Court rules that CIDB grading was incorrectly applied by the City of Cape Town.

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28-02-2023
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Taranis
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In a recent judgement, the Western Cape High Court ruled that the total value of a “Framework or Term Contract” should not be used as the yardstick to determine the required grading of a bidder, to be accepted for consideration in a tender.

The Applicant submitted a bid to become part of a panel of contractors to be used by the City of Cape Town for the replacement of redundant sewer pipes over a period of three years.

The municipality indicated that the required replacements would be in the form of a series of contracts and by calculation collectively it would come to in excess of R180m, despite the fact that it did not mention per se, the latter amount in the bid document.

However, it is a known fact that the tender documents did stipulate that the individual contract values for each appointment, would be in the estimated range of between “R1 million and R6 million”, respectively.

The tender document also indicated that the City would appoint three contractors and based on its own calculation each one would receive work up to a value of R60 million for the duration of the three-year term.

Therefore, it stipulated that only registered contractors with a minimum grading of 7CE will be considered for eventual adjudication, meaning that only those contractors, who are qualified to execute civil engineering projects valued up to a maximum of R60 million, should submit bids.

The Applicant’s tender was rejected by the City on the basis that its CIDB grading was a 6CE, which only allows it to bid for contracts up to a maximum of R20 million at a time.

After exhausting its internal remedies and having failed to convince the City to overturn its own decision to reject its bid from adjudication, the Applicant approached the Court for relief.

It argued that each individual contract will only range between R1m and R6m, therefore its 6CE CIDB grading exceeds the minimum qualification thresholds required for these individual contracts, should it eventually be issued by the City, to any one or more of the contractors on the panel.

That is, despite the possibility that each panellist could receive work, of up to R60 million.

The Court was in agreement with the Applicant and ruled that the City misconceived the interpretation and intent of the CIDB Act and Regulations, by stipulating that only those carrying a 7CE grading may submit tenders.

The Court was of the view that the correct interpretation would have been that even a 4CE graded contractor should have been allowed to tender and the rejection of the Applicants bid and even probably those of others, ultimately resulted in them being treated unfairly.

The Court in its final order declared that the requirement for CIDB grading of 7CE was unlawful and that the bid advertisement and evaluation be set aside.

It also ruled that the rejection of the Applicant’s tender and the contract award was unlawful and that the City must re-advertise the bid with the correct specifications and qualification criteria.

According to Gerrit Davids, Lead Advisor at TaranisCo Advisory, tendering agency, “The judgment clearly confirms that organs of state do not always get it right in the way they interpret legislation, and this case is another example of how bidders are both unfairly and unlawfully excluded from tenders.”

Davids says, “Bidders must also interrogate every condition of tender as well as the scope of works found in tender documents, to stop perpetuating the myth that whatever is stipulated in a tender document, are fair and lawful.”

“As the Court pointed out, how many other bidders received the same cold shoulder in tenders and for how many years has this incorrect interpretation been applied?”, says Davids.

For any further queries, contact, Gerrit Davids | Lead Advisor | TaranisCo Advisory | E-mail: gerrit@taranisco.co.za   | Cell. 082 496 1657