Fight for tender goes to court

A Durban-based construction company has launched a high court application, attempting to halt the construction of 10 low-income housing projects, on the basis that they were incorrectly disqualified as a successful tenderer. Umphemo Development Limited launched the application at the Pietermaritzburg High Court on Tuesday against the Ulundi Municipality, the Head of the Department for Human Settlements in KwaZulu-Natal, as well as the 10 successful tenderers currently working on the project. Umphemo is asking that pending the outcome of an appeal to the municipality’s Municipal Appeals Tribunal, that the municipality be interdicted from putting into effect its decision to award the 10 rural housing projects to the successful tenderers, and that pending a successful outcome, the decision by the municipality be reviewed and set aside.

In court papers, Umphemo company secretary, Shadrack Khumalo, said the invitation to tender was first advertised in the Ilanga newspaper in November last year. The tender called for the appointment of implementing agents to facilitate the planning and construction of 10 low-income housing projects. Each of the projects (estimated to consist of about 100 houses a project) was to be allocated to one agent.The tender would thus be awarded to ten tenderers. The appointed tenderers were to be called upon to first engage in a pre-feasibility study to determine whether the proposed projects were viable, and run studies relating to the environmental and social impacts in the area. Khumalo said the pre-feasibility studies took about three months, with the feasibility studies taking about six to 12 months and the construction of the houses at a rate of 40 houses per month, would take about 25 months. The successful tenderers were currently in the feasibility phase.

Khumalo said it was for this reason that there would be no prejudice suffered if the tender was stopped. According to Khumalo, the Department of Human Settlements pays R2 800 a house for the feasibility stage, and R110 000 a house for construction. Based on these figures,the total cost of the tender is R112 million. Khumalo said Umphemo had been in business for 14 years, employed 154 employees and specialised in low-income project housing. He confirmed that the firm was at present completing work on four rural, low-income, housing projects for the Ulundi municipality. Khumalo said in accordance with the Preferential Procurement Policy Framework, points allocated to the bids were evaluated on a 90/10 basis: 90 for functionality and 10 for BEE points. The 90 points are made up of 60 for relevant experience and 30 points for skills and capability.

The 10 tenderers with the highest points would be awarded the tender. However, Khumalo said the award by the municipality was “fraught with errors” in relation to the municipality’s finding of poor performance in respect of Umphemo’s past performance and track record with the municipality. Khumalo said this allegation was without foundation, because the company was currently working on other low-income housing projects for the municipality. Khumalo said the disparity between points allocated to each of the tenderers also indicated a flagrant disregard by the municipality for the point system, and maintains that the award of the tenders were made “capriciously”. Acting Ulundi municipal manager, Walter Charles de Wet, denied the allegations made by Khumalo, and confirmed that most of the tenders had already commenced, and some have almost completed the feasibility stage.

He said most of the successful tenderers had already expended time, effort and substantial cost and that a delay would also prejudice the eventual recipients of the houses. De Wet said he was of the view that Umphemo had been correctly disqualified as a tenderer, and that the company had not properly made out a case for an interdict to be granted in their favour. Judge Jerome Mnguni was expected to deliver judgment later this week.