R10 billion social grant tender decision invalid

By Drum Digital
29 November 2013

The Constitutional Court has ruled that the awarding of the multi-billion rand social grants administration contract to Cash Paymaster Services (CPS) is invalid.

AllPay Consolidated Investment Holdings (Pty) Ltd took the matter to the country's highest court after it lost the tender to CPS.

The tender, worth R10 billion, for the administration of social grants, was awarded by the SA Social Security Agency (Sassa).

AllPay initially approached the high court alleging there had been irregularities in the tender process. The high court found the tender process had not complied with the requirements set out in the tender documents and was procedurally unfair. It declared the process invalid, but declined to set the tender aside because it would disrupt the payment of social grants.

AllPay appealed to the Supreme Court of Appeal (SCA), which overturned the high court's order. The SCA said a fair process did not demand perfection at every step and a tender need not be set aside for "inconsequential irregularities". On this basis it concluded that the award of the tender to CPS was not unfair.

AllPay then approached the Constitutional Court which, in a unanimous judgment, upheld the appeal.

It found the assessment of the fairness and lawfulness of the procurement procedure had to be independent of the outcome of the tender process and assessed in terms of the provisions of the Promotion of Administrative Justice Act.

The court found Sassa had failed to give due regard to the importance of black economic empowerment in procurement. Sassa had an obligation to investigate and confirm the empowerment credentials of the bidders before the award. The Constitutional Court thus declared the decision to award the tender to CPS constitutionally invalid.

However, due to the serious disruption which could be caused to the payment of social grants if the tender were set aside, it made no decision on whether to do so.

The court suspended the declaration of invalidity pending the determination of a just and equitable remedy. A further hearing to decide the remedy was scheduled for February 11.


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