Clanwilliam Dam tender: Mchunu will have to launch high court action

Minister of Water and Sanitation Senzo Mchunu is required in terms of a settlement agreement, to launch a high court application to review and set aside a tender award by his department to construction group Stefanutti Stocks, linked to the upgrading of the Clanwilliam Dam in the Western Cape.

The settlement agreement follows Raubex Construction, part of the JSE-listed Raubex Group, launching an application in the High Court in Cape Town in July this year, for the provision of a number of documents used to adjudicate the tender and related to the tender award.

Read: Raubex set to challenge award of Clanwilliam Dam tender

Raubex’s application was a precursor to a contemplated high court application by Raubex to review and set aside the tender award to JSE-listed Stefanutti Stocks.

The settlement agreement was made an order of the High Court in Cape Town last week by Judge Lister Nuku.

Background

In September 2022, the minister called on interested contractors with a Construction Industry Development Board (CIDB) grading of 7CE, 7SE or higher, to submit their bid offers to be appointed as a contractor for this tender, which was for the concrete surface preparation for the raising of the Clanwilliam Dam wall.

Stefanutti Stocks was awarded the tender despite Raubex’s bid being the lowest and 18.64% or R9.54 million cheaper than the winning bid.

The parties to the settlement agreement were Raubex Construction, the applicant in the case, and respondents Mchunu, the department’s director-general and Stefanutti Stocks.

In terms of the settlement agreement, Mchunu will, within 10 days of the date of the order, launch an application to review and set aside the award of the tender to Stefanutti Stocks.

If Mchunu fails to launch such an application, Raubex Construction shall launch an application to review and set aside the award of the tender within 10 days of the expiration of the minister’s 10 days.

Settlement conditions

In terms of the settlement agreement, Mchunu was authorised to give instructions to Stefanutti Stocks to continue to perform work under the tender, subject to certain conditions.

Stefanutti Stocks was also authorised, subject to the same conditions, to continue to work under the tender.

These conditions were that Stefanutti Stocks’ work under the tender shall be limited to:

• The surface preparation and related testing procedures necessary to enable the main contractor to perform urgent safety work on the existing apron (horizontal downstream concrete slabs), which consists of the vertical placement of the first 8 metres of concrete to the lower new spillway at the Clanwilliam Dam.
• Any further concrete surface preparation work in terms of the tender necessary to resolve related safety concerns identified by the minister. If Stefanutti Stocks is required to undertake any additional emergency work by the minister, the minister will notify the company.
• If Stefanutti Stocks is delayed from completing the concrete surface preparation for any reason outside of the company’s control, it will be entitled to submit and process a payment claim for all proven additional costs arising from such delay in accordance with the relevant provisions of a clause in the contract between the minister and Stefanutti Stocks. Any such additional costs will be deemed to be costs arising due to a suspension as per a clause of an annexure to the agreement, with delay claims submitted in this manner and established in terms of a clause of the agreement, paid by the minister.
• Stefanutti Stocks will demobilise from the site after the concrete surface preparation is completed and on instruction from the minister, who will pay for the demobilisation costs.
• If Stefanutti Stocks is required by the minister to remobilise for any additional emergency works, the minister will pay Stefanutti Stocks’ costs for remobilisation.

Mchunu was ordered to pay Raubex Construction the costs of its application, while the costs of Stefanutti Stocks’ application will stand over for determination in the review application.

Stefanutti Stocks declined to comment on the settlement agreement.

Scoring

Raubex Construction operations director Martin du Rand said in an affidavit in support of the company’s application for the provision of certain tender adjudication documents that the company had complied with all of the requirements of all phases of the tender and was a responsive and compliant tenderer.

Du Rand claimed Raubex should have reasonably scored:

• 72 out of a possible 100 points for functionality;
• 90 out of a possible 90 points for price;
• 10 out of a possible 10 points for B-BBEE; and
• Total points of 172 out of a possible 200 points.

Du Rand said only three bids were submitted for this tender, with Raubex Construction submitting the lowest tender at R51 235 914.00 and Stefanutti Stocks submitting the second lowest tender at R60 784 080.47.

“The difference between the two tenders is a staggering R9 548 166.47,” he said.

Du Rand said Phase 6 of the evaluation is based on the functionality, price and B-BBEE status level and calculated Stefanutti Stocks’ score for its price and preference, and accepted the company has B-BEE level 1 status.

He claimed that “the maximum score” Stefanutti Stocks could have obtained is 83 points.

“This makes it highly unlikely that the third respondent [Stefanutti Stocks] could have outscored the applicant [Raubex], who scored 100 points out of the possible 100 points,” he said.

Disconcerting

Du Rand said that for Raubex to decide whether the tender award was fair, equitable and transparent, it would need to have the reasons and documents supplied to it as requested from Mchunu.

He said it is very disconcerting that all of Raubex’s inquiries since 15 June 2023 have been ignored by Mchunu, and the company is unable to obtain the information requested from any other party and/or institution.

Du Rand stressed the project under the tender is in its beginning phase, and Stefanutti Stocks will suffer no prejudice if the information and reasons requested by Raubex are provided.

Read: Sanral’s new preferential procurement scoring system challenged

“It is clearly in the interest of justice that the applicant [Raubex] be given these reasons and documents as soon as possible to minimise the impact of the proposed interdict and review application on the successful tenderer who may face judicial proceedings seeking the setting aside of the decision by the first respondent [Mchunu].

“Public interest also dictates this issue be dealt with as expeditiously as possible.

“This matter will cost the public an excessive amount because of the appointment of a significantly more expensive tenderer.

“The higher tender price of R9 million over a tender period of 36 months will cost the taxpayer R250 000 per month extra,” he said.

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