City of Joburg’s R500 million red fleet tender declared unlawful, invalid

The City of Joburg’s red fleet tender valued at over R500 million has been declared “unlawful and constitutionally invalid”.

This information is contained in a high court judgment which was handed down by Judge Thina Siwendu on March 29. The city’s fire engine tender conundrum dates back to 2015. However, owing to the demand, the city opted for a deviation process in 2019 which permitted it to award contracts on the basis of emergency.

After all, TFM Industries was awarded the tender to supply the city with fire engines, but things didn’t go according to plan for both parties as the losing bidders, Marcé Projects and Fire Raiders, interdicted the awarding of the tender. The Star has since uncovered that the matter has been extensively debated in court, as the manufacturing companies and the city try to find common ground.

The judgment has revealed that the city’s tender deviation process breached Section 217 of the Constitution and Municipal Supply Chain Management Regulations. “The process was designed for minor deviations and contracts. The contract price far exceeded the threshold value of R200 000 (inclusive of vat) envisaged in the city’s Supply Chain Management Policy.

“The policy requires that all tenders above the threshold be subject to a competitive bid or tender process. A deviation is permissible in exceptional or emergency cases,” the judgment reads. The judgment states that the city’s Supply Chain Management Policy, a deviation caused by poor planning or procrastination, leading to the situation being declared an emergency, will result in deviation approved under those circumstances being classified irregular.

“The city had put the cart before the horse, because the permission for the deviation was sought on June 11, after it had initiated the Request for Information (RFI) process.” When challenged on this matter, the city reportedly disavowed and recast the RFI process as “due diligence” and an inquiry into the availability of vehicles. The judgment indicates that this was a misrepresentation of true facts and inconsistent with the awarding of the contract to TFM.

“The appointment of TFM was not according to the specification for Bid A781 and was inconsistent with the city manager’s approval, as well as that one of the EAC and the city’s procurement prescripts.” The judgment also indicates that there were contradictory statements surrounding the issue of payment between the city and its chosen supplier, TFM.

“The city first denied making upfront payment to TFM. However, during the urgent application it claimed to have made a payment of R75million for 17 vehicles which it had received.” However, a director at TFM disputed that the contract was funded on upfront payments. The director claimed that TFM received R36m for 20 vehicles which were delivered to the city on November 6, and that the production was financed from its funds.

He went on to say that he had to notify TFM bankers and, as a result, funding and facilities were withdrawn and its bankers terminated its facilities. “The city insisted on completion of the contract. He recast the payments as ‘commitment payments’ made after the review proceedings had commenced.” Judge Siwendu ordered TFM to deliver the eight vehicles which have already been paid for by the city within 60 days.

The eight include five Heavy Duty Rear Mount Pumps and three Light Rapid Fire and Rescue Intervention Units. “The balance of the contract compromising 48 vehicles is legally invalid and terminated forthwith. The city and TFM are prohibited from reviewing the contract in any form other than through a transparent law tender process.”

Judge Siwendu also ordered TFM to ensure that the 15% increase in monthly salaries and payments made to TFM directors, arising from the contract, be returned to the city’s coffers within 60 days. “All profits, dividends or bonuses paid to TFM shareholders and directors if any, arising from this contract shall be forfeited forthwith and paid back to the city within 60 days of this order,” the judgment read.