When can a tender be awarded to a bidder who has not scored the highest points?
13-12-2021
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Taranis
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In terms of the Preferential Procurement Policy Framework Act (PPPFA) of 2000, it is clearly stipulated in Section 2 (f) of the Act, that a contract must be awarded to the “Tenderer who scores the highest points; unless the objective criteria in addition to those contemplated in paragraphs (d) and (e) justify the award to another tenderer.”
The “Objective Criteria”, has to be constructed around the principled interpretation of Section 2 (d), which stipulates that the specific goals may include, a process where the government has created a bias towards contracting with, “Persons or categories of persons”, which were, “Historically disadvantaged by unfair discrimination on the basis of race, gender or disability.”
However, an organ of state must clearly stipulate that it will award points, using the “Objective Criteria”, as the yardstick to award ‘preferential points’ in a tender.
The second instance, where a tender may be awarded to the person not scoring the highest points, is governed by the 2017 PPPFA Regulations, Section 6 (9) and 7 (9), respectively, which deal with the process, where an organ of state may award a tender to another bidder, other than the one scoring the highest points.
These Regulations clearly allow the organ of state to enter into negotiations with the preferred bidder, where the latter’s price is not market related.
If the recommended bidder refuses to enter into such negotiations, the organ of state may cancel the tender or enter into negotiations with the bidder scoring the second-highest points on the shortlist.
Further, if that bidder also, refuses to enter into price negotiations, then the organ of state, may also cancel the tender or offer the tender to the person who has scored the third highest points or finally, cancel the tender.
According to Gerrit Davids, Lead Advisor, TaranisCo Advisory, tendering agency, “In the scenario, where the organ of state has implemented a price negotiation component in a tender process and any of the shortlisted bidders have refused to lower their prices, the former must report such refusals to Treasury, to comply with the demand for transparency”.
For more information on the above tender process and also, if you have missed any of our articles throughout the year, kindly visit our website: http://www.taranis.co.za/ for more details.
Contact: Gerrit Davids, Lead Advisor | TaranisCo Advisory CC | Mobile. +27 (0) 82 496 1657 | E-mail: gerrit@taranisco.co.za
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