The department did not initially oppose the application, but the judge raised concerns about the validity of the settlement agreement, and asked both sides to submit arguments in this regard. It was only then that the department conceded that, “with hindsight”, the matter should have been opposed.
“It is clear the agreement was concluded before the award of any tender was made by the bid adjudication committee.
“It is clear the purpose of the settlement was twofold: to avert a string of litigation; and to circumvent procurement processes which were in progress,” said the judge.
Tokota said there were benefits to settlement agreements as they brought about swift resolution of disputes and finality, and they relieved the workload of judges.
However, notwithstanding this, a court was not relieved of the duty to ensure such orders were lawful, “and a court making an agreement an order of court would not do so by the mere say so of the parties”, he said.
He dismissed the application and ordered each party to pay its own costs.
This article was first published by GroundUp
Eastern Cape court warns government against shortcut tender processes
Judge says it was illegal to use settlement agreements to avoid tender procurement laws
Image: GroundUp/Brian Turner via Flickr
Government departments that “shortcut” tender processes by entering into settlement agreements to avoid protracted litigation are doing so illegally. This is according to Eastern Cape high court judge Bantubonke Tokota.
In what has been described as a precedent-setting case, Tokota, sitting in the Bisho high court, declared a R20.7m tender put out by the provincial department of rural development and agrarian reform for the supply of fertiliser to be invalid and unenforceable.
“It is the duty of courts to ensure organs of state operate within the limits of the law. It is the only way to curb the scourge of corruption,” said Tokota.
The tender came about as a result of a settlement agreement between the department and a tenderer, Siphindile Majojobela. This fell foul of procurement prescripts laid down in the constitution and the Public Finance Management Act, the judge ruled.
The matter was brought before the court as an urgent application by Majojobela, who wanted an order compelling the department to comply with the settlement agreement.
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The department put out the tender in May 2017 but subsequently cancelled it. Aggrieved by this, Majojobela went to court and obtained an order reviewing the state’s decision to cancel.
The court directed that the matter be referred back to the bid adjudication committee. In response, the department applied for leave to appeal, which led to a “litigation loggerhead”.
The two parties signed a settlement agreement in November 2018 aimed at putting an end to the litigation with Majojebela. He was awarded the contract for three years.
In July 2020, the department cancelled the contract because its budget of R20.7m for the tender had been exhausted. This triggered Majojebela’s urgent application, claiming the cancellation was unlawful and asking for an order enforcing the settlement agreement.
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The department did not initially oppose the application, but the judge raised concerns about the validity of the settlement agreement, and asked both sides to submit arguments in this regard. It was only then that the department conceded that, “with hindsight”, the matter should have been opposed.
“It is clear the agreement was concluded before the award of any tender was made by the bid adjudication committee.
“It is clear the purpose of the settlement was twofold: to avert a string of litigation; and to circumvent procurement processes which were in progress,” said the judge.
Tokota said there were benefits to settlement agreements as they brought about swift resolution of disputes and finality, and they relieved the workload of judges.
However, notwithstanding this, a court was not relieved of the duty to ensure such orders were lawful, “and a court making an agreement an order of court would not do so by the mere say so of the parties”, he said.
He dismissed the application and ordered each party to pay its own costs.
This article was first published by GroundUp
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