Public Procurement Law Training Programme - Bid Specifications & Criteria

1. TRAINING PROGRAMME ON PUBLIC PROCUREMENT LAW OFFICE OF THE PUBLIC PROTECTOR OF SOUTH AFRICA DAY 3 PROF GEO QUINOT DIRECTOR , APLU DEPARTMENT OF PUBLIC LAW, STELLENBOSCH UNIVERSITY gquinot@sun.ac.za

2. Day 3 Bid specifications & criteria Advertising Adjudication of bids Cancellation of tenders

3. Day 3 Correction, clarification, variation Negotiation Further information

4. Day 3 Bid specifications & criteria

5. Bid specifications & criteria • BSC • Transparency & fairness • Tender conditions (e.g. completed forms) • Specifications of goods/services • Criteria – qualification & award

6. Bid specifications & criteria • Compliance with tender conditions • PPPFA • 'acceptable tender' means any tender which, in all respects, complies with the specifications and conditions of tender as set out in the tender document;

7. Bid specifications & criteria • Compliance with tender conditions • Millennium Waste Management (Pty) Ltd v Chairperson, Tender Board: Limpopo Province 2008 (2) SA 481 (SCA) • Flexibility & condonation • Dr JS Moroka Municipality v Betram (Pty) Limited [2013] ZASCA 186, 29 November 2013 • no condonation – strict compliance

8. Bid specifications & criteria • Compliance with tender conditions • Sanyathi Civil Engineering & Construction (Pty) Ltd v eThekwini Municipality, Group Five Construction (Pty) Ltd v eThekwini Municipality [2011] ZAKZPHC 45, 24 October 2011 • Pricing • ‘discretion on eThekwini to determine whether deviations were material’

9. Bid specifications & criteria • Criteria • Westinghouse Electric Belgium SocieteAnonymev Eskom Holdings (SOC) Ltd [2016] 1 All SA 483 (SCA) • Only those criteria published in tender documents • (note Areva NP Incorporated in France v Eskom Holdings SOC Ltd (CC) [2016] ZACC 51) • StiegelmeyerAfrica (Pty) Ltd v National Treasury of South Africa [2015] ZAWCHC 9, 9 February 2015 • “competitors are entitled to know beforehand on what basis their tenders are to be evaluated".

10. Bid specifications & criteria • Criteria • Preferential Procurement Regulations, 2017 • Objective • In tender documents

11. Bid specifications & criteria • Criteria • Menzies Aviation South Africa (Pty) Limited v South African Airways (Pty) Ltd [2009] ZAGPJHC 65, 4 December 2009 • timely & adequate information on spec

12. Bid specifications & criteria • Allpay Consolidated Investment Holdings (Pty) Ltd v Chief Executive Officer of the South African Social Security Agency • Certainty and clarity of criteria and s 3(2)(b)(i) & (ii) of PAJA

13. Bid specifications & criteria • Criteria/specifications • SCM: Guide for Accounting Officers/Authorities • Specifications should be based on relevant characteristics and/or performance requirements. References to brand names, catalogue numbers, or similar classifications should be avoided. If it is necessary to quote a brand name or catalogue number of a particular manufacturer to clarify an otherwise incomplete specification, the words “or equivalent” should be added after such reference. The specification should permit the acceptance of offers for goods which have similar characteristics and which provide performance at least equivalent to those specified.

14. Bid specifications & criteria Local content Preferential Procurement Regulations, 2011 Designated sectors – NT & DTI Practice notes Preferential Procurement Regulations, 2017 8(2) An organ of state must, in the case of a designated sector, advertise the invitation to tender with a specific condition that only locally produced goods or locally manufactured goods, meeting the stipulated minimum threshold for local production and content, will be considered.

17. Bid specifications & criteria Subcontracting Preferential Procurement Regulations, 2017 9. Subcontracting as condition of tender.- (1) If feasible to subcontract for a contract above R30 million, an organ of state must apply subcontracting to advance designated groups. (2) If an organ of state applies subcontracting as contemplated in subregulation (1), the organ of state must advertise the tender with a specific tendering condition that the successful tenderer must subcontract a minimum of 30% of the value of the contract to …

18. Criteria PPPFA & Preferential Procurement Regs, 2011 Procurement above R30 000 2 types of criteria: Qualification criteria: functionality Award criteria: price + preference Preferential Procurement Regs, 2017 Pre-Qualification criteria: preference categories Qualification criteria: functionality Award criteria: price + preference Other objective criteria

19. Bid specifications & criteria • Criteria: Functionality • Preferential Procurement Regulations, 2017, reg 5 • = “ability of tenderer to provide goods/services in accordance with spec as set out in tender docs” • The evaluation criteria for measuring functionality must be objective. • Identify criteria, points for criteria & sub-criteria • minimum qualifying score for functionality

20. Bid specifications & criteria • Criteria: Functionality • BKS Consortium v Mayor, Buffalo City Metropolitan Municipality [2013] ZAECGHC 76, 1 August 2013 • only functionality criteria in tender documents

21. Bid specifications & criteria • Criteria: Price • Sethakatshipa Business Enterprise v Mangaung Metropolitan Municipality [2015] ZAFSHC 32, 10 March 2015 • Open ended price

22. Day 3 Bid specifications & criteria Advertising

23. Advertising Turning point – link to cancellation of tender

24. Advertising TR 16A The accounting officer or accounting authority must ensure that – bids are advertised in at least the Government Tender Bulletin for a minimum period of 21 days before closure, except in urgent cases when bids may be advertised for such shorter period as the accounting officer or accounting authority may determine; Treasury Instruction Note: eTender portal

25. Advertising MSCM Regs 22 any invitation to prospective providers to submit bids must be by means of a public advertisement in newspapers commonly circulating locally, the website of the municipality or municipal entity or any other appropriate ways (which may include an advertisement in the Government Tender Bulletin);  30 days in the case of transactions over R10 million (VAT included), or which are of a long term nature 14 days in any other case

26. Advertising MSCM Regs 22  A supply chain management policy may allow the accounting officer to determine a closure date for the submission of bids which is less than the 30 or 14 days requirement, but only if such shorter period can be justified on the grounds of urgency or emergency or any exceptional case where it is impractical or impossible to follow the official procurement process.

27. Day 3 Bid specifications & criteria Advertising Adjudication of bids

28. Adjudication PPPFA & Preferential Procurement Regulations, 2017 (Administrative compliance) Stage 1: Pre-qualification Stage 2: Functionality Stage 3: Price + Preference Stage 4: Objective criteria

29. Adjudication: Stage 1 • Preferential Procurement Regulations, 2017 • Pre-qualification: set-asides – reg4 • Discretionary • B-BBEE status level • QSE/EME • Subcontracting to …

30. Adjudication: Stage 1 (c) a tenderer subcontracting a minimum of 30% to- (i) an EME or QSE which is at least 51 % owned by black people; (ii) an EME or QSE which is at least 51 % owned by black people who are youth; (iii) an EME or QSE which is at least 51% owned by black people who are women; (iv) an EME or QSE which is at least 51% owned by black people with disabilities; (v) an EME or QSE which is 51% owned by black people living in rural or underdeveloped areas or townships; (vi) a cooperative which is at least 51% owned by black people; (vii) an EME or QSE which is at least 51% owned by black people who are military veterans; (viii) an EME or QSE.

31. Adjudication: Stage 2 • Functionality • Specifications • Local content • = qualification (in/out)

32. Adjudication: Stage 2 • Functionality

33. Adjudication: Stage 3 Award criteria: Price + Preference 80/20 split: contracts between R30 000 and R50 m 90/10 split: contracts above R50 m Regulation 3: “An organ of state must— (a)determine and stipulate in the tender documents—(ii) if it is unclear which preference point system will be applicable, that either the 80/20 or 90/10 preference point system will apply and that the lowest acceptable tender will be used to determine the applicable preference point system;”

34. Adjudication: Stage 3 Price PPPFA: 80 / 90 points for price Lowest price = 80/90 points Ps = price points Pt = price of tenderer P min = lowest price

35. Adjudication: Stage 3 Price Regulation 6(9) & 7(9) If the price offered by a tenderer scoring the highest points is not market-related, the organ of state may not award the contract to that tenderer. Negotiations … No 1 … No 2 … No 3

36. Adjudication: Stage 3 Preference

37. Adjudication: Stage 3 Preference 6(4) A tenderer failing to submit proof of B-BBEE status level of contributor or is a non-compliant contributor to B-BBEE may not be disqualified, but— (a) may only score points out of 80 for price; and (b) scores 0 points out of 20 for B-BBEE.

38. Adjudication: Stage 3 Adjudicating only what was called for DFS Flemingo SA (Pty) Ltd v Airports Company South Africa Ltd [2012] ZAGPPHC 66 (17 May 2012) “Sweetener”

39. Adjudication: Stage 3 • Breaking deadlock: • Highest preference points if total equal • Highest functionality score if equal price & preference • Drawing lots

40. Adjudication: Stage 4 Other objective criteria PPPFA 2(1)(f) the contract must be awarded to the tenderer who scores the highest points, unless objective criteria in addition to those contemplated in paragraphs (d) and (e) justify the award to another tenderer Preferential Procurement Regs 2017, reg 11

41. Validity periods Telkom SA Limited v Merid Training (Pty) Ltd; Bihati Solutions (Pty) Ltd v Telkom SA Limited [2011] ZAGPPHC 1 (4) On 8 November 2007 the applicant published an open Request for Proposal (‘RFP0101/2007’) with a view to selecting and appointing service providers for the provisioning of Telkom Network Services (Construction Services) as and when required by the applicant. (5) The RFP stipulated that the closing date for the submission of proposals was 12 December 2007. By the closing date the applicant had received 61 proposals in response to the RFP.

42. Validity periods The RFP stipulated that the proposals submitted shall be open for acceptance by the applicant for a period of 120 days from the closing date (12 December 2007). The proposal signed by each proposer contains the following: ‘I/we agree that the offer herein shall remain binding upon me/us and open for acceptance by Telkom SA Limited during the validity period indicated and calculated from the closing hour and date of the bid’. (7) The 120 day period expired on or about 12 April 2008. The period of validity for proposals to be submitted was not extended at any time prior to 12 April 2008.

43. Validity periods (10) On 24 June 2008, after the validity period of the proposals had expired, the applicant sent an e-mail to each of the 15 proposers whose proposals had been shortlisted for further consideration and requested them to extend the validity period of their proposals. (14) On about 14 November 2008 the Executive Committee of the applicant submitted the recommendation of the PRC to the applicant’s Board of Directors for acceptance of the recommendations to make the award of the tender to the six respondents. The applicant’s Board of Directors approved the recommendation and resolved to award the RFP to the six respondents as service providers.

44. Validity periods (19) During February 2009 one or more of the unsuccessful bidders lodged a complaint with the office of the Public Protector with regard to the procedure relating to the RFP.

45. Validity periods JoubertGalpin Searle Inc v Road Accident Fund 2014 (4) SA 148 (ECP) Process to an end when validity period lapse without extension

46. Award decisions De Vries Smuts v Department of Economic Development and Environmental Affairs [2010] ZAECBHC 8, 30 July 2010 ‘the service provider shall enter into a binding service level agreement with the department’ Award = acceptance SLA is not a condition

47. Award decisions Accounting authority AzolaRecruitment Solutions CC v National Energy Regulator of South Africa [2010] ZAGPPHC 144, 8 October 2010 AccAuth may revoke BAC award – PFMA s 56 56. Assignment of powers and duties by accounting authorities.—(1) The accounting authority for a public entity may— (a) in writing delegate any of the powers entrusted or delegated to the accounting authority in terms of this Act, to an official in that public entity; (3) The accounting authority may confirm, vary or revoke any decision taken by an official as a result of a delegation or instruction in terms of subsection (1), subject to any rights that may have become vested as a consequence of the decision.

48. Award decisions Accounting authority Final decision: MEC for Health, Eastern Cape and Another v Kirland Investments (Pty) Ltd 2014 (3) SA 481 (CC) Change via review State Information Technology Agency SOC Limited v Gijima Holdings (Pty) Limited [2017] ZACC 40 (14 Nov 2017) Review only via legality

49. Award decisions South African Container Stevedores (Pty) Ltd v Transnet Port Terminals [2011] ZAKZDHC 22, 30 March 2011 Awarding to more than one bidder

50. Day 3 Bid specifications & criteria Advertising Adjudication of bids Cancellation of tenders