eThekwini ordered to cancel R90m water tanker contract

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23-01-2023
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News 24
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The eThekwini Metropolitan Municipality has been ordered to cancel an allegedly irregularly awarded R90 million water tanker contract.

The courts and the council's own Appeals Authority found that officials awarded the three-year tender to companies that should have been excluded.

Council officials have allegedly defied the court and Appeals Authority orders and allowed the companies to continue.

The eThekwini Metropolitan Municipality has been ordered to cancel and re-advertise a R90 million water tanker contract it had awarded to companies that allegedly didn't qualify for the bid.

A fortnight before the Appeals Authority's ruling, the KwaZulu-Natal High Court in Durban also issued a different judgment, ordering the municipality to stop work on the contract and not to pay any money to the five contractors it had appointed.

However, municipal officials have allegedly defied the court and Appeals Authority's rulings and have allowed service providers to continue working on the contract.

On 20 December, the eThekwini Municipality Appeals Authority ruled that council officials should cancel and readvertise the three-year tender it had awarded to five companies in November.

The Appeals Authority's ruling was the culmination of an internal appeal process brought by Xmoor Transport after the company was excluded from the R90 million water tanker contract.

In November, officials told Xmoor Transport that the company was excluded from the contract because it had allegedly colluded with another company – Aqua Transport.

Similarly, the High Court's judgment followed an urgent application by Xmoor Transport to have the contract cancelled and set aside.

Xmoor launched an internal appeal against its exclusion, arguing that it was disqualified on the basis of false and unsubstantiated grounds.

The company also argued that the winning bidders – Ekene Investments, Isiwengu, Ikhambi Trading Enterprise, Khosu Trading and Projects and The Rest Follows should have been disqualified because they had submitted defective bids.

Xmoor's appeal shows that sometime in the middle of last year, eThekwini advertised the three-year tender for water tankers.

The Appeals Authority's ruling shows the tender was extended three times - in January, April, and July. All the companies that submitted bids were asked to sign documents and submit them via email, confirming that they were extending their offers.

In the appeal, Xmoor argued that Ekene, Isiwengu, Ikhambi, Khosku, and The Rest Follows should have been disqualified because they did not confirm the extension of their bids via email.

They signed and hand-delivered them to the municipality's offices. This, the company argued, rendered their bids non-responsive and defective.

On the allegation that Xmoor colluded with Aqua Transport, the Appeals Authority found that: "There is nowhere in all the reports that served before relevant bid committees where it was mentioned that the appellant colluded with Aqua Transport.

"If there was evidence that it colluded with Aqua Transport or any other tenderer, surely such information should have been readily available and placed before the relevant bid committees.

"Therefore, the Appeals Authority is satisfied that there is no evidence from the aforementioned minutes and bidders' tender documents that the appellant committed any of the prohibited restrictive practices listed under Section 4(1)(b) of the Competition Act No. 89 of 1998 as amended, or its Section H: MBD9: certificate of independent bid determination was false. Accordingly, the first respondent erred by disqualifying the appellant on this basis."

The Appeals Authority also found that the winning companies' bids should have been disqualified because they were defective.

"The third, fourth, fifth, and sixth respondents were called upon to extend the validity of their offers, but they failed to do so. At its sitting on 15 August 2022, the bid adjudication committee resolved not to award the tender to the above-mentioned respondents on the grounds that they did not extend the validity of their offers.

"On that basis alone, their offers lapsed and could no longer be accepted by the first respondent."

This week, Xmoor Transport's lawyers threatened the municipality with a contempt application, saying that it had obtained evidence that the council did not stop the performance of the contract.

In a letter to municipal officials on Wednesday, Xmoor's lawyers said: "We refer to the attached Appeals Authority ruling, which was quite critical of the City's conduct in the irregular and (unlawful) award of the impugned tender to the disqualified service providers who continue to date to render services and profit from the tender, despite the finding and in flagrant contempt of the High Court order obtained by our client.

"To this effect, our client had employed the services of a private investigation firm that completed an investigation, whose results clearly and unequivocally indicate that the High Court order was and is being willfully and intentionally violated and circumvented to enable profiteering by the disqualified service providers as mentioned in the Appeals Authority ruling.

"We record that our client's rights are accordingly reserved."

"Our instructions are to proceed with the contempt application unless the City can provide, by close of business on 20 January 2023, with indisputable proof that it stopped violating the High Court order," the letter stated.

EThekwini’s spokesperson Msawakhe Mayisela insisted that Xmoor was under investigation for possible collusion. “It must be noted that the only issue with the applicant not to be recommended for an award was the ongoing investigation on alleged possible collusion not that they were not considered for an award. Once the investigation is completed; if it favours them; they will be on the panel.

"The City is compelled to ensure that an alleged anticompetitive behaviour is dealt with within the parameters of the law and investigated properly to inform a decision making”.

The City, he said, did not implement the contract.