Compliance with formalities

In AllPay Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer of the South African Social Security Agency and Others (Corruption Watch and Another as amici curiae) 2014 (1) BCLR 1 (CC), the Constitutional Court dealt with the constitutionality of the award of a tender to Cash Paymaster Services (Pty) Ltd for the payment of social grants.

The award was challenged by an unsuccessful bidder, AllPay Consolidated Investment Holdings (Pty) Ltd. On appeal from the Supreme Court of Appeal, the Constitutional Court considered a number of issues in relation to public procurement.

The court held that an assessment of the fairness and lawfulness of the process must be independent of the outcome of such process. To that effect, insistence on compliance with the formalities of the process has a three-fold purpose: (a) it ensures fairness to participants in the tender; (b) it enhances the likelihood of efficiency and optimality in the outcome; and (c) it serves to guard against a process skewed by corrupt influences.

Where a public entity deviates from the formalities of a process, the basis for doing so must be reasonable and justifiable and the changes involved must be done in a way that is procedurally fair.

Furthermore, the court set out the proper approach for the review of the award of a tender. Any alleged irregularities must be assessed under the grounds of review contained in the promotion of Administrative Justice Act 3 of 2000 (PAJA). If a court finds that there are grounds for review, then it will enquire into what would be a just and equitable remedy.

The court held that vagueness and uncertainty are grounds for review. These elements could render a tender process procedurally unfair.

In the circumstances, the court upheld the appeal and directed the parties to make submissions on what would be a just and equitable remedy.