Raubex challenge of R149m-higher tender award dismissed with costs

High court rules it did not comply with the tender requirements, was not treated unfairly, and the tender requirements were not uncompetitive.

A legal challenge by JSE-listed construction group Raubex of a tender award for a Clanwilliam Dam project where the successful bidder’s price was a staggering R148.9 million more than its bid has been dismissed with costs.

The tender was awarded by the Department of Water and Sanitation to Midrand-based Phoenician Group, which submitted a bid of R807 590 184.50.

ADVERTISEMENT CONTINUE READING BELOW Read:
Raubex set to challenge award of Clanwilliam Dam tender [Jul 2023]
Clanwilliam Dam tender: Mchunu will have to launch high court action [Sep 2023] Another Clanwilliam Dam tender award faces court challenge [Nov 2023] Mchunu’s bid to stop IPP from operating at Clanwilliam Dam dismissed [Mar 2024]

Raubex Construction submitted a bid of R658 657 543.57, which was the lowest and only other bid.

Raubex said it submitted a compliant and responsive tender, which was R148 932 460.93 cheaper than Phoenician.

It claimed Phoenician was not compliant with the mandatory requirements set out in:

• Phase 2 of the tender evaluation process dealing with prequalification and compulsory subcontracting; and
• Phase 3, which dealt with the functionality compliance of the tender requirements, including required documentation in support of key personnel.

Raubex further claimed that limiting the Construction Industry Development Board (CIDB) grading for the tender to two specialist gradings – 9SE and 9SC – adversely affected the competitiveness of the tender pool because there were only two tenderers with a 9SE grading and none with a 9SC grading.

It also claimed that organisational personnel were outsourced and contracted in by Phoenician, and the same result could have been achieved by opening the tender pool to contractors with a 9CE grading, with the same specifications in that the specialist key personnel must or can be contracted in.

Phoenician’s response

Phoenician said in response that:

• Raubex does not possess the mandatory specialised CIDB grading of 9SE or 9SC;
• Raubex did not attach the required Engineering Council of South Africa (ECSA) verification document;
• Raubex was not entitled to undertake the work as the construction works involves highly specialised capabilities for its execution;
• As the project forms part of 66 tender packages all relating to the dam, an equitable distribution of work to several contractors with a different grading is ensured;
• The non-compliance of Phoenician and its nominated subcontractors were not disqualifiable offences and could be cured through the discretion of the department; and
• Phoenician fully complied with all requirements relating to functionality under Phase 3 of the evaluation process, and submitted all necessary required returnable documents, including the mandatory qualifications or experience of its key project team members.

Application

Raubex applied for an interim interdict against the department from giving instructions to Phoenician and/or any other tenderer to perform the work under the tender pending the finalisation of an application to review and set aside the tender award.

It was also seeking an interim interdict to prevent the department and Phoenician from commencing with work or any further work under the tender pending the finalisation of the review application.

Phoenician, among other things, claimed the balance of convenience did not favour Raubex because it is not eligible for appointment even if Phoenician’s appointment is reviewed and set aside, and an alternative remedy was available, which was to prosecute the review application on an expedited basis.

Judge Chantel Fortuin said the tender that Raubex seeks to interdict is for drilling and blasting of the foundations and the installation of lateral support for the dam.

She said the controlled drilling and blasting requires specialist knowledge because it must be done in a manner that measures the peak particle velocity (PPV), a measurement of how the ground shakes – noting that if it is too high, structures around the blast radius could be damaged or may even collapse.

No excuse for application delay

Fortuin said the tender was awarded to Phoenician on 11 July 2023, and Raubex obtained knowledge of the award on 17 July 2023 and the reasons for the disqualification on 1 November 2023.

She dismissed Raubex’s application for condonation for the delay in its application for review.

Fortuin said, among other things, that the tender was initially advertised in 2019 when a challenge should have been launched but Raubex provided no explanation why it launched the challenge at this late stage.

“It was not challenged at the time of the advertisement, nor at the time of the briefing or after becoming aware of the tender specifications,” she said.

“It is common cause that Raubex acquiesced in the tender process with the specifications as they were. Challenging the specifications at this late stage cannot be allowed.”

‘No prospect of success’ anyway

ADVERTISEMENT: CONTINUE READING BELOW

Fortuin added that the requirements for interim relief are that the applicant must firstly show it has a prima facie right or prospect of success and then an apprehension of harm and the balance of convenience.

She said it is common cause that it would be unlawful to award a tender to a bidder who is not registered with the CIDB and that Raubex did not possess the required CIDB grading of 9SC or 9SE.

“As this disqualification is not surmountable, Raubex in my view has no prospects of success,” she said.

Judge Fortuin said even if there are legal problems with the determination of the grading, it does not follow that the tender award itself is unlawful and reviewable.

“In my view, the [grading] complaint by Raubex is irrelevant to the awarding of the tender to Phoenician.

“Phoenician was evaluated in terms of the tender requirements as advertised and was successful.

“Raubex did not comply with the tender requirements. I am not persuaded that Raubex was treated unfairly, as the tender requirements were not uncompetitive,” she said.

Turning to the apprehension of irreparable harm and balance of convenience, Fortuin said Phoenician complied with all the tender requirements and was accordingly awarded the tender.

She said the balance of convenience clearly favours the department, Phoenician and the public at large due to the co-dependent nature of the previous tenders and the costs involved should the project be interdicted.

Safety considerations

She said the construction works are complex because it requires work to be done while the dam remains operational and, in her view, it is imperative that appropriate safety and professional standards during the construction be maintained.

Fortuin said Raubex had an available alternative remedy and could have launched a review challenge against the tender specifications and, if this was done at the appropriate time, it could have been done without interfering with the existing contracts.

She said she is not persuaded that interdicting the work already done or any future work in terms of the tender will be in the interest of the safety of the public, nor in the general interest of justice.

“It is manifest from the evidence, including the expert report, that blasting of the existing concrete will also occur on the old dam wall.

“If the blasting is not done to correct specifications, it follows that it will cause damage to the existing dam wall, and might lead to dam failure,” she said.

“In my view, there is a risk that this will be catastrophic for the many hundreds of people who live in and around the dam as it will lead to loss of many lives, households and livestock.”

Follow Moneyweb’s in-depth finance and business news on WhatsApp here.