Ndlambe Municipality’s water needs take priority over complaints about irregular tender process deviations and allegations of corruption, the Grahamstown High Court has ruled.
Last week Judge NG Beshe dismissed with costs an application by MEB Energy, the losing bidder in a R100-million tender for a sea water reverse osmosis (SWRO) plant that is intended to alleviate Ndlambe’s water shortages.
MEB obtained an interim interdict against the municipality early in March, pending an application to review and set aside the award.
In his founding affidavit, MEB director Aharon Even alleged corruption in the tender process after MEB’s representatives were asked for a R1-milion bribe by someone claiming to work for the Ndlambe municipal manager.
MEB Energy also said it was inexplicable that the winning bidder, Quality Filtration Systems (QFS), had a price almost R90-million lower than theirs.
The tender was for a 2 megalitre (ML) plant, for which MEB Energy submitted three options ranging in price from R132.3-million to R140.901-million. MEB further submitted options for 5ML plant, as it was known the municipality would want to upgrade the plant in due course.
QFS submitted a bid of R40.2-million and an alternative of R28.7-million for a 2ML plant.
Other matters came to light in the municipality’s answering papers.
According to the minutes of the bid adjudication committee, the tender was awarded for an amount of R111,254,827. It emerged that after the close of bids, the municipality effectively changed their tender specifications from 2ML to 5ML.
The product line from the SWRO was meant to be injected to a bulk water reticulation network, but QFS’s bid provided for the product line to be discharged at a fire hydrant.
Despite this, QFS was requested to submit a quotation for a product line that would discharge to the Nkwenkwezi water treatment works. This was something MEB Energy had proposed.
QFS was allowed to augment its price to R110-million by quoting for a product line which would discharge at the correct discharge point.
Subsequent to the issue of the rule nisi on March 5, further affidavits were filed and both parties filed additional heads of argument.
Ndlambe said it was constrained to award the bid to QFS, because it only had R100-million at its disposal which it had secured from two grants – from the department of cooperative governance and traditional affairs and the department of water affairs.
The allegations of corruption… cannot be said to be hearsay evidence
The municipality also asked for the allegations of corruption in MEB’s court papers to be struck out on the basis they amount to “hearsay”.
But Judge Beshe disagreed, as conversations with the alleged bribe-seekers were confirmed by MEB’s representatives Edward Batty and Gareth Dart, including the transcripts of a recorded conversation. “This cannot be said to be hearsay evidence,” the judge said.
But she said MEB was no longer placing as much reliance on this complaint, and “it has not been shown what effect these could have had on the outcome of the bidding”.
Among other issues, MEB complained that the bid evaluation committee could not have been properly constituted because it did not include a technical expert. Ndlambe denied this. Acting municipal manager Michael Klaas said he chaired the bid adjudication committee and that the tender process was managed by infrastructure director Noluthando Vithi-Masiza, who holds a B Tech degree in civil engineering.
Both bidders did not achieve the 85-point threshold for “functionality”, but both were allowed to proceed at 80 points each – a requested deviation due to the water crisis.
The record does not reveal that the 90:10 price preference formula was used.
In response, Klaas said the terms and conditions of the bid do not state the manner in which functionality points should be allocated. Points in this regard were allocated at the discretion of infrastructure deputy director Sipho Babama and a colleague called Mr Nkwelo.
I am not required to determine whether there are valid grounds for the reviewal and setting aside of first respondent’s [Ndlambe Municipality] decision to award the tender in question to the second respondent, the judge said.
Even though the initial invitation for bids was for a 2ML installation, Ndlambe said additional funds became available. This resulted in the two bidders being asked to give prices for a 5ML plant.
Judge Beshe said: “I am not required to determine whether there are valid grounds for the reviewal and setting aside of first respondent’s [Ndlambe Municipality] decision to award the tender in question to the second respondent. What I am required to determine is whether the applicant has made out a case for the granting of an interim interdict to halt the implementation of the tender pending the review of the decision.”
She said MEB had not succeeded in establishing a prima facie right based on a probability of success of the review application.
She also said the balance of convenience favoured the municipality, to deal with the pressing need of the water crisis.