The Rigour Of Tender Compliance: Insights From The WBHO-Lubocon vs. Grinaker High Court Decision – – South Africa

Tender processes and awards in South Africa have been a topic of
fervent court activity in recent years. The case of WBHO-Lubocon JV v Eskom Holdings SOC Limited and
Another (005599/2022) [2023] ZAGPJHC 1008, decided upon in the
Gauteng Local Division of the High Court in Johannesburg, is no
exception.

The case emerged from a tender awarded by Eskom Holdings SOC
Limited (“Eskom”). The tendering process resulted in the
disqualification of the WBHO-Lubocon Joint Venture
(“WBHO”) based on specific criteria. Consequently, the
tender was granted to the only qualifying bidder, Grinaker LTA-Ezra
Construction Joint Venture (“Grinaker”).

WBHO, feeling aggrieved by the disqualification, sought a
judicial review of the decision. They anchored their arguments on
the Promotion of Administrative Justice Act 3 of 2000
(“PAJA”). The primary bone of contention was the
perceived illegality of WBHO’s disqualification. Eskom’s
stance was clear in that WBHO failed to provide certain mandatory
information, leading to their exclusion.

In a decision that will undoubtedly be referenced in future
tender disputes, the court sided with Eskom and the application by
WBHO was dismissed with costs.

The Judge’s analysis:

1. Legality of disqualification: Central to the
   case was the question of whether WBHO’s disqualification was in
   line with the rule of law. The judge examined the criteria set out
   in the tender documents and how WBHO’s submission was found to
   be incomplete. The verdict suggests that the judge found
   Eskom’s reasons for disqualifying WBHO to be both clear and
   justified. Eskom maintained that the disqualification was due to
   WBHO’s failure to provide mandatory information. In the opinion
   of the court, the omission, regardless of its perceived
   significance, was grounds for disqualification.
2. Principle of fairness: The judge also weighed
   the principle of fairness in the tender process. WBHO’s
   contention was that their omission was minor and should not have
   led to their disqualification. The court, however, emphasised that
   the sanctity of the tender process requires strict adherence to the
   rules, irrespective of the perceived magnitude of an
   oversight.
3. The role of PAJA: PAJA formed a pivotal part
   of WBHO’s arguments who believed that their disqualification
   was arbitrary and unjust. After examining the tender’s criteria
   and WBHO’s submission, the court found, however, that
   Eskom’s actions were consistent with the principles of
   administrative justice enshrined in PAJA.

Judgment implications:

This judgment underscores the importance of meticulous adherence
to the requirements set out in tender documents. A failure to
comply, even if perceived as immaterial, can result in
disqualification. For companies and consortiums bidding for large
tenders, this case serves as a stark reminder of the legal and
financial implications of non-compliance.

1. Stringent adherence to tender criteria: One of
   the primary lessons from this case is the emphasis on strict
   compliance with tender requirements. Even seemingly minor omissions
   or errors can lead to disqualification. For businesses and
   consortiums, this underscores the need for thoroughness and
   diligence in preparing tender documents.
2. Legal precedence: The verdict sets a precedent
   for future tender disputes. The judiciary has signalled its intent
   to uphold the integrity of tender processes, which serves as a
   deterrent for potential litigants who might consider challenging
   tender outcomes.
3. Reinforcement of PAJA’s principles: The
   case reaffirms the principles of PAJA, particularly in ensuring
   that administrative actions are lawful, reasonable, and
   procedurally fair. Organisations should be mindful of these
   principles when participating in or administering tenders.
4. Financial risks: Beyond the immediate legal
   ramifications, the case highlights the financial risks associated
   with tender disputes. WBHO not only lost the opportunity to secure
   the tender but also incurred significant costs.

Tender disputes are complex, often involving vast sums of money.
It is paramount for bidders to be acutely aware of the requirements
and ensure complete compliance. As always, a proactive approach,
coupled with sound legal advice, can mitigate the risk of
unfavourable outcomes.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.