Judge rules R46m DUT security contract invalid amid allegations of ‘trickery’

The award of a R46m five-year contract by the Durban University of Technology (DUT) for security at its Durban and Pietermaritzburg campuses has been declared unconstitutional and invalid amid allegations of “trickery”.

Durban high court judge Mahendra Chetty has ordered that DUT readvertise the contract and repay a R200,000 “non-refundable deposit” to aggrieved tenderer Mzansi Fire and Security Pty Ltd for what became an unsuccessful internal appeal against the decision in December 2019 to give the contract to Izikhova Security Services.

While DUT and Izikhova opposed the application, Chetty said during argument lawyers for DUT had conceded it had failed to provide the court with a “good and proper explanation” of the reasons Mzansi had been excluded during the three-round tender adjudication process.

More specifically, there had been no explanation why the bid adjudication committee (BAC) had given Mzansi a “disqualifying” score of 70.5% for “quality and functionality” in round two, when a subsequent independent audit of the supply chain management process had scored it 84.5%, the highest in that round.

“This concession in my view bolsters the applicant’s submission that there was some trickery at hand,” he said.

Mzanzi, in its review application, said from the auditors' report it was clear it had scored highest in the second round and made allegations of fraud. It sought an order setting aside the tender award and it being substituted in place of Izikhova as the successful bidder. Alternatively, Mzansi argued, the matter should be adjudicated again.

DUT’s main point of opposition was technical. It argued the tender award was not reviewable under the Promotion of Administrative Justice Act (Paja) because it was not an “administrative action”, as defined, but was exercising a “domestic power” to safeguard students and infrastructure.

Chetty ruled, however, that DUT was an organ of state and if it were correct in its argument, it would mean a state-funded institution would effectively be “a law unto itself” and unaccountable to the public, or even the minister, for the amount of money it spent on contracts, to the exclusion of provisions of the constitution.

He said the provision of security services was intrinsic towards the realisation of the end goal — the right to education — and there was no denial that public funds were used to pay for guarding services.

He said he was satisfied the university had been exercising a public power when it entered into the contract and the award was capable of being reviewed under Paja.

In citing allegations of corruption and collusion, Mzansi relied on the report of auditors Ngubane and Company (the Ngubane report) who were engaged by DUT to independently review the processes followed in the award of the tender.

It also claimed DUT officials had conducted a site visit of its premises, indicating it was assessing its ability to discharge its obligations under the tender. The company said this could not have occurred if it had not passed the 75% threshold in phase two.

The company said a whistle-blower had reported it had met this threshold.

DUT claimed the officials had no authority to conduct this visit.

Chetty said DUT had not put up any affidavits regarding this, it had simply denied the allegations.

However, he said, advocate Griffiths Madonsela for DUT has correctly submitted that fraud was a serious allegation, carrying with it serious consequences and the potential for reputational harm and there had to be the “clearest evidence”.

“Despite the questions hanging over the site visit, this in itself is not sufficient to meet the threshold of sufficient proof. This aspect was perhaps wisely abandoned by (the applicant).”

Chetty said ultimately DUT had conceded that in light of the Ngubane report, it had failed to furnish the court with a good and proper explanation leading to Mzansi’s exclusion.

“This concession bolsters the applicant’s submission that there was some trickery at hand. Moreover, the one aspect which DUT has failed to address is an explanation for the difference in the scores in which the BAC scored the applicant 70.5% and the auditors 84.5%. 

“In addition there has never been a satisfactory response to the Ngubane report, which concluded with regard to phase two that only two bidders were assessed to have scores above 75%, namely Excellent Security and Mzansi Fire and Security. This would be in direct contradiction to the scoring of the adjudication committee.”

The judge said in awarding the tender, DUT had not acted in accordance with constitutional provisions and it must be declared in invalid.

He said both DUT and Izikhova had argued against an order substituting Izikhova with Mzansi, and he agreed. He said it would have a direct impact on scores of employees who had no idea about the litigation and its potential consequences for their job security. Further, he was concerned about exposing the university and its students to “risks either in the form of safety to property or persons”.

Regarding the return of the non-refundable R200,000 deposit, Mzansi had argued the demand for such a deposit ahead of an internal appeal was unconstitutional because it stymied the rights of unsuccessful bidders, particularly smaller, emerging businesses, from challenging tender decisions.

Chetty said this had been conceded by Madonsela and he was satisfied that DUT, as an organ of state, would amend its procedures to ensure they were fair, equitable and transparent.

He set aside the award of the tender, stayed the invalidity for six months, directed DUT to readvertise the tender within 14 days, and ordered it to pay back the R200,000 deposit with interest.

On costs, counsel for Mzansi had argued that the respondents should pay punitive costs because its opposition was “nothing more than an attempt to defend the indefensible”, especially in light of the vice-chancellor’s view that DUT was not bound by the constitution when it contracted for services and spent public funds.

Chetty pointed to the “late” concessions by Madonsela and that the applicant had “diluted its claim” from allegations of corruption to “there was something wrong”. 

He ordered DUT and Izikhova to pay the costs of the application.

Approached for comment, Alan Khan, DUT’ senior director of corporate affairs, said the matter was “sub judice” and the university was “pursuing its appeal options”.

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