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• DOES THE DECISION BY AN ORGAN OF STATE TO CANCEL A TENDER BEFORE ADJUDICATION AMOUNT TO ADMINISTRATIVE ACTION?

DOES THE DECISION BY AN ORGAN OF STATE TO CANCEL A TENDER BEFORE ADJUDICATION AMOUNT TO ADMINISTRATIVE ACTION?

The Promotion of Administrative Justice Act, 2000 (Act No 3 of 2000) [PAJA] gives effect to the right to just administrative action in terms of Section 33 of the Constitution of the Republic of South Africa. Most of the decisions taken by officials of the government institutions while performing their duties as government employees usually amount to administrative action. This would usually be the case if the decisions taken would negatively affect the rights of other persons. Therefore, before a decision is taken the authority must follow the necessary procedures provided in PAJA. 

Other decisions cannot amount to an administrative action. A decision to cancel a public tender for example is not an administrative action. The Supreme Court of appeal in the matter of The City of Tshwane Metropolitan Municipality and Others v Nambiti Technologies (Pty) Ltd has recently held that a decision taken by the organ of state (the municipality) to cancel a tender does not amount to an administrative action. In this matter, the municipality had issued a tender inviting companies to bid for the provision of IT services. After the tenderers had submitted their tenders and, before the adjudication process had started, the Municipality decided to cancel the tender and re-advertised. 

NB: Prior to the Municipality advertising the tender, the Municipality was contracted with Nambiti Technologies to provide the IT services (in respect of which the tender was issued), a contract which was subsequently terminated shortly before the tender was advertised.

Nambiti Technologies was amongst the bidders and was not happy with the decision of the Municipality to cancel the tender, as a result of which Nambiti Technologies challenged the decision by way of a judicial review.

Judicial review, in this context, is a process of approaching the court (by way of application) seeking an order to review and set aside a decision taken by a public body. The application is usually done in terms of the provisions of PAJA. The decision complained of must amount to an administrative action in order for the provisions of PAJA to be applicable. 

Nambiti Technologies brought their review application in the High Court. In court, they argued that the decision of the Municipality to cancel the tender amounted to administrative action and therefore they were entitled to challenge it by a judicial review application in terms of PAJA. The High Court agreed and ordered that the decision to cancel the tender was unlawful and therefore reviewed and set it aside. On appeal, the Supreme Court of Appeal (SCA) disagreed with the High Court and held that the decision of the Municipality to cancel the tender does not meet all the requirements for an administrative action as set out by the Constitutional Court. The requirements are as follows: The decision must be (a) a decision of an administrative nature; (b) taken by an organ of State or a natural or juristic person; (c) exercising a public power or performing a public function; (d) in terms of any legislation or an empowering provision; (e) that adversely affects rights; (f) that has a direct, external legal effect; and (g) that does not fall under any of the listed exclusions. Most importantly, the SCA held that Nambiti Technologies failed to show the Court that the decision by the Municipality to cancel the tender adversely affected their rights and that the decision had a direct, external legal effect. 

Author:    Agrippa Mpungose (Director in Litigation and Public Sector Department)
Tel: 033 341 9107
Fax: 033 394 3005
Email: agrippam@tmj.co.za