Judge sets aside toll road tender

A R144-million eight-year contract to manage and operate the N2 South Coast toll plaza has been set aside by a Durban High Court judge who ruled that, in considering the tenders for the job, officials of the SA National Roads Agency Limited (Sanral) had not been “objective”. Judge Rashid Vahed directed Sanral to reconsider the award of the contract, but ordered that the officials who had previously been involved in its adjudication be precluded from participating again. The review application was brought by unsuccessful bidder The Toll Collect Consortium – comprising Procon Fisher, ItraMas and PG Mavundla Engineering – against Sanral and successful bidder Tolcon Lehumo (Pty) Ltd, one of the biggest toll road operators in SA.

Sanral issued the invitation to tender for the South Coast plaza in March 2010, and the contract was finally awarded in June last year. The consortium immediately challenged the award, saying its price was cheaper. Sanral said this was not true, and that Tolcon’s price was 8 percent less. On top of this, the consortium had not scored the minimum points for quality because of its inexperience in toll operations. In his judgment, Judge Vahed said Sanral had a constitutional obligation to conduct its operations transparently and accountably. He said the tender document stipulated that the contractual offer made by a prospective tenderer had to be expressed in a rand amount inclusive of VAT, whereas elsewhere in the tender document the items had to be expressed exclusive of VAT.

In the consortium’s bid, both figures were the same. And Sanral officials then deemed the applicant’s tendered price to be R156m exclusive of VAT, while Tolcon’s was R144m inclusive of VAT. The judge said the consortium said its price – as being inclusive of VAT – was confirmed at the tender open meeting. On top of this, it was illogical and irrational for Sanral to simply “correct” what it regarded as being incorrect without seeking clarity. “It is difficult to understand why it did not seek this clarity,” the judge said. “It did not act rationally. In unilaterally altering the applicant’s price, it offended the constitution. Had it been properly treated as the lowest tenderer, it would have achieved a score of 90 points on price alone,” he said.

In terms of the constitution, in the award of government contracts price is the dominant factor, unless objective criteria and clearly identified specific goals justify the award to a more expensive tenderer. Judge Vahed said the tenders did not disclose what criteria and what weightings were attached to them in assessing “quality”. “It was incumbent on Sanral to set out all the benchmarks up front. A tenderer must know how to achieve predetermined scoring. “Given the constitutional importance placed on price, it is important to tell tenderers precisely how experience can trump price and, more importantly, the subjective and objective assessments that would be employed in that process.

That was not done here.” He said the “leaning” towards the advancement of those who had previously been awarded contracts of this nature was unfair. He suspended his order setting aside the contract for two months to allow Sanral and Tolcon to arrange their affairs and prevent any disruptive effect on the toll road.