Extension of bid validity periods

In Telkom SA Ltd v Merid Trading (Pty) Ltd and Others; Bihati Solutions (Pty) Ltd and Others [2011] JOL 26617 (GNP), the High Court dealt with, amongst other things, the purported extension of a bid validity period.

Telkom invited proposals for the provision of network services. The tender documents contained a condition to the effect that a proposal was to remain open for acceptance for a period of 120 days, expiring on 12 April 2008. The bidders submitted proposals in terms of which they agreed to such a condition.

By 12 April 2008, Telkom had shortlisted 15 proposals but had not yet accepted any. After the expiry of the bid validity period, Telkom invited the shortlisted bidders to extend the validity of their proposals. Several did so, the remainder did not. Telkom eventually awarded the tender to six of the shortlisted bidders.

Complaints were lodged by some of the unsuccessful bidders about the process that was followed. After taking legal advice, Telkom applied to the High Court to have the awards set aside.

The High Court held that the purported extension of the bid validity period, after 12 April 2008, was unlawful. As soon as the bid validity period had expired, without Telkom’s having made an award, the tender process was complete- albeit unsuccessfully. Telkom was no longer free to negotiate with the shortlisted bidders. Any negotiations to extend the bid validity period after its expiry lacked transparency and were neither equitable nor competitive.

For the above and other reasons mentioned in the judgment, the High Court was prepared to set aside the awards.

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