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Tender for the provision of social grants declared invalid and new tender process to be initiated

Reading Time 2 minute read

Infrastructure & Public-Private Partnerships Bulletin

Today the Constitutional Court handed down a judgment on the just and equitable remedy arising from the Constitutional Court’s earlier order in Allpay Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer of the South African Social Security Agency and Others [2013] ZACC 42.

In the Court’s earlier order, the Court declared that a tender was invalidly awarded.

The tender was invited by the South African Social Security Agency (SASSA) for the administration of social grant payments to beneficiaries. The tender was awarded to Cash Paymaster Services (Pty) Ltd (Cash Paymaster). AllPay Consolidated Investment Holdings (Pty) Ltd (AllPay), an unsuccessful bidder, challenged the award of the tender.

The award of the tender was declared invalid on two grounds:

(1) SASSA failed to ensure that the empowerment credentials claimed by Cash Paymaster were objectively confirmed; and
(2) one of the Bidders Notices did not specify with sufficient clarity what was required of bidders.

The Court held that this rendered the process uncompetitive and made any comparative consideration of cost-effectiveness impossible.

The declaration of invalidity was suspended pending the determination of a just and equitable remedy. The Court required the parties to make submissions to it on what a just and equitable remedy would be. Those submissions were made, and have been considered by the Court.

In today’s unanimous judgment, the court confirmed that the Contract for the Payment of Social Grants between SASSA and Cash Paymaster is invalid. However, that declaration is suspended pending the decision of SASSA to award a new contract in accordance with the rest of the Court’s ruling. So payments of grants will not be interrupted.

The court held that SASSA must initiate a new tender process within 30 days of the order. A new and independent Bid Evaluation Committee and Bid Adjudication Committee are to be appointed to evaluate and adjudicate the new tender process. The request for proposals for the new tender must, inter alia, contain adequate safeguards to ensure that the payment of lawful existing grants is not interrupted.

The new tender period will be for a period of 5 years.


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