contracts in the role of prime supplier, management contractor, JV member, or subcontractor prior to the applicants submission deadline as was the requirement. The criteria were that each JV members must meet the requirements.
Your technical bid did not have Form MFA – Manufacture’s Authorization as required in page 65 of the bidding documents under clause 1.4 subcontractors/vendors/manufacturers which clearly states that
“Where a bidder offers to supply and install major items of supply under the contract that the Bidder did not manufacture or otherwise produce, the Bidder shall provide manufacture’s authorization, using the form provided in Section IV, showing that the Bidder has been duly authorized by the manufacturer or producer of the related sub system or component to supply and install that item in the Purchaser’s Country. The Bidder is responsible for ensuring that the manufacturer or producer complies with the requirements of ITB4 and 5 and meets the minimum criteria listed above for that item.”
The above deviations were considered material and therefore made your technical bid no-responsive to the bidding document.
Your bid was not evaluated in the FORM TECH-1 since it did not pass the above-mentioned evaluation criteria hence there is no score provided.”
[6] To this letter, the applicant, on 17 August 2021, responded by writing a letter in which it raised a number of issues, namely:
Why the 1st respondent did not make use of the clarification procedure under ITB 28 to seek clarity on issues it did not fully understand.
Provided response in relation to Form FIN 2.3.2, FORM EXP 2.4.1 and Form MFA: In respect of Form FIN 2.3.1 (Historical Financial Performance, it pointed out that it was wrong for the 1st respondent to eliminate it based on the criteria not provided for in row 2.3.1 of Form FIN which required of every bidder (including each member of the Joint Venture) to submit financial statements for the last three 3 years and not for at least three years to demonstrate the current soundness of the bidders’ financial position, as 1st respondent seemed to suggest.
As to Form EXP – 2.4.1, the applicant explained that although Sumo Inc. was registered in 2019, its shareholders have vast experience going beyond the floatation date of the company, and that the two years’ experience relative to three 3 years required is not material in the determination of non-responsiveness in accordance with ITB.33 especially when the whole picture of the structure of the bidder is considered, for example, the JV has included reputable companies as subcontractors; Sumo Inc. has a subcontractor and service level Agreement with Comnet (Pty) which is highly experienced in Information and Communications Technology (ICT) as a service provider and software developer in Lesotho since 1991.
Fischer Consulting as the lead member of the JV has more than thirty (30) years’ proven experience in similar projects and proven successful implementation, and technical capability to carry out the LITIS-type projects.
As regards Form MFA – Manufacturer’s Authorization – the applicant stated that it was inaccurate for the 1st respondent to say that its technical bid did not comply as clause 1.4, as this clause refers not only to manufacturers but also producers of the related sub-systems and a component to supply and install. The applicant intimated that it had supplied the signed authorizations by each of its four proposed subcontractors/vendors/manufactures and suppliers. Furthermore, Fischer Consulting as the lead member of the JV, is the sole manufacturer and supplier of all information systems, inclusive of all sub-systems and integrations and therefore, it needed no authorization. It asserted that its bid was substantially responsive.
[7] The 1st respondent reacted to the above letter as follows:
Form FIN – 2.3.1: That submission of audited financial statement for each JV member for the last three years is mandatory and the fact that Sumo Inc. did not comply, disqualified the JV.
Form EXP: The evaluation criteria under 2.4.1 General Experience: should have been met by Sumo Inc. as a prime supplier management contractor, JV member, or subcontractor for at least the last three years prior to the bid, and further stated that:
“As stated above, the evaluation was done on the Joint Venture members as it was a must meet requirement not on the owners of the company complementary experience of the sub-contractor…”
Form MFA – Manufacturer’s Authorization. The 1st respondent stated the following:
“Form MFA was missing in the submission of FISCHER CONSULTING JV, it is important to note that its absence was never considered a material deviation.”
Technical Evaluation:
The 1st respondent stated that the JV was deemed not substantially responsive in terms of the Evaluation and Qualification criteria for non-compliance with (i) Form FIN – 2.3.1 Historical Financial Performance (material deviation): (ii) Form EXP – 2.4.1 – General Experience (Material Deviation): (iii) Form MFA – Manufacturers’ Authorization.
[8] Notification of intention to award and its aftermath
On 11 November 2021, the 1st respondent issued its intention to award the contract to the 3rd respondent. On the 23 November 2021, the applicant formally challenged the decision of the 1st respondent to award the contract to the 3rd respondent, before this court. It challenged the decision on four grounds, namely:
That the 3rd respondent did not satisfy the experience requirements in Section III Form EXP 2.4.1 (Experience) as it never participated in contracts in the last three to five years before its current bid, of the value of LSL 20,000,000 which are similar to the LIIIS Project, and that the 3rd respondent had never completed a system that included at least vehicle module and drivers module as described in Section III.
Non-conformance of the 3rd respondent’s key personnel requirements for their lack of requisite academic qualification and experience.
Non-responsiveness of the 3rd respondent’s bid due to underestimated contract price given the scale of the project.
[9] The 1st respondent responded to the applicant’s complaint challenging its decision to award the contract to the 3rd respondent by stating that: it is unlawful to discuss the merits of other bidder’s information with other bidders; refused to disclose information relating to the 3rd respondent’s key personnel citing ITB 27.1 and ITB 48.2; refused to disclose information relating to the score which the 3rd respondent got under Form TECH – 1, and it relied. Based on ITB 27.1 as the basis for its refusal, it reasoned that it could not provide information in relation to the 3rd respondent’s alleged non-responsive bid due to underestimated price as in its opinion this issue was “not related to the evaluation process.” It claimed confidentiality in terms of ITB 27.1 for its position that disclosure should not be made. It further refused to disclose the Evaluation Report on the basis that information contained therein was confidential.
[10] Aggrieved by the 1st respondent’s decisions, the applicant lodged the instant application seeking the reliefs outlined in the introductory part of this judgment. All the respondents opposed the application. The 1st respondent’s opposing affidavit was deposed to by the Principal Secretary of the 1st respondent. He maintained that the applicant’s Technical Part bid was rightly disqualified because one of the members of the JV failed to meet the requirements of Historical Financial Performance (Form FIN – 2.3.1), General Experience (Form EXP – 2.4.1) and lack of Manufacturer’s Authorization (Form MFA), and that for these reasons the applicant’s bid could not pass the pre-qualification to be evaluated in terms of Form TECH-1. On JV’s non-conformance due to Sumo Inc.’s lack of general experience and historical financial performance the following was averred:
“8.4 contents herein are categorically denied. The lack of experience and Historical Financial Performance – (FIN – 2.3.1) by one member of joint venture warranted the disqualification because non-compliance of this nature falls squarely under material deviation and could not be rectified.
8.5 I must take this honourable court into my confidence and strongly aver that lack of requisite 3 years for historical performance and general experience by one member of applicant was substantial non-compliant (sic) and could not be rectified by any stretch of imagination.
8.6 Contents herein are vehemently denied. I must stress that the joint venture is treated as one legal entity and a lead member cannot be regarded as a cover up for non-conformities of another member.
I must further aver that when evaluating the Joint Venture as a legal entity, it is treated as one entity and its members are not distinguishable from it. Thus, Fischer would have a different case is he had supplied in his personal capacity as an individual.”
[11] The relevance of this excerpt will become clear in when the evaluation of the case is undertaken later in the judgment. It will be interesting to observe that regarding lack of Manufacturer’s Authorization, the deponent while maintaining that the non-conformities were material, he however, makes an admission that MFA document could be submitted later upon request by the Tender Evaluation committed. He denies that fraud and corruption on the part of the Tender Evaluation Committee (TEC) were responsible for the applicant’s unsuccessful bid. Regarding confidentiality, the 1st respondent maintains that confidentiality covered its refusal to provide the applicant with the requested information including the Evaluation report even after the expression of intention to award the contract to the 3rd respondent.
[12] On the issue of bid-price alteration, the 1st respondent avers that a pre-bid virtual meeting in which the applicant participated, was held whereat the price was reduced. The 1st respondent contended that it was, therefore, unnecessary to issue an addendum notifying the bidders of the reduction as they were aware of the changes. The alteration was made pre-bid and each tenderer had enough time to submit the tender in line with the reduced bid price. As at that time the bidders were not known it and therefore, it could not be correct, as suggested by the applicant, that the reduction in price was tailor-made for the 3rd respondent.
[13] As regards the role of Project Managements Consultants (PMC), the 1st respondents contend that its role was to advise the TEC and not to evaluate the technical soundness of the bids. TEC was the evaluator. The deponent averred that the PMC report was rejected by the Tender Panel for overstepping its advisory role in evaluating tenders. He maintained that PMC’s advice was considered by TEC before it made its decision, and that it should be discarded as it has no weight at all. The 3rd respondent’s contentions are mirrored by the 1st respondent and therefore, there is no need to repeat them.
[14] Issues for determination
Whether the decision of the 1st respondent to qualify the applicant’s Technical Bid at the first stage of the technical evaluation was irregular.
Whether the 1st respondent’s decision that the applicant’s bid was technically unresponsive should be set aside for being unreasonable, irrational and unjustified
Whether the decision of the 1st respondent to award the contract to the 3rd respondent was unreasonable and irrational.
Whether the 1st respondent’s decision to reject the applicant’s procurement-related complaint should be reviewed.
In the event it is found that all the 1st respondent’s decisions are reviewable, whether this court should order that a three-member Independent Evaluation Panel be appointed by the 1st respondent to evaluate the applicant’s Financial Part Bid and determine the most advantageous bid for contract award by the 1st respondent.
Whether the 3rd respondent should be disqualified from the procurement process on account of its conflict of interest.
[15] Discussion and Evaluation
As stated earlier in the introductory segment of this judgment, the project now the subject of this fierce contestation, is funded by the World Bank. The bidding was done through an international competitive procurement process by using Request for Bids (RFB) as provided for in the World Bank’s “Procurement Regulations for IPF Borrowers” [Procurement in Investment Project Financing Goods, Works, Non-Consulting and Consulting Services Fourth Edition November 2020 WB regulations).
[16] In the foreword to the WB regulations, it is stated that they are guided by the core principles of value for money, economy, integrity, fit for purpose, efficiency, transparency and fairness. In the Request for Bids (RFB) it is stated that the procurement process is done under the WB regulations. The Request for Bids and all appended documentation which includes Instructions to Bidders (ITB) and WB Regulations, are the legally binding and enforceable framework within which the submission of tenders, their evaluation and the ultimate award of a contract, should be carried out (see: Chief Executive Officer of the South African Social Security Agency NO and Others v Cash Paymaster Services (Pty) Ltd [2011] ZASCA 13: 2012 (1) SA 216 (SCA) at para. 15).
[17] This legal framework contains the roles of various role-players in the bidding process. One of those role-players in this matter is the Project Management Consultant (PMC). The role of this consultant is to provide expert opinion and technical advice of the technical aspects of the bidding process. This technical advice, the PMC, provides to the Tender Evaluation Committee (TEC) which as tasked with evaluating the tenders. PMC’s role is important to the determination of this case as will become apparent in due course. The evaluation of tenders is done by the Tender Evaluation Committee (TEC). At end of its business, the TEC forwards its recommendation to the Tender Panel for the final decision on who should be awarded the tender.
[18] Having set out the legal framework within which the bidding process was to be conducted, it follows therefore that, this legal framework sets the parameters beyond which those tasked with executing this public power may not stray. The public role-payers involved in this process are constrained by the hallowed doctrine of legality which merely postulates that those endowed with the public power must exercise it within the set legal limits, and if they stray beyond, their actions will be struct down as invalid (Pharmaceutical Manufacturers’ Association of SA: in re ex parte President of the Republic of South Africa [2000] ZACC; 2000 (2) SA 674 (CC) paras. 17 and 50).
[19] The following remarks by Schultz J.A, in the matter of Premier, Free State, and Others v Firechem Free State (Pty) Ltd [2000] (4) SA 413 (SCA) at para. 30, are apposite:
“One of the requirements … is that the body adjudging tenders be presented with comparable offers in order that its members should be able to compare. Another is that a tender should speak for itself. Its real import may not be tucked away, apart from its terms. Yet another requirement is that competitors should be treated equally, in the sense that they should all be entitled to tender for the same thing. Competitiveness is not served by only one or some of the tenderers knowing what is the true subject of tender…. That would deprive the public of the benefit of an open competitive process.”
[20] Equally apposite are the remarks of the Court in Allpay Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer of the South African Social Security Agency and Others [2013] ZACC 42: 2014 (1) SA 604 (CC) at para. 40:
“Compliance with the requirements of a valid tender process …. is thus legally required. These requirements are not merely internal prescripts that … may be disregarded at whim. To hold otherwise would undermine the demands of equal treatment, transparency and efficiency under the [tender legal framework]. Once a particular administrative process is prescribed by law, it is subject to the norms of procedural fairness. That does not mean that administrators may never depart from the system put into place or that deviations will necessarily result in procedural unfairness. But it does mean that, where administrators depart from procedures, the basis for doing so will have to be reasonable and justifiable, and the process of change must be procedurally fair.”
[21] Disqualifications of the applicant’s technical bid at the first stage of technical evaluation.
It is crucial to state that ITB. 31 read with ITB. 32.1 provides that only the evaluation methodologies provided for under ITB. 30, ITB. 31, Section III Evaluation and Qualification criteria, and BDS (where applicable) will be used in the Evaluation of the bids. The procedure for evaluating tenders has three stages to it, namely; The Preliminary Examination, Evaluation in terms of Form TECH-1 and Financial or Economic Evaluation. The first stage is the Preliminary Examination which is provided for under clause 31.2. of Instructions to Bidders (ITB). In terms of this stage the 1st respondent examines the bids with the sole aim of determining whether they have been properly signed; whether sureties have been provided as required; whether any computational errors have been made and whether sureties which have been furnished are complete; whether there are no missing parts of the bid or that the bids are silent on substantial parts of the technical requirements.
[22] To be included in the Preliminary Examination is the exercise for ascertaining compliance with the requirements under ITB.12.1. There is a criterion which is set out for this purpose under ITB. 12.1 which provides that: the bidders use forms which “must be completed without any alterations to the text, and no substitutes shall be accepted except as provided under ITB. 21.3. All blank spaces shall be filled in with the information requested.” ITB 21.3 states that:
“The original and copies of the Bid shall be typed or written in indelible ink and shall be signed by a person duly authorized to sign on behalf of the Bidder. This authorization shall consist of a written confirmation as specified in the BDS and shall be attached to the Bid. The name and position held by each person signing the authorization must be typed or printed below the signature. All pages of the Bid where entries of amendments have been made shall be signed or initiated by the person signing the Bid.”
[23] If the bidder clears the Preliminary Examination stage, the process moves on the technical evaluation stage where the 1st respondent examines information supplied by the bidder in terms of ITB. II and ITB. 16. The information required under ITB 11 relates to the Technical Part and the Financial Part; which is contained in two separate envelopes. The Technical Part contains:
Letter of bid
Bid Security
Alternative Bid if applicable
Authorization: written confirmation authorizing the signatory to the Bid to commit the Bidder.
Bidder’s eligibility
Qualifications
Eligibility of Information System
Intellectual Property
All software included in the Bid
System, General purpose and Application Software; or
Standard and Custom Software;
List of subcontractors
Conformity
The Financial Part envelop contains:
Letter of Bid – Financial Part
Price Schedules
Alternative schedules if permissible
Any other document required by Bid Data Sheet. (BDS)
[24] Once the hurdle of Preliminary Examination is cleared, the bidder is then subjected to technical evaluation in terms of Form TECH -1 to determine the bid’s technical responsiveness. For a bid to be evaluated in terms of the Technical and Financial Parts it has to first pass the qualification stage which is provided in Section III of the ITB – Evaluation and Qualification Criteria, Technical and Financial Parts. This is in line with ITB 32.1 which states that:
“In evaluating the Technical Parts of each Bid, the Purchase [1st respondent] shall use the criteria and methodologies listed in ITB 30, ITB 31, the BDS, if applicable, and Section III, Evaluation and Qualification Criteria. No other evaluation criteria or methodologies shall be permitted.”
[25] It is common ground that the applicant is a Joint Venture formed for purposes of bidding for LITIS Project. In terms of Regulation 5.38 of the WB Regulations:
“Firms participating in Bank-financed contracts may form joint ventures with domestic and/or foreign firms to enhance their qualifications and capabilities. A joint venture may be for the long term (independent of any particular procurement); or for a specific procurement. All the partners in a joint liable for the entire contract ….” (emphasis added)
[26] Technical proposal of each bidder consists of Qualification criteria for Technical Evaluation and Technical Implementation Requirements (TIR). Qualification criteria for Technical Evaluation is provided for in Section III. The Criteria has four components, with each having its own sub-components, namely:
Eligibility
Nationality
Conflict of interest
Bank ineligibility i.e. not having been declared ineligible by the Bank
State owned entity of the Borrower Country
United Nations resolution or Borrower Country law, that is the bidder must have been excluded as a result of United Nations resolution or Borrower Country’s law.
Historical Contract Non-Performance
History of non-performing contracts.
Not under suspension based on execution of a Bid Securing Declaration.
Pending litigation: Whether the Bidder’s financial position and prospective long-term profitability will still be sound based on audited balance sheet for the last 3 years, assuming that all pending litigation will be resolved against the bidder.
Financial Situation
Historical financial performance: the bidder must submit an audited balance sheet for the last three years to demonstrate the soundness of its current financial position and its prospective long-term profitability.
Minimum average annual turnover of LSL 2,000,000.00 calculated as total certified payments received for contracts in progress or completed, within the last three (3) years.
Financial resources: Bidder must demonstrate access to, or availability of, financial resources.
Experience
General experience under information system contracts in the role of Prime Supplier, management contractor, JV member, or, subcontractor for at least the last three (3) years prior to tendering.
Specific Experience: Participation as a prime supplier, management contractor, JV member sub-contractor, in at least two (2) contracts within the last three (3) to five (5) years each with a value of at least LSL 20,000,000.00 that have been successfully and substantially completed and are similar to the proposed Information system which system must have included at least a vehicle module and Drivers module as described in Section VII of the Purchaser’s Requirements.
Specific Experience in operations of a systems environment and maintenance/support of such systems must be clearly indicated.
[27] The applicant was eliminated for failure to meet the requirements of Qualification Criteria for Technical Evaluation. To be precise, Sumo Inc. as a member of the JV did not have at least three years’ experience prior to tendering, under information system contracts in the role of prime supplier, management contractor, JV member or subcontractor, and historical financial performance in the sense of submitting audited balance sheet for the last three years to demonstrate the soundness of its current financial position and its prospective long-term profitability. This is common cause. The question to be answered is whether in view of the fact that each JV member had to meet these requirements, failure by one automatically leads to disqualification of the JV regardless of undoubted expertise and experience of the other JV member?
[28] The answer to this question should be in the negative. It is important to recall why WB Regulations and consequently the Instructions to Bidders permit formation of joint ventures. Regulation 5.38 of WB Regulations states that the purpose of forming joint ventures is “to enhance [joint venture members’] their qualifications and capabilities.” If this is the rationale for allowing such business arrangements, it beggars belief why Sumo Inc.’s undoubted non-compliance in respects articulated above should be treated as the shortcoming of the JV despite Fischer Consulting’s vast experience in the field and financial resources. The fact that each member of the JV was obliged to comply with these requirements did not preclude the TEC from assessing whether in the light of Fischer Consulting’s compliance, the JV should nonetheless have been disqualified. In my considered view, the TEC’s approach to this issue is quite flawed because it treated the JV as a company when in fact it is a partnership. This approach is made more evidence in the answering of the 1st respondent when the deponent says:
“8.6 contents herein are vehemently denied. I must stress that the joint venture is treated as one legal entity and a lead member cannot be regarded as a cover up for non-conformities of another member.”
[29] Evident from this excerpt, the TEC lost sight of the fact that JVs are formed to enhance qualification and capabilities of its members. A question was put to counsel for defence that without Sumo Inc., Fischer Consulting would have qualified to be evaluated in terms of TECH-1, and the answer was in the affirmative. Then, if Fischer Consulting alone would have qualified then it appears to me to be absurd to contend that a blemish on the part of its partner should disqualify the JV. An approach which was adopted by the 1st respondent makes a mockery of the rationale for formation of joint ventures.
[30] The applicant contended that the TEC used the criteria for eliminating it, which is not provided for in the legal framework, instead of using Qualification criteria stated in para. 3.3.3 of the LITIS Evaluation Report in terms of which enquiry should have been directed at whether the bidders used relevant forms; whether the forms were completed without alternations; whether substitutes use impermissibly and that all blank space had been filled in with information. In my considered view, the applicant had past the Preliminary Examination phase and was assessed in terms of whether it complied with the requirements for Qualification for Evaluation of Technical Part. The criteria for qualification for evaluation in terms Technical Part is contained in Qualification Criteria for Technical Evaluation discussed above, and in terms of which the applicant was disqualified.
[31] The other reason for which the TEC disqualified the applicant is that Sumo Inc. has (or had) a pending litigation. In the Qualification Criteria for Technical Evaluation (2.2.3), the purpose of demanding the disclosure of pending litigation is to determine whether the financial position and prospective long-term profitability of the member of JV (or single bidder) assessed in the light of audited balance sheet for the last three years, will still be sound assuming that all pending litigation will be decided against the bidder. TEC did not undertake this analytic exercise, as it seemed to assume that because Sumo Inc. has/had a pending litigation against it, that is the end of the matter, it was disqualified. But this is a wrong approach as it had to show that the pending litigation would affect the financial position and long-term profitability of Sumo Inc. on the assumption that that the pending case would be decided against it.
[32] Sumo Inc.’s lack of historical financial performance and its past experience in the context of the fact that it is part of the Joint Venture, cannot be regarded as material deviation in the light of the criteria for determining material deviation stipulated in ITB. 33.2:
“33.2 A substantially responsive Bid is one that meets the requirements of the bidding document without material deviation; reservation, or omission is one that;
If accepted, would:
Affect in any substantial way the scope, quality, or performance of the Information System specified in the contract; or
Limit in any substantial way, inconsistent with the bidding document, the Purchaser’s rights or the Bidders obligations under the proposed contract; or
If rectified, would unfairly affect the competitive position of other Bidders presenting substantially responsive Bids.”
[33] In my judgment Sumo Inc.’s lack of proof of historical financial performance and general experience as required by the bid document is not a material deviation in view of Fischer Consulting’s complementary and undoubted historical financial performance and general experience in the LITIS-type projects. In my considered view, the applicant passed the Qualification Criteria for Technical Evaluation.
[34] Case against the 3rd Respondent
As stated earlier when the applicant was disqualified from being evaluated in terms of TECH-1, the 3rd respondent succeeded and was, after technical and economic evaluation declared to be the most advantageous bid worthy to be awarded the contract in question. At the outset, it is my considered view that the 3rd respondent should not have been declared successful in passing the hurdle of technical evaluation in terms of Form TECH-1. To demonstrate that the 3rd respondent should not have qualified, both the reports of the Project Management Consultant (PMC) and TEC’s Evaluation Report will come into focus. And further, as is the nature of these proceeding, a comparative exercise of the applicant and 3rd respondent bids will be undertaken with a view to determining whether the 1st respondent complied with the prescripts of the legal framework applicable. This approach was aptly articulated in South African National Roads Agency Limited v City of Cape Town and Others; In Re: Protea Parkway Consortium v City of Cape Town and others [2014]4 ALL SA 497 at para. 71:
“As recognised in Transnet supra loc cit, any person who participates in a tender process…. must appreciate that much of the information that they disclose in the process may be susceptible subsequently to public scrutiny, certainly much of it that is relevant to an assessment of compliance by the organ of State concerned with the competitive and cost-effective character of the procurement concerned. Any such public assessment will entail a consideration not only of the bid of the successful tenderer, but also of the unsuccessful bids, because of a comparative assessment is necessary to determine whether there has been compliance with the applicable constitutional and statutory requirements [legal framework applicable].”
[35] Evaluation in terms of Form TECH-1 involves assessing each bidder’s compliance with its twelve components, some more critical than others as they go to the bidder’s technical capability to deliver the project in terms requested by the 1st respondent. But before I make a comparative assessment of the bids, it is apposite to detail out the twelve components of Form TECH-1:
Legislation: Knowledge of or experience in Road traffic legislation
LITIS combined modules
Technical capability LITIS modules with sub-components:
2.1 Drivers sub-system
2.2 Vehicle sub-system
2.3 Public permits
2.4 Contraventions sub-system
2.5 Automated Biometric identification system
2.6 System Driving licence card production
2.7 Help Desk/call management solution
2.8 System-to-system interface module
2.9 Auditing module
2.10 Financial transactions
Additional Existing Modules
(3) SLDC categories (System Development Life Cycle)
3.1 SLDC methodology
3.2 Development framework
3.3 Rapid Development
3.4 System Testing and Acceptance Regime
Experience combined
4.1 Key Resources
4.2 Development and deployment of traffic and transport systems in the TTTFP region for the past 15 years
Standards combined (International and regional standards)
5.1 ISO 9001 experience
5.2 ISO/IEC relevant standards experience
5.3 SADC standards experience or understanding
5.4 TTTFP experience or understanding
5.5 Compliance Industry Standards, e.g. vehicles, Biometrics, etc
Migration combined
6.1 Data migration plan (eNaTIS and Driving Licence System)
6.2 Migration manual systems
6.3 Migration testing plan
6.4 Final conversion “go live.”
Project management combined
7.1 Project management methodology
7.2 Vehicle (manufacture, import, build) methodologies
7.3 Role-player liaison
7.4 Project structure
7.5 Document management
Architecture
8.1 Hardware
8.2 Software
8.3 Network
8.4 Security
Support and maintenance
Training combined
10.1 Skills transfer to IT and support staff
10.2 LITIS module training to users and support staff.
Implementation
11.1 Adherence to timescales
11.2 Feasibility of proposed Project Plan
Capacity building
12.1Capacity building during Design, build, deployment (pre-commissioning) phase
12.2 Capacity Building during the operational phase
[36] There was much spirited debate about the role of the PMC and what the status of its advice should be in the context of bid adjudication process. These debates notwithstanding, it is common cause that PMC was involved in the evaluation process in an advisory role to the TEC. It offered technical advice on evaluation of the technical components of the bids. The PMC did its own technical assessment of the respective bids. The 1st respondent’s Tender Panel expressed its disquiet about the way the PMC did its work, as it seemed to contradict with the TEC’s evaluation. It will be recalled that at the beginning of this matter a relief was sought directing the dispatch of the Evaluation Report together with the PMC report. The 1st respondent initially intimated that PMC report does not exist and after the court had ordered that its responsible officials place it in an affidavit that such a report does not exist, under the threat of perjury if it would later be found to exist, the report was released. It will be seen in due course the reason behind the 1st respondent’s glamour to have this report concealed from this court’s sight. When the PMC report came to light the 1st respondent could only contend itself with saying it was not binding as the TEC was the final arbiter on evaluation of bids.
[37] Before I deal with the question whether the 3rd respondent should have qualified to be evaluated in terms of Form TECH-1 it should be stated that the 3rd respondent should never have qualified to be assessed technically. In terms of paragraph 2.4.2 of the Evaluation and Qualification Criteria Form, which specifies the purchaser’s required experience, the bidder is required to show that it participated as a prime supplier, management contractor, JV member, sub-contractor, in at least two contracts within the last three to five years each valued at least LSL10,000 000.00 that have been successfully and substantially completed and which is similar to LITIS which system. The system must have included at least a vehicle module and drivers module as described in section VII of Purchaser’s Requirements (I am advisedly referring to an amended amount of Ten million Maloti instead of Twenty million Maloti). The 3rd respondent is very evasive about dealing with this issue. The 3rd respondent does not have any experience as a prime supplier, management contractor, JV member, subcontractor in at least two contracts that have been successfully or substantially completed which are similar to the proposed Information System, which includes at least a vehicle module and Drivers module. This shortcoming was also flagged by the PMC in its technical advice to the TEC when it stated that:
“
“The PMC finds it of particular concern that Engidata did not present any evidence that it has already completed or partially completed modules of the LITIS system, even if it would have been under development. However, on their own version, they will develop a complete system from scratch within nine months. The PMC finds it extremely unlikely that this very tight timescale van (sic) be met in a situation where the Bidder does not have prior experience in integrated transport management systems.
The PMC regards the offering in this Bid as HIGH RISK and unlikely to succeed within the time scales and quality requirements of the LITIS user requirements.”
[38] It is puzzling how the 3rd respondent was allowed to progress to technical evaluation when there is a no evidence that it has the requisite experience to carry out the project of this magnitude. The 3rd respondent was evaluated under TECH-1. The components of TECH-1 evaluation process have already been outlined above. On its evaluation of the 3rd respondent, TEC made the following findings in summary form:
Legislation: No Comment/Bidder ex-employee/derived experience from one of the resources/TTTFP focal person/personnel who worked in DTT for 15 years/developed E-spot fine.
Technical Capability LITIS modules: Systems partly/audit module not defined/previous experience/complies to all requirements impressive system to system interface/meet requirements.
System development life cycle: No information/Agile/Agile Azure Dev. Ops fast development/faster time to market/scrum/Agile/Dev. Ops.
Related Experience: Team leader not employed by bidder 1 partners developed systems E-Spotfine/Mantra and Silver touch not in TTTFP/Personnel that worked on TTTFP in DTT.
[39] I will not deal with all the components, the above suffice for present purposes. Before evaluation could be done, the PMC provided the TEC with a briefing about Form TECH-1 components and sub-components that should have been included in each bid response and level of proof that should have been provided for each component, as follows:
Legislation: The bidders were required to have a knowledge or experience in Road traffic legislation. The PMC advised that the bidders provide evidence of working.
Knowledge and experience with Road Traffic Act.
Bidder must provide evidence of working knowledge and experience with Road Transport Act.
Bidder must provide evidence of working knowledge and experience with the Amendment Bill.
Bidder must provide evidence of working knowledge and experience with TTTFP model laws.
Bidder must provide evidence of working knowledge and experience with implementation with other traffic information system in the SADC region.
Bidder must provide evidence of at least person with legal/legislation drafting experience on the resource team.
[40] PMC’s factual findings.
PMC found that the bidder had stated that it has knowledge or experience in Road Traffic legislation through the vehicle registration book in Gujarat, India. The bidder provided no reference to Lesotho Traffic Act, Road Transport Act, any Amendment bills, any Lesotho regulation or any TTTFP model laws. Bidder claims to have experience from its officials whose CVs were attached.
Technical Capabilities
PMC found the 3rd respondent to be compliant with only five of twelve sub-components i.e. contravention sub-system; Help desk/call management solution, system to system interface methodology and financial transaction. But as regards Drivers sub-system, biometric identification system and automated vehicle public permits sub-systems, which are evidently more important and crucial, PMC found that the 3rd respondent was not compliant as it did not submit an active system screenshots, menu items, database screens, output documents, thereby leading to the conclusion that the 3rd respondent does not have a system module that complies with the LITIS requirements.
System development life cycle (SDLC):
PMC found that:
“There is no indication in SDLC, Development framework and rapid development subsection that the Bidder has tools to perform rapid system development and the bidder has access to completed modules. The LITIS needs to be developed in 12 months, and the bidder did not present the capability to perform this task. Yet, they claim to be able to perform this task in nine months. Unrealistic/impossible.”
Related Experience
It was required that the bidder provide for experience of the resource that worked on development and deployment of Traffic and Transport Systems in the TTTFP region for the past 15 years. It is common cause that the 3rd respondent has personnel that worked on TTTFP while in the employ of the Department of Traffic and Transport, however the PMC found that the 3rd respondent’s personnel only have experience in developing Automated teller facility (2006) school data collection system (2006), Training on Microsoft application (2008), HRIS system specifications for Ministry of Public Service (2009). Electronic spot fine system for Lesotho Mounted Police Service (2009) which has 2% functionality and online procurement system (2014). All these projects are not related to the information system now being sought by the 1st respondent. The 3rd respondent’s Database expert, system analyst, Training expert, Programming expert and system Administrator have no SADC, TTTFP or Lesotho experience as required.
[41] This short juxtaposition exercise is merely being done to show how diametrically differing the PMC and TEC evaluation results are, on critical points of evaluation. The factual shortcomings which are identified by the PMC were simply glossed over by the TEC, many of which touch on the core technical capability of the 3rd respondent to deliver the LITIS project as envisaged by the 1st respondent. Taken in their totality, the inadequacies of the 3rd respondent’s bid, such as absence of proof that it has already completed or partially completed modules of LITIS System, lack of critical experience on the part of its key resources, not having submitted active system screenshots, menu items, database screens, output documents regarding biometric identification, Drivers sub-system and automated public permits subsystem, renders it doubtful that it be able to deliver LITIS project. The 3rd respondent’s bid, in view of these considerations, is unresponsive, as the above shortcomings together with others which were not highlighted above would in a substantial way affect the scope, quality and performance of the LITIS system.
[42] Mr. Moshoeshoe, for the 1st respondent, vehemently argued that PMC advice was simply that and nothing more, and that the TEC was not bound by it. This attitude is clearly evident in the varying technical assessment of both PMC and TEC. TEC faced with the undeniable factual realities concerning the 3rd respondent’s technical bid simply decided not to follow the technical advice of the experts they had engaged to advise them in on those technical issues. If indeed it is true, as the Principal Secretary (deponent to the 1st respondent’s answering affidavit) says that TEC was not bound by the technical advice of the PMC, it begs the question why in the first place their services were sought. The only reason which I can find for the 1st respondent’s attitude is that based on the objective facts which have been pointed out by the PMC in its report the 3rd respondent should not have progressed beyond the technical phase. The respondents argued that the PMC overstepped the bounds of its mandate by making technical assessment of the bids. Even if it were to be accepted that indeed the PMC overreached its powers, my considered view is that they make undeniable factual findings about the bids, which cannot be ignored.
[43] The purpose of seeking a review of the exercise of a public power based on rationality is not to replace the decision of the public functionary with the one preferred by the court or disgruntled litigant, but it is primarily geared at determining whether the decision – where what is challenged is the decision and not the procedure to reaching the decision – is rationally related to the objective sought to be achieved. (Albutt v Centre for the Study of Violence and Reconciliation and Others 2010 (3) SA 293 (CC) at para. 51: see also Tšepe v Independent Electoral Commission and others LAC (2005 – 2006) 169 at 186 para.38).
[44] With this principle in mind there is no escaping the conclusion that the 1st respondent’s decision to progress the 3rd respondent’s bid beyond technical evaluation stage to financial stage and the ultimate decision to award the contract to the 3rd respondent despite the glaring shortcomings in bid which puts into question its technical capability to deliver a functioning LITIS project, is not rationally related to the purpose of finding a bidder capable of delivering the LITIS system on terms sought by the Request for Bids.
[45] Regarding the applicant’s technical bid, the PMC made the following conclusion after conducting its objective assessment:
“The PMC found this bidder to be non-complaint in two components, and partially complaint in one component. The bidder was complaint in all other components and often exceeded the requirements. The PMC is of the view that this bidder does have the technical capability to deliver the LITIS in terms of the purchaser’s requirements however clarification will be required on the following topics:
Development period and framework used;
Software intellectual property rights;
Capability of the local partners and the records of the local partner;
Implementation plan.”
[46] In view of the conclusion I am going to reach on question of review of the decision of the 1st respondent to award the contract to the 3rd respondent, I find it unnecessary to deal with the relief directed at the review of the 1st respondent’s decision to reject the Applicant’s Procurement-related complaints relating to the award of the contract to the 3rd respondent. The applicant had sought a further relief that the 3rd respondent be declared to have been disqualified from the procurement process on account of its conflict of interest, however, I do not find that evidence has been adduced on papers evincing this conflict, except cryptic allusions that one of the 3rd respondent’s key personnel participated in the LITIS project team, without providing any specificity.
[47] Variation of bid value without issuing an addendum.
The applicant’s complaint in this regard is that the 3rd respondent did not qualify as regards the criteria requiring LSL20,000.00 as prescribed in the bid document. The applicant’s argument is that the 1st respondent unilaterally and without issuing an addendum, amended bid document to lower the amount to LSL 10,000,000.00 in order to benefit the 3rd respondent. There is uncontroverted evidence that prior to bidding, the 1st respondent convened a pre-bid meeting wherein all the prospective tenderers were present, including the applicant, where the bid amount was reduced to LSL 10,000,000.00 without any objection. ITB.8 on amendment of bidding document provides that:
“8.1 At any time prior to the deadline for submission of Bids, the purchaser may amend the bidding document by issuing addenda
8.2 Any addendum issued shall be part of the bidding document and shall be communicated in writing to all who have obtained the bidding document from the Purchaser in accordance with ITB.6.3. The purchaser shall also promptly publish the addendum on the Purchaser’s web page in accordance with ITB 7.1.
8.3 To give prospective Bidders reasonable time in which to take an addendum into account in preparing their Bids, the Purchaser may, at its discretion, extend the deadline for the submission of Bids, pursuant to ITB 23.2.” (see also WB Regulation 5.32)
[48] Evidently, the purpose of this provision to ensure transparency and fairness when making amendments. It is intended to give prospective bidders equal opportunity of seeing the amendment in order that they may be enabled to adjust their bids accordingly. Fairness as a concept is not cast in stone, it is determined sensitive to the facts of every situation. In the present matter all the prospective bidders were present when the amendment was made, and one would assume as it is not being argued for, that they had a reasonable time to prepare their bids in alignment with the amendment. It is true that the 1st respondent did not issue an addendum. In my considered view, that should not be a fatal irregularity. Transparency and fairness, which are the hallmarks of a tender process, were achieved in the circumstances. It is important to heed the following remarks made in Allpay Consolidated Investment Holdings (Pty) Ltd and others v Chief Executive Officer of South African Social Security Agency and others 2014(1) SA 604 (CC) at para. 40.:
“Compliance with the requirements for a valid tender process, … is thus legal required. These requirements are not merely internal prescripts that … may[be] disregarded at whim. To hold otherwise would undermine the demands of equal treatment, transparency and efficiency … Once a particular administrative process is prescribed by law, it is subject to the norms of procedural fairness …. Deviations from the procedure will be assessed in terms of those norms of procedural fairness. That does not mean that administrators may never depart from the system put into place or that deviations will necessarily result in procedural unfairness. But it does mean that, where the administrators depart from procedures, the basis for doing so will have to be reasonable and justifiable, and the process of change must be procedurally fair.”
[49] In the result the following order is made:
The final relief is granted in terms of prayers 2.1, 2.2, 2.3, 2.4, 2.5, 2.6, 2.7 and 2.12 of the Amended Notice of Motion.
___________________
MOKHESI J
For the Applicant: Adv. K. J Selimo instructed by Sello-Mafatle Attorneys
For the 1st and 2nd Respondents: Adv. L. P Moshoeshoe From Attorney General’s Chambers
For the 3rd Respondent: Ms Mokebisa from Mokebisa Attorneys