Constitutional court of south africa



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(b) SASSA’s duty to investigate

  1. Corruption Watch made submissions on the duty of state organs to investigate, independently and proactively, any possible irregularities in the procurement process.107 SASSA accepted that it had that obligation, but asserted that it had done all it could in that regard. It is not possible or prudent for us to assess and pronounce on this collateral issue, effectively as a court of first instance.


Remedy

  1. The national system for the payment of social grants has been in operation for some 20 months now. SASSA and Cash Paymaster assert that it is running smoothly and efficiently and that setting the tender aside would cause great disruption. The Centre for Child Law108 made submissions in relation to the appropriate remedy in order to protect the rights of child grant beneficiaries. Part of the submissions dealt with the constitutional obligation that Cash Paymaster may have to continue with the current system even if the tender award is set aside, until a new system is in place. These considerations raise difficult factual and legal issues. The information currently before us is outdated and inadequate. It would be inappropriate to make a decision on a just and equitable remedy in the absence of further information and argument on these issues. Our order will thus contain directions requiring further submissions and a hearing on the issue of a just and equitable remedy before a final decision is made.


Costs

  1. Whatever remedy eventually follows, AllPay has been substantially successful in having the award of the tender declared invalid. It is entitled to costs.


Order

  1. The following order is made:

1. Leave to appeal is granted.

2. The appeal succeeds and the order of the Supreme Court of Appeal is set aside.

3. It is declared that the award of the tender to Cash Paymaster (the third respondent) to provide services for payment of social grants over a period of five years for all nine provinces is constitutionally invalid.

4. The declaration of invalidity is suspended pending determination of a just and equitable remedy.

5. The parties and the amici curiae are directed to furnish factual information on affidavit, as well as further written submissions, on the following aspects:

5.1 The time and steps necessary, and the costs likely to be incurred, in the initiation and completion of a new tender process for a national social grant payment system.

5.2 The time and steps necessary, and the costs likely to be incurred, in the implementation of a new system after the tender process is completed.

5.3 The just and equitable arrangements that should be made for the continued operation of the payment of social grants until a new system is implemented.

5.4 Cost implications for:

5.4.1 the third respondent if a new tender process is ordered and implemented, and how these costs could be ameliorated or offset; and

5.4.2 the state if a new tender process is ordered and implemented, and how these costs could be ameliorated.

5.5 What would be in the public interest when determining a just and equitable remedy.

5.6 Data and statistics on the implementation of the tender to date.

5.7 Whether the third respondent is under a public duty or is constitutionally or otherwise obliged to assist in the transitional arrangements.

5.8 Whether there is any other remedy available to the applicant to protect or enforce its private interests in the event that a new tender process is not ordered.

5.9 Any other information considered relevant.

6. The parties and the amici must comply with the directions in paragraph 5 above by not later than Thursday, 30 January 2014.

7. The matter is set down for further hearing on Tuesday, 11 February 2014.

8. The grant of a just and equitable remedy is reserved pending the further hearing on Tuesday, 11 February 2014.

9. The first, second and third respondents are ordered to pay the applicants’ costs, including the costs of three counsel, in the High Court, the Supreme Court of Appeal and in this Court.








For the Applicants:
For the First and Second Respondents:

For the Third Respondent:


For the First Amicus Curiae:

For the Second Amicus Curiae:


Advocate G Marcus SC, Advocate D Unterhalter SC, Advocate M Du Plessis, Advocate C Steinberg and Advocate A Coutsoudis instructed by Nortons Inc.

Advocate S Cilliers SC, Advocate M Mostert and Advocate A Higgs instructed by the State Attorney.

Advocate T Beckerling SC, Advocate R Strydom SC, Advocate N Ferreira and Advocate J Bleazard instructed by Smit Sewgoolam Inc.

Advocate S Budlender, Advocate M Townsend and Advocate L Kelly instructed by Van Hulsteyns Attorneys.



Advocate T Ngcukaitobi and Advocate M Bishop instructed by the Legal Resources Centre.


1 The second respondent.

2 The third respondent.

3 The applicant, in different legal capacities, as cited above in the header.

4 The provisions of section 217 are set out in [32] below.

5 Steenkamp NO v Provincial Tender Board, Eastern Cape [2006] ZACC 16; 2007 (3) SA 121 (CC); 2007 (3) BCLR 300 (CC) (Steenkamp) at paras 20-3.

6 Section 27(1)(c) of the Constitution provides: “[E]veryone has the right to have access to social security, including, if they are unable to support themselves and their dependants, appropriate social assistance.”

7 Section 28(1)(c) of the Constitution provides: “Every child has the rightto basic nutrition, shelter, basic health care services and social services”.

8 AllPay Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer, South African Social Security Agency, and Others [2013] ZASCA 29; 2013 (4) SA 557 (SCA) (Supreme Court of Appeal judgment) at para 96.

9 SASSA was established in terms of the South African Social Security Agency Act 9 of 2004.

10 The Request for Proposals defines biometric as “the means by which a person is uniquely identified by evaluating one or more distinguishable biological trait[s] based primarily on ten (10) fingerprints”.

11 Circular 10 of 2008 published on 29 September 2008.This circular was circulated in compliance with regulation 16A6.2 of Treasury Regulation R 225 published in Government Gazette 27388 of 15 March 2005 (Treasury Regulations).

12 The first respondent.

13 Corruption Watch, the first amicus curiae (friend of the court), is an independent, non-profit civil society organisation that seeks to promote transparency and accountability to protect beneficiaries of public goods and services. It also seeks to fight corruption and the abuse of public funds.

14 Supreme Court of Appeal judgment above n 8 at para 21. See also para 96: “It seems to me that it would be most prejudicial to the public interest if inconsequential irregularities alone were to be capable of invalidating the contract.” (Emphasis added.)

15 Id at para 44.

16 Id at para 46.

17 Id at paras 50-3 (multiple bids); at paras 54-64 (non-compliance with Bid Evaluation Committee and Bid Adjudication Committee requirements); at paras 65-6 (black economic empowerment requirements); at paras 67-85 (Bidders Notice 2); and at paras 86-95 (scoring of bids).

18 3 of 2000.

19 Bengwenyama Minerals (Pty) Ltd and Others v Genorah Resources (Pty) Ltd and Others [2010] ZACC 26; 2011 (4) SA 113 (CC); 2011 (3) BCLR 229 (CC) (Bengwenyama) at paras 81-3. See also Minister of Health and Another v New Clicks South Africa (Pty) Ltd and Others [2005] ZACC 14; 2006 (2) SA 311 (CC); 2006 (8) BCLR 872 (CC) (New Clicks) at para 19 and De Lange v Smuts NO and Others [1998] ZACC 6; 1998 (3) SA 785 (CC); 1998 (7) BCLR 779 (CC) at para 104.

20 Section 8(1) of PAJA provides:

“The court or tribunal, in proceedings for judicial review in terms of section 6(1), may grant any order that is just and equitable, including orders―

(a) directing the administrator―

(i) to give reasons; or

(ii) to act in the manner the court or tribunal requires;

(b) prohibiting the administrator from acting in a particular manner;

(c) setting aside the administrative action and―

(i) remitting the matter for reconsideration by the administrator, with or without directions; or

(ii) in exceptional cases―

(aa) substituting or varying the administrative action or correcting a defect resulting from the administrative action; or

(bb) directing the administrator or any other party to the proceedings to pay compensation;

(d) declaring the rights of the parties in respect of any matter to which the administrative action relates;



(e) granting a temporary interdict or other temporary relief; or

  1. (f) as to costs.”

21 See City of Johannesburg Metropolitan Municipality v Gauteng Development Tribunal and Others [2010] ZACC 11; 2010 (6) SA 182 (CC); 2010 (9) BCLR 859 (CC); South African Veterinary Council and Another v Veterinary Defence Association [2003] ZASCA 27; 2003 (4) SA 546 (SCA); and Hira and Another v Booysen and Another [1992] ZASCA 112; 1992 (4) SA 69 (AD).

22 Logbro Properties CC v Bedderson NO [2002] ZASCA 135; 2003 (2) SA 460 (SCA) (Logbro) at paras 24-5 and Administrator, Transvaal, and Others v Zenzile [1990] ZASCA 108; 1991 (1) SA 21 (AD) at 37C-F.

23 Wade Administrative Law 6 ed (Oxford University Press, New York 1988) at 533-4. The remarks are as applicable to our law as they are to English law.

24 Transparency International Handbook on Curbing Corruption in Public Procurement (Transparency International, Berlin 2006).

25 Millennium Waste Management (Pty) Ltd v Chairperson of the Tender Board: Limpopo Province and Others [2007] ZASCA 165; 2008 (2) SA 481 (SCA) (Millennium Waste) at paras 28-32.

26 Hoexter Administrative Law in South Africa 2 ed (Juta and Co Ltd, Cape Town 2012) at 48-50 and 292-5.

27 Compare Maharaj and Others v Rampersad 1964 (4) SA 466 (AD). See also Weenen Transitional Local Council v Van Dyk [1990] ZASCA 108; 2002 (4) SA 653 (SCA) at para 13.

28 African Christian Democratic Party v Electoral Commission [2006] ZACC 1; 2006 (3) SA 305 (CC); 2006 (5) BCLR 579 (CC) (ACDP v Electoral Commission) at para 25.

29 Steenkamp above n 5 at para 33.

Millennium Waste above note 25 at para 4.

30 5 of 2000.

31 1 of 1999.

32 Section 1(i) of the Procurement Act.

33 R502, published in Government Gazette 34350 of 8 June 2011, issued in terms of section 5 of the Procurement Act.

34 Id regulation 1(s).

35 Id regulation 4.

36 Regulation 16A3.1 and 16A3.2(a) of the Treasury Regulations.

37 Id regulation 16A6.2.

38 Id regulation 16A6.3(a).

39 53 of 2003.

40 Regulation 16A6.3(b) of the Treasury Regulations.

41 Chief Executive Officer of the South African Social Security Agency NO and Others v Cash Paymaster Services (Pty) Ltd [2011] ZASCA 13; 2012 (1) SA 216 (SCA) (SASSA v CPS) at para 15.

42 13 of 2004.

43 9 of 2004.

44 Request for Proposals at clause 13.1.

45 Premier, Free State, and Others v Firechem Free State (Pty) Ltd [2000] ZASCA 28; 2000 (4) SA 413 (SCA) (Firechem).

46 Id at para 30.

47 Steenkamp above n 5 at para 60.

48 SASSA v CPS above n 44.

49 Bolton The Law of Government Procurement in South Africa (LexisNexis Butterworths, Cape Town 2007) at 57:

“One of the primary reasons for the express inclusion of the five principles in section 217(1) of the Constitution is to safeguard the integrity of the government procurement process. The inclusion of the principles, in addition to ensuring the prudent use of public resources, is also aimed at preventing corruption.”



See also R (on the application of the Law Society) v Legal Services Commission; Dexter Montague & Partners (a firm) v Legal Services Commission [2008] All ER 148 (CA) at paras 42-3. Currie The Promotion of Administrative Justice Act: A Commentary (Siber Ink, Johannesburg 2007) at 113-4 says the following with regard to section 3(5) of PAJA, which allows an administrator discretion to follow procedures that are “fair but different” from the ones mandated in section 3(2):

  1. “Only procedures in empowering provisions can qualify as fair but different. An empowering provision is defined as ‘a law, rule of common law, customary law, or an agreement, instrument or other document in terms of which an administrative action was purportedly taken.’ Some empowering materials – such as internal department circulars – are not generally publicly accessible. At least for the purposes of the fair but different provision, it is submitted that an empowering provision can only qualify as ‘fair’ if it is itself publicly accessible. A law that is not publicly accessible cannot provide publicly known and thus fair procedures.”

50 Compare section 3(4) of PAJA and Member of the Executive Council, Department of Education, Gauteng and Others v Governing Body of Rivonia and Others [2013] ZACC 34; 2013 (6) SA 582 (CC) at para 49(c).

51 Mazibuko and Others v City of Johannesburg and Others [2009] ZACC 28; 2010 (4) SA 1 (CC); 2010 (3) BCLR 239 (CC) at para 73; New Clicks above n 19 at paras 95-7; and Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Others [2004] ZACC 15; 2004 (4) SA 490 (CC); 2004 (7) BCLR 687 (CC) at paras 25-6.

52 Section 6(2)(h) of PAJA.

53 In this regard it differs from the Labour Relations Act 66 of 1995. In Gcaba v Minister for Safety and Security and Others [2009] ZACC 26; 2010 (1) SA 238 (CC); 2010 (1) BCLR 35 (CC) at para 65, this Court held that these factors placed state employment decisions outside the ambit of the provisions of PAJA.

54 Bolton “Public Procurement Systems in South Africa: The Main Characteristics” (2007-2008) 37 Pub. Cont. L.J. 781 at 782-3. See also SASSA v CPS above n 44 at para 18.

55 This also includes other relevant legislation referred to in these Acts.

56 Agri SA v Minister for Minerals and Energy [2013] ZACC 9; 2013 (4) SA 1 (CC); 2013 (7) BCLR 727 (CC) (Agri SA).

57 Id at para 61.

58 Section 2(1)(a)-(d) of the Procurement Act.

59 Id section 4.

60 Id sections 5 and 6.

61 For works above R1 million see section 6(2)-(4). Section 1(d) of the Procurement Act defines a B BBEE status level as “the B-BBEE status received by a measured entity based on its overall performance using the relevant scorecard contained in the Codes of Good Practice on Black Economic Empowerment, issued in terms of section 9(1) of the [Empowerment Act]”.

62 Section 1 of the Empowerment Act.

63 Section 2 of the Empowerment Act.

64 Codes of Good Practice on Broad Based Black Economic Empowerment promulgated in GN 1106, published in Government Gazette 33857 of 10 December 2010.

65 Id at para 5.21 which sets out the principles of B-BBEE transactions as follows:

“5.21.1 B-BBEE ownership initiatives should be aimed at promoting the productive and sustainable participation of Black companies and Black people in each sector of the economy;



  1. 5.21.2 Ownership will be particularly encouraged if it adds value to the companies involved and includes meaningful participation in management and control”. (Emphasis added.)

66 Clause 6.1 of the Request for Proposals.

67 Id clause 2.9.

68 Id clause 3.1.

69 Id clause 3.2.

70 Viking Pony Africa Pumps (Pty) Ltd t/a Tricom Africa v Hidro-Tech Systems (Pty) Ltd and Another [2010] ZACC 21; 2011 (1) SA 327 (CC); 2011 (2) BCLR 207 (CC) (Viking Pony).

Id at para 46.

71 Id at para 47.

72 Id at para 46.

73 Section 3(1) of PAJA provides:

  1. “Administrative action which materially and adversely affects the rights or legitimate expectations of any person must be procedurally fair.”

74 Logbro above n 22 at para 20.

75 Grey’s Marine Hout Bay (Pty) Ltd and Others v Minister of Public Works and Others [2005] ZASCA 43; 2005 (6) SA 313 (SCA) (Grey’s Marine).

76 Section 1(i)(b) of PAJA defines administrative action as―

  1. “any decision taken, or any failure to take a decision, by a natural or juristic person, other than an organ of state, when exercising a public power or performing a public function in terms of an empowering provision, which adversely affects the rights of any person and which has a direct, external legal effect.”

77 Grey’s Marine above n 80 at para 23. (Emphasis added.)

78 Joseph and Others v City of Johannesburg and Others [2009] ZACC 30; 2010 (4) SA 55 (CC) 2010 (3) BCLR 212 (CC); at para 27.

79 Request for Proposals at clause 3.7.

80 See [52] above.

81 Section 2(1)(a)-(d) of the Procurement Act.

82 Compare Bengwenyama above n 19 at paras 72-4; Walele v City of Cape Town and Others [2008] ZACC 11; 2008 (6) SA 129 (CC); 2008 (11) BCLR 1067 (CC) at para 72; and Minister of Law and Order v Hurley and Another 1986 (3) SA 568 (AD) at 577H-578F.

83 See above n 10 for the definition of biometric according to the Request for Proposals.

84 Clause 3.3 of Section C “Scope of Work”, in the Request for Proposals. (Emphasis added.)

85 Clause 14.6 of Section B “Conditions for Acceptance” in the Request for Proposals.

86 Though Bidders Notice 2 is dated 6 June 2011, AllPay says it did not receive it until 10 June 2011.

87 Minutes of the Bid Evaluation Committee meeting, 31 August 2011 at para 4.4-4.6 and handwritten notes taken at the Bid Evaluation Committee meeting, 5 October 2011.

88 Minutes of the Bid Evaluation Committee meeting, 31 August 2011 at para 4.6.1.

89 Minutes of the Bid Evaluation Committee meeting, 7 October 2011 at para 2.1.1 and 2.4 and Minutes of the Bid Evaluation Committee meeting, 19 October 2011 at para 2.1.

90 Minutes of Cash Paymaster’s presentation to the Bid Evaluation Committee, 7 October 2011 at para 4.

91 Preparations for Bid Adjudication Committee Meeting: Key Issues for Discussion at para 3.2 and 3.4.

92 Addendum to the Bid Evaluation Committee Report, 25 November 2011 at para 3.2.5-6 and Minutes of the Bid Evaluation Committee meeting, 31 August 2011 at para 4.6.1.

93 See the handwritten notes to the Minutes of the Bid Evaluation Committee meeting, 31 August 2011, showing that biometric testing was equated with fingerprinting, and para 4.5.2.1 of the official Minutes, which states, “[b]iometric standards – the supporting documents issued with the Bid specification provide for a specific standard requiring fingerprints to be captured of all beneficiaries.”

94 AllPay alleges that, had the specifications been clear that verification was sought monthly, at the time SASSA paid the grants into bank accounts, it could have offered voice-recognition verification as a solution. It says the fact that it offered this solution for annual enrolment demonstrates it had the capacity to do so. It was only at withdrawal points that it was unable to provide this solution.

95 The key evidence of this confusion appears in the Minutes of the Bid Evaluation Committee meeting, 31 August 2011. In those minutes, we see confusion about “conflicting messages arising from the Bid specification document and Bidders Notice 2”. There is confusion about the Request for Proposals requiring only a “payment solution” and Bidders Notice 2 requiring “biometric verification”. There is confusion about whether biometric verification was required at ATMs and point of sale devices – which might have resulted in bidders withdrawing. And there is confusion over whether proof of life was required annually or at the time of every payment, as stipulated in Bidders Notice 2.
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