Controversial tender for Thebephatswa air base worth P169 million suspended

Mpho Mokwape | Monday, 22 July 2024, 06:00

Hitecon had sought judicial intervention, citing irregularities, after it was allegedly disqualified from the controversial 2023 tender for failing to submit a list of local subcontractors. The contract was allegedly awarded to Zhong Gan Engineering. Upon learning of the award of the contract to Zhong Gan, Hitecon reportedly approached court, seeking, among other things, an interim injunction (rule nisi) to restrain the defendants from continuing with the tender process and to stay the tender process pending the resolution of a review application. Judge Zein Kebonang recently upheld the rule nisi enjoining and restraining the defendants issued on May 14, 2024, saying that the decision to disqualify the company on the grounds that it failed to submit a list of local subcontractors when the tender did not require it was irrational and impermissible. “By qualifying the applicant’s bid based on a criterion not specified in the tender, the defendants committed irregularities that are prima facie verifiable. For this reason alone, the applicant was able, upon examination, to demonstrate a claim that would entitle him to the interim injunction,” he said. The judge said the applicant had argued that his right to appeal to the court and the application for review would be null and void if the interim injunction was not obtained.

The judge stressed that under the Procurement Act, the court can only suspend a procurement process or contract performance if a contract has not been concluded. However, once the contract has been concluded, it becomes irrevocable and its execution will continue without interruption, regardless of whether the accounting officer’s award decision itself can be challenged by a contractor before the court. “Based on all these considerations, it is clear that no other remedy is available to the applicant in due course and the balance of interests favors granting the interim injunction,” said Justice Kebonang. Justice Kebonang further explained that the applicant also claimed that the decision to disqualify was irrational because its tender was disqualified based on a criterion that was not set out in the ITT. He pointed out that the company justified its disqualification on the grounds that it did not provide a list of proposed subcontractors from the public in its tender documents, although this was not a requirement. “It also states that the third respondent company which was awarded the contract was unlawfully awarded the contract when it should have been disqualified since it had not attended the mandatory pre-award meeting,” he said. The judge explained that it is usually for the procuring entity and not the court to determine the conditions for a valid tender and therefore the question of whether or not a tender bid was rightly disqualified must be assessed from that perspective. He explained that failure to comply with prescribed conditions usually leads to the disqualification of a bidder. Judge Kebonang noted that in the instant case, the ITT had determined that preferential margins would be applied to qualified bidders in accordance with the Economic Diversification Drive (EDD) and the Citizen Economic Empowerment Policy. “There is certainly a difference between preferential margins, which represent the additional price premium granted to any domestic contractor or supplier who bids in response to a tender without the bid being otherwise disadvantaged in terms of price, and the provision or preparation of a list of subcontractors,” he explained. Finally, he explained that as regards other conditions for granting an interim injunction, although Zhong Gan Company had been awarded the contract, it had not yet signed the contract with the procuring entity. In addition, the company had refused to attend on-site, arguing that it was unable to do so until it had signed a contract and fulfilled the suspensive conditions of the award.

“For all the reasons stated above, the preliminary judgment entered on May 14, 2024 is hereby confirmed with costs. These costs are to be borne by the defendants, one paying the other for the acquittal and the costs including attorney’s fees,” he said.

The tender and the dispute

Court documents state that the applicant (Hitecon) was invited by the BDF to tender for three (3) projects in 2023 and two of these projects were to be carried out at Thebephatshwa Air Force Base and the other at Francistown.

The notice of tender (ITT) issued by the BDF stated, among other things, that the tender would close on 18 July 2023 and that all bidders would have to attend a mandatory pre-tender meeting in Thebephatshwa on 4 July 2023. “The ITT also stated that the tender documents could be collected from the BDF Barracks in Mogoditshane from 26 June 2023 and that any queries or clarifications should be received by the procuring entity not later than seven (7) working days before the tender closing date. It is common knowledge that the applicant responded to the tender and attended the mandatory pre-tender meeting in Thebephatshwa while the third respondent did so later,” the court documents said. According to the documents, the register of visits showed that a total of twenty-one (21) companies attended the mandatory pre-tender meeting and Zhong Gan allegedly said that it received a tender notice on 5 July 2023 and proceeded to purchase the tender documents on 6 July 2023 and attended a mandatory pre-tender meeting at the Botswana Defence Force barracks in Donga, Francistown on the same day. “At this meeting, it learnt that another mandatory pre-tender meeting had taken place on 4 July 2023 in relation to the tenders for Thebephatshwa Air Force Base in Thebephatswa. Although the date of the mandatory pre-tender meeting was stated in the tender documents, the third respondent says he was never told the date,” the court documents further state. Meanwhile, on 10 July 2023, Zhong Gan is said to have written to the BDF to inquire, among other things, whether (a) it could submit a bid for the Thebephatshwa projects despite not attending the mandatory pre-tender meeting on 4 July 2023 and (b) whether the bid deadlines could be extended by at least two weeks to enable it to submit a more favourable bid. Subsequently, court documents said that as a result, an undated and unsigned addendum was apparently issued not by the BDF but by the Director of Procurement Oversight at the Ministry of Defence and Security, extending the bid deadline from 18 July 2023 to 1 August 2023 and setting a mandatory pre-tender meeting for 20 July 2023, even though that meeting had already taken place.

The documents further mention that on May 2, 2024, the third defendant was awarded the disputed Thebephatshwa project valued at P169,513,412.68 (incl. GST) with a completion period of 16 months, while the plaintiff’s bid for the same project was at P101,735,174.85 (incl. GST) with a completion period of 10 months. “Following his disqualification on March 19, 2024, the plaintiff promptly filed a complaint with the Accounting Officer under Section 104(2) of the Public Procurement Act. Section 51 states that a contractor who is aggrieved by a breach of any provision of the Act or who claims to have suffered or is likely to suffer any loss or damage as a result of a breach of any duty imposed on a procuring entity shall first file a complaint with the Accounting Officer for review,” the documents state. The records further revealed that the complaint filed by the applicant remained unanswered until 1 April 2024, when her disqualification was confirmed on the grounds that she had not provided a list of local subcontractors in her tender documents as required by the ITT. The judgment further revealed that the Permanent Secretary in the Ministry of Defence and Security, Pearl Ramokoka, in her capacity as Accounting Officer, falsely stated in her dismissal letter that Zhong Gan had attended the mandatory pretender meeting on 4 July 2023 in Thebephatswa when he had not. Although the Permanent Secretary’s letter appears to have been written on 11 April 2024, Hitecon claimed it did not learn of it until 2 May 2024 when the letter was received by them. “Immediately after Hitecon learned on May 2, 2024 that the disputed contract had been awarded to Zhong Gan, the company filed an emergency motion on May 10, 2024, seeking, among other things, an injunction prohibiting and restraining the defendants from proceeding with the procurement process and freezing the procurement process,” the background to the dispute states.