In circumstances where a validity period of a tender has expired, and the tender has not been awarded, the tender process is considered “completed”, despite there being no award. Without a timeous extension of the validity period, there is no tender award capable of acceptance as the “offer” has expired.
In the City of Ekurhuleni Metropolitan Municipality v Takubiza Trading & Projects CC and Others case, the City of Ekurhuleni Metropolitan Municipality published a tender for the appointment of finance meter management consultants to manage the Municipality’s electricity and water meter readings and credit control processes. The value of the tender was approximately R117 million.
During the tender process, the closing date had to be extended. The validity period for the tender was 120 days. As a result, a representative of the Municipality circulated an e-mail, on the last day of the validity period, to the bidders requesting their confirmation for an extension of the validity period. Not all bidders confirmed the extension of the validity period on that day. One had declined the extension, three had responded after the deadline (including one of the successful bidders), and one had failed to respond.
The tender was awarded to two entities. Takubiza, which was an unsuccessful bidder, brought an urgent application to set aside the tender award on the basis that the tender period had lapsed when the tender award was made. The court found that there was no explanation by the Municipality why the request to extend the validity period was circulated on the last day of the validity period. Further, the Municipality required confirmation from all bidders for such extension, which it did not receive. As the validity period had lapsed, there was no tender award to accept.
One of the successful bidders had confirmed the extension of the validity period, but only after the validity period had expired. Such confirmation does not apply retrospectively. In order to extend the validity period, all bidders are required to consent to the extension before the expiration of the validity period. If there is no consent by all bidders, the tender process has come to an end. A tender process cannot be open-ended. In the Takubiza case, the notification for the extension of the validity period did not serve its intended purpose. As a result, the Supreme Court of Appeal set aside the award of the tender.
The Takubiza case is a reminder that organs of state are required to issue tenders with sufficient validity periods. In situations where the validity period is expiring, and the tender process is not completed, the validity period should be extended, with the consent of all bidders, in advance of the validity period expiring.