SANRAL stumped again

On Friday 27th July, Judge J Vahed of the KZN High Court handed down a judgment setting aside SANRAL’s award of a contract to Tolcon Lehumo (Pty) Ltd for the operation and maintenance of the N2 South Coast Toll Plaza, and ordering SANRAL to pay costs of the high court action, brought by The Toll Collect Consortium.

Tolcon Lehumo’s bid for the eight year contract was priced at R 165 million. Toll Collect’s bid was significantly cheaper at R156,4 million, but SANRAL adjudged that the terms of the policy of preferential procurement rendered the Tolcon Lehumo bid more favorable and awarded Tolcon Lehumo the contract on 17th June 2011.

Toll Collect challenged the award in an application lodged at the KZN High Court on 28th July 2011. The matter was argued on 6th and 7th March 2012, with P J Olsen appearing for the applicant (instructed by Cox Yeats Attorneys - telephone 031 5363683), and B E Leech SC (instructed by Shepstone and Wylie - telephone 031 575 700).

Judge Vahed found in favour of the applicant, setting aside the award of the contract and ruling that SANRAL must reconsider the award of the contract and that the re-adjudication must be done by a different panel of officials.

The judgment calls into question the arbitrary way in which SANRAL has applied the preferential procurement policy in awarding tenders when price is not the sole criterion.

Besides an elementary error of having wrongly assumed that VAT was excluded in Toll Collect’s bid priced at R156,4 million when it wasn’t, Judge Vahed was highly critical of the lack of transparency in SANRAL’s “assessment for quality” process.

Judge Vahed found that SANRAL failed to make it clear to all bidders what the criteria and goals were that would justify a contract being awarded on other than price considerations to tenderers. SANRAL reserves the right to ensure that all bidders meet at least a score of 75% in terms of capability and capacity before they could be considered for the award of the contract. However he said “the question of price was almost all important unless objective criteria and clearly identified specific goals justifies the award to a more expensive tenderer”.

He said if SANRAL wanted to assess and score quality and functionality on the basis of “manifest capability and capacity to successfully carry out the tolling and maintenance operations” and “more especially if quality and functionality was to serve as a gatekeeper function, objectivity, rationality and functionality demanded more clarity on how prospective tenderers could get through the gate.”

He found that SANRAL had not told prospective tenderers “precisely how experience would trump price and more importantly, the subjective and objective assessments that would be employed in that process”.

SANRAL had instead showed great reluctance to furnish Toll Collect with relevant documents they sought in order to better understand why they had not been successful, which “suggests a leaning on the part of the evaluation and adjudication committees toward the advancement of the interests of tenderers who had previously been awarded contracts of this nature. That in the context of this case, is unfair.”

SANRAL was thus ordered to set aside its award of the contract to Tolcon Ledhumo, and reconsider the award of the contract, with a different adjudication panel.

Judge Vahed gave SANRAL two months before the orders come into effect.  This is to minimise the disruptive effect of the reversal, and allow the parties to complete particular facets of work that are incomplete.