WHEN IS A TENDER NOT A TENDER?
 The Eastern Cape Provincial Government invited tenders for the installation of an automated cash payment system for social pensions. Balraz Technologies submitted a tender and was awarded the contract.
The tender award was subsequently challenged by an unsuccessful tenderer and set aside by the Ciskei High Court. The court found that the Eastern Cape Provincial Tender Board had misunderstood Belraz's tender. The Tender Board had looked only at unit prices and had not considered the total cost of Belraz's proposal. As a result, the Belraz price was not the lowest quote. In addition, two technical evaluation committees had expressed concern regarding Belraz's capacity to undertake the contract.
Belraz incurred expenses following the award of the tender in the amount of R4.35 million, which it claimed back from the Tender Board. Belraz was a private company, formed specifically for the purpose of winning the tender, but was only registered after the award of the tender. Prior to incorporation, a company is not yet in existence and could not perform a valid juristic act such as submitting a tender.
Belraz argued that the Tender Board owed a duty of care to Belraz and that the Tender Board had negligently acted in breach of that duty by failing to comply with proper tender adjudication procedures in awarding the contract to Belraz.
Judge Louis Harms of the Supreme Court of Appeal found that, Belraz's tender was void. Before registration, Belraz was not yet in existence and could not perform a legal act. A tender is clearly a legal act, being in nature an option contract, in terms of which the tenderer accepts the tender conditions imposed and undertakes to comply with them. The option is then exercised by the award of the tender. As Belraz's tender was not valid, there was no duty of care owed by the Tender Board to Belraz. Belraz's claim was dismissed.
Steenkamp N.O v Provincial Tender Board, Eastern Cape, 2006 (3) SA 151 (SCA).
Roger Pickles | Previous Membership Services Manager
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