THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case no: 20580/2014

In the matter between:
THE CITY OF TSHWANE METROPOLITAN
MUNICIPALITY

First Appellant
THE CITY MANAGER OF THE CITY OF TSHWANE
METROPOLITAN MUNICIPALITY

Second Appellant
DUMISANE J OTUMILE NO

Third Appellant
THE EXECUTIVE DIRECTOR SUPPLY CHAIN MANAGEMENT
OF THE CITY OF TSHWANE

Fourth Appellant
THE CHAIRPERSON OF THE BID EVALUATION
COMMITTEE OF THE CITY OF TSHWANE
METROPOLITAN MUNICIPALITY

Fifth Appellant
THE CHAIRPERSON OF THE BID ADJUDICATION
COMMITTEE OF THE CITY OF TSHWANE
METROPOLITAN MUNICIPALITY

Sixth Appellant
and
NAMBITI TECHNOLOGIES (PTY) LTD

Respondent

Neutral citation: City of Tshwane v Nambiti Technologies (Pty) Ltd
(20580/2014) 2015 ZASCA 167 (26 November 2015)

Coram:
MAYA DP, BOSIELO, WALLIS, PETSE and DAMBUZA
JJA
Heard:
17 November 2015
Delivered: 26 November 2015
Summary: Tender – cancellation thereof – terms of tender authorising its
withdrawal – cancellation not administrative action – cancellation set
aside by High Court as unfair and municipality ordered to adjudicate
tender – no grounds for holding cancellation unfair – relief granted by
High Court impinging on municipality’s powers and obligations in regard
to procurement – such impermissible as infringing the doctrine of the
separation of powers.

.

ORDER

On appeal from: Gauteng Division, Pretoria (Kganyago AJ, sitting as
court of first instance):
The appeal is upheld with costs, such costs to include those
consequent upon the employment of two counsel.
The order of the High Court is set aside and the following
substituted therefor:

‘The application is dismissed with costs.’

JUDGMENT

Wallis JA (Maya DP, Bosielo, Petse and Dambuza JJA)

Introduction
[1] From 1 August 2009 until 31 December 2012, the respondent,
Nambiti Technologies (Pty) Ltd (Nambiti) was contracted to the first
appellant, the City of Tshwane Metropolitan Municipality (the City), to
provide it with SAP support services. On 12 October 2012 the City
published an invitation to submit tender CB204/2012, for:
‘The provisioning of on-site and off-site SAP support services for the City of
Tshwane.’
Nambiti, along with a number of other parties, submitted a tender to
supply these services. On 11 December 2012 it was informed that the
tender would be cancelled and a new tender issued. In the meantime on
20 December 2012 its services were effectively terminated and a new
contractor EOH Mthombo Limited (EOH), which was the fifth

respondent in the high court but has played no role in the litigation, was
employed to provide those services. It is accepted in these proceedings
that EOH lawfully provided SAP support services to the City until
31 December 2013. The papers do not reveal what occurred after that
date.

[2] Nambiti was dissatisfied with this course of events. After an
exchange of correspondence it launched proceedings on 1 March 2013 in
which it claimed the following relief:
‘2.
The decision of the First alternatively Second alternatively Third alternatively
Fourth respondent to appoint the Fifth Respondent as service provider to the First
Respondent in respect of on- and off-site SAP support services for the period
1 January to 30 June 2013 is reviewed and set aside.
3.
The decision of the First alternatively Second alternatively Third alternatively
Fourth Respondent to cancel tender CB204/2012 for the provision of on- and off-site
SAP support services to the First Respondent for a three year period with effect
1 January 2013 is reviewed and set aside.
4.
The First Respondent is ordered without delay to invite new tenders in respect
of the provision of on- and off-site SAP support services to the First Respondent.’

[3] Subsequently there was an amendment to the notice of motion and
the relief sought was varied. After the application was argued, the high
court held that, while the award of the contract to EOH was deficient, it
should not be set aside. There is no challenge to that decision. But the
high court granted relief in relation to the cancellation of tender
CB204/2012.

[4] The net effect of the high court’s order was to resuscitate the
cancelled tender and compel the City to adjudicate and award the tender
within two months of this order. Tenderers were permitted to adjust their

tariffs upwards or to withdraw their tenders, but otherwise the process
was to continue as if the tender had never been cancelled. Leave to appeal
against the order was refused but granted by this Court.

Mootness
[5] The immediate question is whether the appeal still raises a live
dispute. Counsel were at one that the order granted by the high court
could not be implemented at this stage. The contract period of the tender
the City was ordered to adjudicate will expire at the end of next month.
The original contract with EOH has also expired. Presumably the City has
made fresh arrangements in respect of SAP support services. When asked
about this counsel for Nambiti said that they were not here to defend the
order, but to defend the judgment. But that is a classic indication that the
outcome of this appeal will have no practical effect or result and the
appeal has become moot. Why then should it not be dismissed in terms of
s 16(2)(a)(i) of the Superior Courts Act 10 of 2013?

[6] There is no need to rehearse the jurisprudence that developed
around section 21A(1) of the Supreme Court Act 59 of 1959, which
jurisprudence is equally applicable under section 16(2)(a)(i) of the
Superior Courts Act. The court has a discretion notwithstanding that an
appeal has become moot, to hear and dispose of it on its merits. The usual
ground for exercising that discretion in favour of dealing with it on the
merits is that the case raises a discrete issue of public importance that will
have an effect on future matters.1

1 Qoboshiyane NO & others v Avusa Publishing Eastern Cape (Pty) Ltd & others 2013 (3) SA 315
(SCA) para 5.

[7] In my view there is such an issue in this case. This is the first
occasion in the reported cases where a decision by a public authority to
cancel a tender has been challenged by way of judicial review. Not only
is this the first such case, but the review succeeded and the court ordered
the City to adjudicate and award the cancelled tender. That was a far-
reaching order impinging as it did on the power of a municipal council to
determine for itself what goods and services it needed and would procure
by a process complying with s 217 of the Constitution. Whether such a
decision is administrative action bringing the case within the purview of
PAJA2 is central to the case. Furthermore the terms of the order granted
by the high court had the potential to infringe upon the constitutional
powers and obligations of a municipal council. Accordingly the mootness
of the appeal should not bar the court from addressing the merits.

The facts
[8] A brief exposition of the facts surrounding the disputed tender and
its cancellation is called for.  The call for tenders was issued in the
ordinary course and Nambiti and various other parties submitted tenders.
These were opened on 13 November 2012.

[9] On 5 November 2012, the City appointed the third appellant, Mr
Dumisane Otumile, as its Group Chief Information Officer. Mr Otumile’s
responsibilities extended to oversight of all matters relating to
information systems used by the City. As such he had a material interest
in the basis upon which SAP support services were provided to the City.
His
first
intervention
in
relation
to
this
tender
came
on
23 November 2012, when he, on behalf of his department, placed a

2 The Promotion of Administrative Justice Act 3 of 2000.

motivation before the Executive Acquisition Committee, a Supply Chain
Committee chaired by the Municipal Manager, asking that it approve an
effective extension of the existing contracts of Nambiti and Baraka,
another contractor providing similar services, until September 2013.

[10] This proposal did not find favour with the committee. Instead it
resolved to refer the matter back to Mr Otumile’s department on one of
two bases. The first was that it should consider the use of other SAP
entities used by different organs of state for support and maintenance and
appoint them in line with regulation 32 of the regulations published in
terms of the Local Government: Municipal Finance Management Act 56
of 2003.3 The second option was to fast-track and finalise tender
CB204/2012. The municipal manager signed a resolution to this effect on
30 November 2012. Fast-tracking the tender was the option that Mr
Otumile and his department decided to explore, but first they reviewed
the terms of the tender in the light of the needs of the City as determined
by Mr Otumile.

[11] The results of that review were unfavourable. It concluded that the
tender as published was seeking services inconsistent with the City’s
needs and for a longer period than the policy of the City permitted. In
part, at least, these conclusions flowed from Mr Otumile’s re-evaluation
of the City’s technological needs since his appointment. He identified
three issues. They were that:
 The City had outsourced its requirements in respect of SAP support
services without building its own internal capacity.

3 The resolution referred to regulation 36, but Mr Otumile said, without dispute, that this was an error
and should refer to regulation 32.

 The arrangements in place for the provision of SAP support
services provided that such support be given both on-site and off-
site, and in the case of the latter it was not possible to monitor the
work and assess whether it was being done and the value of the
services being rendered.
 The City had decided that it was undesirable to have contracts of
this type extend over a period of three years in the light of the
rapidity with which technological change can occur. It had
accordingly taken a decision that it would no longer contract on
that basis.

[12] These conclusions appear to have been reported to the Bid
Adjudication
Committee
of
the
City
(BAC),
because
on
7 December 2012 it took a decision to cancel tender CB204/2012. The
resolution recorded that the tender would be re-advertised, with a
changed specification addressing the current needs of the City.

[13] There was some debate on the papers whether the decision to
cancel the tender was in fact taken on 7 December 2012. However, the
debate appears to be academic as it is plain that the City proceeded on the
basis that a firm decision had been taken on that date. On
11 December 2012 Mr Otumile met with Mr Paul and Ms Easton,
representing Nambiti. The minute of the meeting prepared by Nambiti
reflected in its conclusion that tender CB204/2012 would be cancelled
and a new tender released. So by that date a decision had been taken and
appropriate steps were being pursued in consequence of that decision.
Principal among these was the appointment of a new service provider to
provide SAP support services.

[14] In view of the imminent expiry of Nambiti’s contract Mr Otumile
was to advise it by no later than 21 December whether their contract
would be further extended. On 18 December 2012 a letter was addressed
to Nambiti informing it formally of the cancellation of the tender. On the
following day Mr Otumile sent an email to Mr Paul advising him that
Nambiti’s contract would be expiring at the end of the month and that it
was unnecessary, with effect from 20 December 2012, for it to continue
rendering services to the City. It is common cause on the affidavits that
from 20 December 2012 Nambiti’s representatives were excluded from
the municipal offices. At the same time employees of EOH started to
render SAP support services to the City.

[15] In the light of these events there was an exchange of letters on 18
and 19 December 2012, and on 27 December 2012 attorneys representing
Nambiti wrote to the City Manager requesting written reasons in terms of
s 5(1) of PAJA4. The ‘decisions’5 in respect of which reasons were sought
were the appointment of a new service provider, in the form of EOH, and
the cancellation of the tender CB204/2012. The City responded to this
request on 18 January 2013. It took the attitude that these were
contractual matters and that they did not fall within the category of
decisions subject to PAJA, but nonetheless certain reasons were
proffered, presumably in the interests of open and transparent
government.

[16] In regard to the termination of Nambiti’s contract it was pointed
out that this terminated by effluxion of time on 31 December 2012. As to

4 The Promotion of Administrative Justice Act 3 of 2000.
5 The definition of administrative action in PAJA relates to decisions as defined in s 1 of that Act.

its complaint that insufficient was done to provide for an orderly
handover, the City’s approach was that it did not require Nambiti’s
assistance in that regard. Finally in regard to the cancellation of the tender
and the appointment of a new contractor the letter said:
‘Please note that a number of factors arose that have made the COT [City of
Tshwane] reconsider the way it would procure its IT services going forward, not the
least of which was the recent appointment of a Chief Information Officer (CIO)
within the COT. Unfortunately, the CIO was not appointed at the time the renewal of
IT services tender was dispatched. Since his appointment, the CIO was authorised to
review the specifications of any tender that would serve his portfolio. It is for this
reason that the tender that was in progress was abandoned, with certain provisional
ensure continued business operation.
We advise that the new service provider has been appointed in terms of
Regulation 32 to Municipal Supply Chain Management Regulations. The regulations
are in terms of the Municipal Finance Management Act 56 of 2003. The service
provider was the IT service provider at the City of Johannesburg.
You will appreciate that in order to procure prudently within the present
circumstances, a sensitive balance of the rights and obligations, as well as
procurement procedures had to be weighed by the COT. We assure your client that
legal advice has been taken every step of the way and the COT is committed to good
governance and legal compliance in its operations. The COT therefore denies that any
laws have been side-stepped in the present circumstances.’

[17] Nambiti did not accept this response and on 1 March 2013 it
launched review proceedings directed at challenging both EOH’s
appointment and the cancellation of tender CB204/2012. After the
delivery of further affidavits and the production, in a somewhat sporadic
fashion, of the record, Nambiti delivered a supplementary founding
affidavit and an amended notice of motion.  It continued to challenge the
appointment of EOH, but added a challenge to any extension of the
latter’s contract on a month to month basis after the expiry of the initial

period. It also sought an order preventing the City from continuing with a
fresh tender CB107/2013 for SAP services issued on 10 May 2013.

The Review
[18] The review was eventually heard by Kganyago AJ. On
1 November 2013 judgment was handed down with the following order:
‘1.
The decision of the respondent to cancel tender CB204/2012 for the provision
of on- and off-[site SAP] support services to first respondent of a three year period
with effect from 1st January 2013 is hereby reviewed and set aside.
2.
The City of Tshwane must give written notice within ten days of this order to
all the short-listed tenderers in respect of CB204/2012. The said notice must inform
the tenderers that they are only allowed to adjust their tariffs upwards (to make
provision for inflation) or withdraw their tenders should they wish to do so and to
give notice to the City of Tshwane of their decision within ten days of receiving such
notice.
3.
The City of Tshwane must proceed to adjudicate tender CB204/2012 within
two months after the expiry of the ten days period.
4.
The fifth respondent to be allowed to honour the contract until the 31/12/13
when it expires.’

[19] Some explanation of the basis for this order is necessary. The judge
held that the award of the contract to EOH was flawed, rendering it liable
to be set aside, but decided that, as it only had two more months to run, it
should not be set aside. That explains para 4 of the order. That order was
unnecessary and it has in any event long since expired. In the heads of
argument of Nambiti’s counsel it was accepted that during the year from
1 January to 31 December 2012, SAP services were lawfully rendered to
the City by EOH. We do not know what happened thereafter, but that is
not a concern in these proceedings.

[20] The remaining portions of the order relate to the cancelled tender
CB204/2012. They required the City to proceed to adjudicate that tender
after allowing tenderers to withdraw or to adjust their prices upwards to
make provision for inflation. The order was silent about the fresh tender
CB107/2013. Presumably that was because there was an interim order in
place prohibiting the City from proceeding with that tender pending the
outcome of the review.

[21] The high court concluded that there were no justifiable reasons for
the cancellation of tender CB204/2012 and that it was unfairly cancelled.
The judge appears to have been greatly influenced by the resolution taken
on 30 November 2012 referred to in para 10 above. He said that it
provided for the fast tracking of the tender process in respect of
CB204/2012. He described the reasons given for the cancellation of the
tender as flimsy. In his view the revised tender CB107/2013 was only
marginally different from that under CB204/2012. Accordingly he said
that the earlier tender could have been proceeded with and minimal
changes negotiated with the successful tenderer after the award of the
contract.

Was this administrative action?
[22] PAJA gives effect to the right to just administrative action in
section 33 of the Constitution. It provides for judicial review of
administrative action. What constitutes administrative action is the
subject of a lengthy and somewhat convoluted definition, which was

consolidated and abbreviated by Nugent JA in Grey’s Marine,6 in the
following terms:
‘Administrative action means any decision of an administrative nature made … under
an empowering provision [and] taken … by an organ of State, when exercising a
power in terms of the Constitution or a provincial constitution, or exercising a public
power or performing a public function in terms of any legislation, or [taken 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
…’

[23] The Constitutional Court,7 citing Grey’s Marine with approval, has
broken the definition into seven components, namely that ‘there must be
(a) a decision of an administrative nature; (b) by an organ of State or a
natural or juristic person; (c) exercising a public power or performing a
public function; (d) in terms of any legislation or an empowering
provision; (e) that adversely affects rights; (f) that has a direct, external
legal effect; and (g) that does not fall under any of the listed exclusions.’

[24] Whether the cancellation of a tender before adjudication is
administrative action in terms of these requirements depends on whether
it involves a decision of an administrative nature and whether it has
direct, external legal effect. I do not think that the decision in this case
satisfied either of these criteria.

[25] To determine if action by an organ of State is administrative action
requires an analysis of the nature of the action in question and a positive

6 Grey’s Marine Hout Bay (Pty) Ltd & others v Minister of Public Works & others [2005] ZASCA 43;
2005 (6) SA 313 (SCA) para 21.
7 Minister of Defence and Military Veterans v Motau & others [2014] ZACC 18; 2014 (5) SA 69 (CC)
(Motau) para 33.

decision that it is of an administrative character.8  Here the decision
related to a matter of procurement. The issue of a tender indicated that the
City wished to procure certain services. But its desire to procure them
was always provisional. That follows from the terms of the advertisement
of the tenders, which contained the caveat that ‘the lowest or any tender
will not necessarily be accepted’. In the standard conditions of tender,
which counsel agreed applied to both tenders, clause F.1.5.1 provided
even more explicitly that the City ‘may cancel the tender process and
reject all tender offers at any time before the formation of a contract’. In
cancelling tender CB204/2012 the City was doing no more than
exercising a right it reserved to itself not to proceed to procure those
particular services on the footing set out in that tender.

[26] It is possible that these express reservations merely made explicit
what would in any event have been the position, namely, that it is always
open to a public authority, as it would be to a private person, to decide
that it no longer wishes to procure the goods or services that are the
subject of the tender, either at all or on the terms of that particular tender.
(I stress that there is no allegation in this case that the decision was
tainted by impropriety such as improper political influence, fraud, bribery
or corruption, where different considerations may apply.)

[27] In saying this I am aware that regulation 10(4) of the Procurement
Framework Regulations 20119 provides that prior to awarding a tender an
organ of state may cancel a tender in three circumstances, namely if:

8 Sokhela & others v MEC for Agricultural and Environmental Affairs (KwaZulu-Natal) & others
[2009] ZAKZPHC 30; 2010 (5) SA 574 (KZP) para 60 quoted with approval in Motau para 34 and
Minister of Home Affairs & others v Scalabrini Centre & others 2013 (6) SA 421 (SCA) para 52.
9 Published in Government Gazette 34350 of 8 June 2011 in terms of s 5 of the Preferential
Procurement Policy Framework Act 5 of 2000.

 Due to changed circumstances there is no longer a need for the
services, works or goods requested;
 Funds are no longer available to cover the total envisaged
expenditure;
 No acceptable tenders are received.

[28] In Trencon10 it was said that this regulation constrained the
discretion afforded an organ of state by the terms of the tender and that a
tender could only be cancelled if one of the grounds set out in the
regulations existed. It is unclear what is meant by ‘changed
circumstances’ in this regard. Would it be a changed circumstance if the
organ of state concluded that the terms of the tender were detrimental to
its interests? What if the goods or services were still required, but the
terms of the tender were no longer thought to be favourable? Why should
an organ of state be constrained by the necessity to demonstrate a change
of circumstances, in order to cancel a tender for goods or services that it
had decided it no longer needed? A change in control of a municipality
could easily lead to a change in priorities. Is it suggested that the
incoming council would be forced to go ahead with procurement
decisions with which it did not agree?  Take the simple example of a
tender to purchase a new mayoral car.  That the mayor needed a car might
not be in dispute.  But the outgoing council might have issued a tender for
the acquisition of a luxury vehicle, while the incoming council might
believe that something more modest would be appropriate. Would that be
a sufficient change of circumstances?

10 Trencon Construction (Pty) Ltd v Industrial Development Corporation of South Africa Ltd & another
[2015] ZACC 22 para 68.

[29] These are difficult questions. Trencon was not concerned with the
cancellation of a tender. It was concerned with whether the court should
have made a substitution order that a tender awarded to one company
unlawfully be awarded to the tenderer whose bid had been unlawfully
excluded. It is not clear in what context the argument was advanced that
the public body concerned was not obliged to award any contract at all.
That was not the factual situation with which the court was confronted.
Assuming that to have been correct, the reality was that a contract had
been awarded and it was the intention to proceed with the work. So
cancellation was not an issue. Furthermore the statement in question was
based on a concession by counsel that was accepted as correct without
explanation.

[30] The regulation is couched in permissive, not mandatory, terms.
There is nothing to show that it is intended to be restrictive in regard to an
organ of state’s powers to cancel a tender. In addition the organ of state is
equally obliged to conduct the tender process strictly in accordance with
the tender conditions, which also have a statutory provenance. But there
is no need to resolve these questions because in this case there was a
change in circumstances. The needs of the City had been reviewed and it
no longer required that SAP support services be provided to it for the
period stipulated in CB 204/2012 or on the same terms as those in that
tender. Its requirements changed and that is why it cancelled the tender.
In terms of the regulation it was entitled to do so. No contrary argument
was advanced in Nambiti’s heads of argument.

[31] Until the tender was issued the City was entirely free to determine
for itself what it required by way of SAP support services. The evidence
showed that it had decided that it did not want those services on the

conditions set out in CB204/2012. In other words it decided to deal with
its requirements for SAP support services on a different basis. That was a
decision it could have reached at the very outset and Nambiti would have
had no grounds for complaint. I cannot think that because it thought
initially that a fresh contract on the basis of CB204/2012 was desirable
and then, on reconsideration changed that view, the decision to cancel
CB204/2012 constituted administrative action. While there are instances
where a decision not to do something may constitute administrative
action, as in the case of a failure to issue a passport or an identity
document, inaction is not ordinarily to be equated with action. Even less
so is it administrative in nature. Administration is concerned with the
implementation of the policies and functions of government after those
policies and functions have been determined, usually through the political
process or as a result of actions by the executive. A decision not to
procure certain services does not fit easily into that framework.

[32] But the second aspect seems to me, if anything, clearer. A decision
not to procure services does not have any direct, external legal effect. No
rights are infringed thereby. Disappointment may be the sentiment of a
tenderer, optimistic that their bid would be the successful one, but their
rights are not affected. There can be no legal right to a contract and
counsel did not suggest that there was. When asked to identify the direct,
external, legal effect of cancelling tender CB204/2012 his sole
submission was that his client had a reasonable expectation that its tender
would be considered by the Bid Evaluation Committee (BEC) and
thereafter by the BAC. But that expectation was dependent on there being
an ongoing tender process, where principles of just administrative action
are of full application. Once the entire tender was cancelled any

expectation that the tenders submitted by tenderers would be adjudicated
by the BEC and the BAC fell away.

[33] No other direct external legal effect was suggested to us and I can
think of none. Nambiti’s legal entitlement to provide SAP support
services to the City would expire at the end of December 2012.
Thereafter it had no right to provide those services. It had a right to a fair
adjudication of tender CB204/2012, but only so long as that tender
remained extant. Once it was cancelled none of the tenderers had any
rights in relation to, or arising from, it. In the words of King Lear
‘Nothing will come of nothing.’11 There is no scope in that situation for
the King’s injunction to think again.

[34]  It follows that the decision by the City to cancel the tender was not
administrative action and was not susceptible of review in terms of PAJA.
As that was the sole basis upon which the review was brought it should
have failed on this ground. But even if the decision had been susceptible
to judicial review on the grounds of unfairness advanced by Nambiti it
should not I think have succeeded. It is appropriate briefly to state my
reasons for saying that.

The fairness of the cancellation
[35] The judge’s reasoning that led him to the conclusion that the
decision to cancel the tender was unfair has been summarised in para 21
above. Three factors were identified as leading to that conclusion. They
were the resolution to fast-track tender CB204/2012; that the reasons
given for cancelling the tender were ‘flimsy’; and that CB204/2012 and

11 William Shakespeare King Lear Act 1, scene I, line 92.

CB107/2013 were so similar that the City could easily have proceeded
with the earlier tender and, after awarding it, negotiated with the
successful bidder to adjust the terms of the contract to fit its concerns.

[36] There are a number of difficulties with these reasons. In regard to
the resolution they overlooked the fact that the resolution included an
alternative of appointing a fresh service provider under regulation 32(1).
No preference was expressed between these two options. What Mr
Otumile did was, in the first instance, to review CB204/2012 with a view
to fast-tracking it. Once he had done so and concluded that it was not
suitable the BAC agreed that it should be withdrawn and steps were taken
to appoint EOH in terms of regulation 32(1). So the resolution had been
followed and no significance could be attached to the fact that the
cancellation occurred only a week after the resolution was taken. There
was in fact no obligation at all on Mr Otumile to consider fast-tracking
CB204/2012.

[37] Turning to the reasons for cancelling the tender advanced by Mr
Otumile in his affidavit, the judge did not analyse those reasons. He
simply said that they were flimsy. Why he did so is unclear, because he
did not explain his conclusion. It is not suggested that Mr Otumile did not
genuinely entertain the views expressed by him in advancing those
reasons. Nor was it suggested that those were not the reasons that
motivated the decision by the BAC not to proceed with the tender, but to
appoint EOH on a short term contract, while preparing and then issuing a
revised tender. Furthermore, Mr Otumile’s reasons related to the
technical requirements of the City in regard to information technology
and support for its existing systems. Judges do not ordinarily have the
qualifications, in the absence of expert testimony to assist them, to make

judgments on the weight to be attached to reasons for taking technical and
strategic decisions in the field of technology.

[38] The first reason was that it was necessary to develop the City’s
own capacity to deal with issues around SAP and the support that the
SAP system required. On the face of it this was a reasonable desire on the
part of the City and it was something provided for in Nambiti’s original
contract. The minutes prepared by Nambiti of the meeting on
11 December, when it was told that the tender was to be withdrawn,
reflected that there had been a problem in this regard. Nambiti’s
representative attributed this to the City’s failure to ‘up skill’ and retain
staff rather than to any deficiency in the training they had received. Right
or wrong this was an issue and it was legitimate for Mr Otumile to form
his own view on how it could be addressed and whether simply
proceeding with CB204/2012 would resolve the problem. We were
referred to a passage from a recording of that meeting in support of the
submission that Mr Otumile always intended to continue outsourcing
SAP support services, but this was beside the point. The concerns related
to oversight functions and the ability to account internally for the
performance of these services, as well as dealing with changing
circumstances.

[39] Mr Otumile’s second reason relating to the fact that the support
services were furnished both on-site and off-site was not addressed in the
judgment.  The affidavits did not suggest that it was not a real concern.
Finally there was the point that the tender was for three years and the City
had decided that contracts involving technology should not be for longer
than two years in view of the rate at which technology was changing. As I
understand the judgment, the judge’s approach was that this was a minor

matter that could be adjusted after the tender had been awarded by way of
negotiations with the successful bidder. I am unable to agree. First, there
would be no reason why a contractor appointed for three years would be
willing to reduce the contractual period to two years. Second, this would
be a material, not an insignificant, alteration to the contract. And it is, at
its lowest, doubtful whether it is open to an organ of State to make such a
substantial change to a contract secured by way of public tender after
letting the contract. That would possibly expose it to legal challenges on
the grounds that it thereby subverted the procurement process and
rendered it unfair.

[40] The judge’s conclusion that the reasons given by the City for
cancelling the tender were flimsy was not therefore justified. His last
ground related to the differences between CB204/2012 and CB107/2013.
He regarded these as inconsequential. But he did not have the two tenders
before him, as CB204/2012 was not included in the application papers.
On what basis he compared the two is therefore unclear. In any event
these were tenders dealing with a technical subject and the affidavits did
not contain a detailed analysis of the similarities and differences between
the two. In those circumstances this was not a conclusion that could be
reached on these papers.

[41] It follows that there were no grounds upon which the judge was
entitled to come to the conclusion that the decision to cancel the tender
CB204/2012 was unfair, even if one assumes that this was a ground on
which the court was entitled to intervene. On that ground as well the
appeal must succeed. But before concluding it is desirable that I say
something about the relief granted by the high court.

The relief
[42] I have already set out the terms of the order granted by the high
court. It effectively compelled the City to consider and award a tender
that it had decided should not be proceeded with. The fact that the tender,
on its own terms, reserved the City’s right not to accept any of the tenders
was ignored. Instead the court took it upon itself to order the City to
procure SAP support services in terms of a contract concluded after a
tender process on the terms stipulated by the high court.

[43] That this was the effect of the order should have given pause for
thought. A decision as to the procurement of goods and services by an
organ of State is one that lies within the heartland of the exercise of
executive authority by that organ of State. We live in a country of finite
resources at every level of government. Decisions by organs of State on
how their limited resources will be spent inevitably involve painful
compromises.12 A decision to spend money on support systems for
computer technology will divert those resources from other projects such
as the construction of roads or the provision of rubbish collection in
residential areas. The Constitution entrusts these decisions to elected
bodies at all three tiers of government. In turn the elected representatives
at every tier select the executive that is required to carry out the chosen
programme of government. It is an extremely serious matter for a court to
intervene in such decisions. But for it to do so by compelling the organ of
State to enter into contracts and acquire goods and services that it has
determined not to acquire, or at least not to acquire on the terms of a
specific tender, is something that, if open to a court to do at all, should

12 None more so than that in Soobramoney v Minister of Health. KwaZulu-Natal [1997] ZACC 17;
1998 (1) A 765 (CC).

only be done in extreme circumstances. These issues are among those
comprehended by the broad doctrine of the separation of powers. But the
court here does not appear to have been alive to them or to the impact of
its orders. That should not have been the case.

Result
[44]  In the result the appeal must succeed. The following order is
granted:
The appeal is upheld with costs, such costs to include those
consequent upon the employment of two counsel.
The order of the High Court is set aside and the following
substituted therefor:

‘The application is dismissed with costs.’

M J D WALLIS
JUDGE OF APPEAL

Appearances

For appellant:
Vuyani Ngalwana SC (with him Khaya Mnyandu)
Instructed by:
Dlamini Attorneys, Sandton
Honey Attorneys, Bloemfontein

For respondent:
Q Pelser SC (with him C J Welegemoed)
Instructed by:
Thapelo Kharametsane Attorneys, Pretoria
Symington & De Kok, Bloemfontein.
Supreme Court of Appeal of South Africa

MEDIA SUMMARY– JUDGMENT DELIVERED IN THE SUPREME
COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
26 November 2015
Status:
Immediate
Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal.
City of Tshwane v Nambiti Technologies (Pty) Ltd

The Supreme Court of Appeal (SCA) today upheld an appeal by the City of
Tshwane against an order compelling it to evaluate a tender that it had
cancelled, and award a contract in accordance with that evaluation. The SCA
held that the decision to cancel the tender was not administrative action
susceptible of judicial review in terms of Promotion of Administrative Justice
Act 3 of 2000 (PAJA). It also held that there were no grounds for saying that the
municipality acted unfairly in cancelling the tender.
The respondent in the appeal, Nambiti Technologies (Pty) Ltd, had held a
contract for the provision of SAP support services to the Tshwane Municipality.
That contract was due to expire on 31 December 2012. In October 2012 the
municipality advertised a tender for the provision of SAP support services from
1 January 2013 for a period of three years. Nambiti, among others, submitted a
tender.
Before the tender could be adjudicated, the City reviewed its needs in respect of
information technology and SAP support services. It concluded that it did not

need such services on the basis or for the period set out in the advertised tender.
It accordingly cancelled the tender and indicated that in due course it would
publish a revised tender. In the meantime it appointed another contractor to
provide SAP support services in terms of the applicable procurement
regulations. Early in 2013 it advertised a fresh tender for the provision of SAP
support services.
Nambiti Technologies contended that the cancellation of the original tender was
unfair and the appointment of the new contractor was unlawful. It brought
review proceedings in the Gauteng Division, Pretoria of the High Court to
challenge these decisions. At the same time it obtained an interdict against the
City preventing it from evaluating and adjudicating upon the fresh tender.
The review succeeded. The court declined to set aside the contract appointing
the new contractor as, by the time of the hearing, it was about to expire. It held
that the cancellation of the original tender was unfair. It set aside the
cancellation of that tender. It ordered the City to afford the parties who had
submitted tenders an opportunity to revise those tenders in order to take account
of inflation, or to withdraw them. The City was ordered once that process was
complete to adjudicate the tenders and award a contract pursuant to that
adjudication.
The SCA held that the cancellation of the tender was not administrative action
and accordingly could not be reviewed under PAJA. On the facts it held that
there were no grounds for saying that the City's cancellation of the tender was
unfair. Furthermore it pointed out that the effect of the court's order was to
compel the municipality to acquire services on the terms of a tender, when it
had decided that it no longer wanted those services on those terms. The
procurement of services is fundamentally a matter for the decision of the organ
of State concerned and not the court. For a court to order a municipality to

procure services that it has decided it does not want to procure, or does not want
to procure on particular terms, infringes the municipality's constitutional powers
and is contrary to the doctrine of separation of powers. The appeal was
accordingly upheld and the order of the high court altered to one dismissing the
application with costs.