Court blow for City’s power station tender

The City of Cape Town says it is studying a Supreme Court of Appeal (SCA) ruling which set aside a high court decision that would have allowed it to cancel the tender for the decommissioning of the Athlone power station. That ruling by the Western Cape High Court was made even though the City acknowledged that its own investigation, conducted by Ernst & Young, had found no corruption or tender fraud from Aurecon or City employees. The City of Cape Town had gone to court to seek a judicial review of its own decision to award the tender to Aurecon in 2012, on the basis that “reviewable irregularities occurred in the course of the evaluation of the tender submitted to it and in the ultimate award of the tender”. The auditors’ forensic report found a number of irregularities which allegedly happened during the procurement process.

Its conclusion, which prompted the review proceedings, was that Aurecon had been afforded an unfair advantage over the other bidders which took part in the procurement process for the following reasons:

• The final scope of work that formed part of the bid specifications for the tender was based directly on the draft scope of work prepared by a joint venture in 2010 of which it was a partner. This was allegedly in contravention of clause 95 of the City’s own supply chain management rules.
• Aurecon was included in an internal City e-mail communication concerning the pending tender.
• The bid evaluation committee did not meet as a collective to evaluate the functional scoring of the bidders as required, and this omission compromised the validity of any decisions taken during this process.

These irregularities were said to have arisen from the ignorance of City officials over the requirements at the various stages of the consideration and awarding of tenders. But the SCA found the high court judgment was flawed because it meant that a consulting engineering company – which had prepared a scope of work, as was the case with Aurecon, for professional services for a particular project – was then excluded for tendering for a subsequent contract which stemmed from this work. Cape Town deputy mayor and mayoral committee member for finance Ian Neilson said yesterday the City would study the ruling to understand its implications for handling tenders in the future. “There does appear to be some clear legal direction on the ability of companies to tender when they are involved in preparatory work on the same project.

“Exactly how the contract, which the court has reinstated, proceeds will be discussed with Aurecon in the near future,” said Neilson. Aurecon managing director Albert Geldenhuys said if the company had not challenged the Western Cape High Court judgment, it could have had a “significant negative effect” on the practice of consulting engineers in South Africa, and the accepted norms and practices that underpin the industry.