Court rejects losing bidder’s tender case

The Pretoria High Court has refused to overturn a contract to sell textiles to the government, saying the contractor was neither breaking the “buy local” requirements nor acting as a front for others. The losing bidder, Da Gama Textiles from the Eastern Cape, took the National Treasury to court along with winning bidder Eye Way Trading and textile company Seardel, to challenge the Treasury’s awarding of a year-long textile contract to Eye Way. The state uses the fabric for uniforms.

Da Gama claimed that Eye Way was buying the textiles from two Seardel businesses that in turn imported the yarn, thus breaking the contract’s local manufacturing requirements. One of the Seardel businesses imported the yarn and wove the cloth, while the other did the dyeing, printing and finishing. The finished cloth then went to Eye Way, which sold it to the Treasury. Judge Ephraim Makgoba said as the Seardel businesses were both based in the Western Cape they were both local and thus complied with the contract requirements. Da Gama had said the contract required local products, and as using imported yarn was cheaper, it gave Eye Way an unfair advantage.

The judge also threw out Da Gama’s allegations that Eye Way was fronting for the Seardel businesses as it wasn’t producing the goods itself. He said the fronting allegations were not made in the founding affidavit, but only in later documents when Eye Way could not respond properly. Judge Makgoba said that, on the evidence before him, there was “absolutely nothing untoward” in Eye Way’s business model or the way it conducted business, and “nothing irregular or improper” in its business relationship with the Seardel suppliers. Da Gama initially brought an application for a review of the tender decision, then later filed the urgent application to overturn the tender award that was heard this week. The respondents opposed the application.

Judge Makgoba dismissed the application with costs, saying it was not urgent because it was brought late and had no merit. He said Da Gama had been scored lowest out of five bidders. “In my view, given the applicant’s poor performance in the tender evaluation, even if the interdict were to be granted, it is highly unlikely that it would be awarded the contract,” he said. Eye Way Trading’s managing director Nomathamsanqa Mashoala, who attended the judgment, and her attorney Rick Smith welcomed the judgment, particularly the judge’s striking out of the fronting allegations. “Mr Justice Makgoba specifically struck out the paragraphs relating to fronting and furthermore he found that there’s nothing untoward or inappropriate with my client’s business model,” said Smith.

“That was for us the best part of the judgment. We’d just like to have our reputation remain intact and our integrity protected.” Da Gama’s attorney, Ashley Kretzmann, said although his party lost, they had won an important victory in that the Treasury had now made it explicitly clear what local content means in revised tender documents for future contracts. “Everybody in the industry now knows and it’s clear that you can’t use imported yarn,” he said. Kretzmann said they would study the judgment and then decide on the way forward.