PPAA RULINGS

RJM,
To me the first answer I could say Yes, PPA have the mandate to order but not the termination directly but to restart the process because the whole procurement process to get the winner was determined to be erred in the eyes of law.
in Other hand PPAA also may consider the cost have incurred after the contract have been signed and that it is executed in such a away that the some of percentage of public fund have been paid to the winning bidder, so it will be the issue of public interest against individual one through their decision.

I will be back again.

Dear forum members,

I was reading this post. I just wish all posts would be responded like thisnone - it just contains a lot of rich contributions which are of benefit tomeverbody.

RJM

Bravo, that is good research.

Well I wish to comment on the two questions out of the three,

Question 1: Whose right do we put at the forefront - that of a bidder or of the citizens who are the beneficiaries of the intended procurement i.e. the services that will eventually be provided by the selected bidder;

Responce: What is put forward is compliance with the law which ultimately will give value for money in exchange. The comparison of whose right whether that of a bidder or of the beneficiaries is a misconception. You can not talk of the bidder's rights while the law is infringed and the same to beneficiaries.

Question 2: What should we do to a person who goes through all those stages and in the end it is found that the complaints were frivolous?

Responce: The courts of law do award costs in which case the losing party with frivolous claims has to pay costs incurred by the other side from the commencement of the dispute to the end. These costs are serious in some of the High court cases one can be condemed to pay costs up to even twenty million. So for me I think the tribunal should be vested with powers to award costs to losing parties with frivolous claims. This will obviously deter frivolous claims


.

fmwalongo

I might have gone on leave not to have seen this. On 14th October 2010 you wrote

What I see here is the inconvenience cause in the event the PPAA delays to hear the matter and to deliver its decision. For instance PPAA delivers its decision at a stage where the performance of the contract is at 70%. It is true at that stage both the PE and the bidder find themselves in a dilemma not knowing where to go.

My advise is the PPAA should be given deadliens in hearing appeals and delivering decisions.
Thanks

Already the Law provides a limit on the duration in which an aggrieved bidder can submit an appeal, and once an appeal is presented to PPAA it must deliver its decision within 45 days.

I however want to take this issue of bidders complaint a bit further.
Currently we have a three tier system in which

Before the award of contract
An aggrieved bidder can complain to an accounting officer, who in turn is mandated review the complaint and give decicion within 30 days. If the bidder is not satisfied by the decision of the accounting officer or if the accounting officers doe'nt give a decision within 30 days, then the bidder can submit his complaints to PPRA. PPRA is required to review the complaint and give a decision within 30 days, and if the bidder is still not satisfied by the decision of PPRA or if PPRA doe'nt give a decision within 30 days, then the bidder can submit his complaints to PPAA, who are in turn required to give a decsion in 45 days. If one takes this route it can take not less than four months to satisfy a complaining bidder, and yet if not satisfied by the decision of PPAA he is entitled to a judicial review.

After the award of contract
An aggrieved bidder can submit his complaints directly to PPAA, who are in turn required to give a decsion in 45 days.

My question questions are
(1) Do we need this lengthy procurement complaints review procedure;
(2) Whose right do we put at the forefront - that of a bidder or of the citizens who are the beneficiaries of the intended procurement i.e. the services that will eventually be provided by the selected bidder;
(3) What should we do to a person who goes through all those stages and in the end it is found that the complaints were frivolous?

What I see here is the inconvenience cause in the event the PPAA delays to hear the matter and to deliver its decision. For instance PPAA delivers its decision at a stage where the performance of the contract is at 70%. It is true at that stage both the PE and the bidder find themselves in a dilemma not knowing where to go.

My advise is the PPAA should be given deadliens in hearing appeals and delivering decisions.
Thanks

RSM wrote:Geve,

I quote

Otherwise, as a matter of legal principle under the rule of natural justice, when the complaint for review is made to the PPAA under section 79 of the Act, the PPAA is obliged to allow any succesful bidder to joint and defend the proceedings for the challenging of the tendering process (as Respondent or Interested Party) because the negative outcome of the decision by the PPAA may affect the interest of such bidder in one way or another .

What you have just prescribed above is provided for in Section 83 of the Act.

"83.-(1) After the submission of a complaint or dispute under sections 80, 81 or 82, the head of the procuring entity or of the approving authority or the Public Procurement Appeals Authority, as the case may be, shall notify all suppliers, contractors or consultants participating in the procurement proceedings to which the complaint or dispute relates, of the submission of the complaint or dispute and of its substance."

Further Subsection 2 explains very clearly that if a supplier fails to participate in the complaints proceedings he/she shall not be allowed to submit complaint on the same item "

83(2) Any supplier, contractor or consultant or any Government authority whose interests are or could be affected by the review proceedings, shall have a right to participate in the review proceedings and a supplier, contractor or consultant who fails to participate in the review proceedings and supplier, contractor or consultant who fails to participate in the review proceedings shall be barred from subsequently making the same claim.

That having been clarified, and provided that Head of PE, PPRA and PPAA (depending on the level of complaints handling) provided notification for all other bidders to participate - would that change your previous contribution?

Thanks RSM this clarification.

But it apppears the law is not very clear if the "participation in the proceeding" would mean a physical appearance during hearing of the matter or formal failing of response to count/challenge the complaint and if so, need to have a clear time limit for notification and appearance/ filing a counter and further procedures in dealing with the matter so as to give a clear fair hearing between the parties.

Geve,

I quote

Otherwise, as a matter of legal principle under the rule of natural justice, when the complaint for review is made to the PPAA under section 79 of the Act, the PPAA is obliged to allow any succesful bidder to joint and defend the proceedings for the challenging of the tendering process (as Respondent or Interested Party) because the negative outcome of the decision by the PPAA may affect the interest of such bidder in one way or another .

What you have just prescribed above is provided for in Section 83 of the Act.

"83.-(1) After the submission of a complaint or dispute under sections 80, 81 or 82, the head of the procuring entity or of the approving authority or the Public Procurement Appeals Authority, as the case may be, shall notify all suppliers, contractors or consultants participating in the procurement proceedings to which the complaint or dispute relates, of the submission of the complaint or dispute and of its substance."

Further Subsection 2 explains very clearly that if a supplier fails to participate in the complaints proceedings he/she shall not be allowed to submit complaint on the same item "

83(2) Any supplier, contractor or consultant or any Government authority whose interests are or could be affected by the review proceedings, shall have a right to participate in the review proceedings and a supplier, contractor or consultant who fails to participate in the review proceedings and supplier, contractor or consultant who fails to participate in the review proceedings shall be barred from subsequently making the same claim.

That having been clarified, and provided that Head of PE, PPRA and PPAA (depending on the level of complaints handling) provided notification for all other bidders to participate - would that change your previous contribution?

RJM wrote:

GEVE, you are most welcome. First of all I appreciate your efforts and good submission.

Based on the above doctrines, let us go back to unanswered question in relation to scope of mandate of PPAA - (f) order that the procurement proceedings be terminated.”

Can't PE cite that the termination is a result of the ruling by PPAA? In this case which provision of the contract can they use? This has been big problem to PEs in implementing directives of the PPAA to re-restart process as we all know the contract has to be terminated first.

I am afraid if PPAA has powers under the PPA, 2004 to order termination of the signed contract.

As per Section

An interpretation of Section Regulation 55 (7) of PPA, 2004 and Regulation 97(4) would mean that the PE, can not in any way review do any act that can frustrate the entry into force of the contract with a succesful bidder. This may include, the decsions of terminating the contract procurement proceedings by itself.

Under clause 40, 41 and 39 of ITB in the Bidding Documents by PPA read together with the section 81 - 84 of the PPA, 2004 and Regulation 110 read together, imply that the supplier, service provider, contractor or asset buyer is not able not able to submit an application for the administrative review of the tender proceedings unless the ward has been made and the contract to that respect has been signed between the PE and succesful bidder.

Clause 40 of ITB provides as follows:

"1. Promptly after notification, Procuring Entity shall send the successful Bidder the agreement and Special Conditions of Contract, incorporating all agreements between the parties obtained as a result of Contract negotiations".

2. Within twenty eight (28) days of receipt of the Contract Agreement Form, the successful Bidder shall sign and date the Contract and return it to the Procuring Entity.

3. Upon the receipt of the signed Agreement from the Bidder, the Procuring Entity will, within one week, notify the other Bidders that their bids have been unsuccessful.

Clause 41

1. Within twenty eight (28) days after receipt of the Letter of Acceptance, the successful Bidder shall deliver to the Procuring Entity a Performance Security in the amount and in the form stipulated in the Bid Data Sheet and the Special Conditions of Contract, denominated in the type and proportions of currencies in the Letter of Acceptance and in accordance with the Conditions of Contract.

Clause 39:

3. "Upon the successful Bidder’s furnishing of the performance security pursuant to ITB Clause 41, the Procuring Entity will promptly notify unsuccessful Bidders, the name of the winning Bidder and the Contract amount and will discharge the bid security or bid securing declaration of the unsuccessful Bidders pursuant to ITB sub Clause 18.7."

Section 80(1) of the Act gives powers to the Accounting Officer or Chief Executive of a Procuring Entity, to entertain any dispute realting to the procurement with the supplier/service provider or contrators.

However, under (2) the head of the procuring entity or of the approving authority can not entertain a complaint or dispute unless it is submitted within twenty eight days (28) from the date the supplier, contractor or consultant submitting it became aware of the circumstances giving rise to the complaint or dispute or when that supplier, contractor or consultant should have become aware of those circumstances, whichever is earlier. This means that the comaplainant has to have a formal notified course of complaining to the PE against the proceedings of tender.

Further to subsection(2), it is provides under subsection (3) of section 80 that the head of a procuring entity or of the approving authority shall not entertain a complaint or dispute or continue to entertain a complaint or dispute after the procurement contract has entered into force..

This section is given more weight regulation 97(4) of the GN No. 97/2005 which restricts the PE and the contractor, service provider, supplier or asset buyer from taking any action that will interfere with the entry into force of the procurement or disposal contract, or its performance between the time when the notice of ward has been dispatched to the contractor, service provider, supplier or asset buyer and the entry into force of the procurement or disposal contract.

Under subsection (6), the decision of the procuring entity or approving authority shall be final unless the supplier, contractor or consultant applies for administrative review by the Authority except for complaints or disputes made against the Public Procurement Regulatory Authority which shall be submitted to the Public Procurement Appeals Authority in accordance with section 81.

The administrative review to the PPRA has to be made against the deacion of PE withnin 14 days. Both PE and PPRA are bound to reach their decsion within 30days after the, submission of the complaint or dispute deliver.

By virtue of section 82, reference to the PPAA is made by way of further review of the decision of the PE which the supplier, contractor or consultant is still aggrieved with OR if the complaint or dispute cannot be submitted or entertained under section 80 or 81 because of entry into force of the procurement contract. However, for the later case, the complaint or dispute is submitted within fourteen (14) days from the date when the supplier, contractor or consultant submitting it became aware of the circumstances giving rise to the complaint or dispute or the time when that supplier, contractor or consultant should have become aware of those circumstances.

It appears that under subsection (4) (e) of section 82, PPA can not give a recomendation that "annul in whole or in part any act or decision in relation to the bringing the procurement contract into force. In that case, only the remedy will be to act under Subsection 4(f) for awarding a resonable compesantion to the complainant.

Therefore, in a case that the PPAA orders the nullification of the tendering process, the PE can rely upon such decsion as a genuine reason not to proceed with the contract by the supplier.

Otherwise, as a matter of legal principle under the rule of natural justice, when the complaint for review is made to the PPAA under section 79 of the Act, the PPAA is obliged to allow any succesful bidder to joint and defend the proceedings for the challenging of the tendering process (as Respondent or Interested Party) because the negative outcome of the decision by the PPAA may affect the interest of such bidder in one way or another .

Under the PPA, 2004, PPAA is vested with legal authorities as an administrative Tribunal like any arm of the Court to administer justice.
The PPAA has authority to review petitions for public contract awards and is a competent Authority to hear cases that may be instituted by aggrieved bidders.

Privity of contact is the legal principle giving a party in a right to institute a claim in case his/ her right is in one way or another is affected under the existence of such contract. The doctrine of privity in contract law provides that a contract cannot confer rights or impose obligations arising under it on any person or agent except the parties to it. The premise is that only parties to contracts should be able to sue to enforce their rights or claim damages as such.
It should be clearly understood that under the law of contract, one of the prerequisite of valid contract is compliance by the parties thereof to the relevant laws of the land. Amongst the conditions for awarding public tenders under the PPA is to observe the principles of competiveness, fairness and openness procedures. Therefore, if at all the PE fails to abide to the procurement procedures as per PPA, 2004 in its process of procurement, even if the award is made and contract is signed, the law will presume that the said contract is void ab initio, which means "to be treated as invalid from the outset," and making the whole transaction as if it has not been done for the purposes of protection the rights of others who participated/ would have participated in the competitive basis to obtain the same advantage for which the PE had deliberately ignored in the favour of contracted bidder.
Legal mandates of PPAA

The PPAA is established under section 77(1) of the PPA, 2004 and amongst its functions as set out under section 78 is to entertain appeals against tender boards, clarify the issues in dispute between the parties and endeavour to bring about agreement between the parties upon mutually acceptable terms.

Section 79 of the Act provides that as for the mandates of reviews by the PPAA

“ 79.-(1) Subject to sub-section (2) of this section, any supplier, contractor or consultant who claims to have suffered or that may suffer any loss or injury as a result of a breach of a duty imposed on a procuring entity or an approving authority by this Act may seek a review in accordance with sections 81 and 82 of this Act, provided that the application for a review is received by the procuring entity or approving authority within twenty-eight days of the supplier, contractor or consultant becoming aware of the circumstances giving rise to the complaint or when the supplier, contractor or consultant should have become aware of those circumstances.[/i] (Emphasis supplied).

Remedies that PPAA can award

Section 82(1) and (2) of the Act provides that the complaints or disputes not amicably settled by the Authority i.e. PPA shall be referred to the Public Procurement Appeals Authority. For the dispute on the tender for which its procurement contract has entered into force, the supplier, contractor or consultant is entitled to submit a complaint or dispute to the PPAA within 14 days from the date when the supplier, contractor or consultant submitting it became aware of the circumstances giving rise to the complaint or dispute or the time when that supplier, contractor or consultant should have become aware of those circumstances. However, by the wordings, the onus will always be upon the complainant to prove as to when he was aware on the facts which is complaining for.!

Section 82(4) of the PPA, 2004 reads as follows:

“4 The Public Procurement Appeals Authority may, unless it dismisses the complaint or dispute, recommend one or more of the following remedies:

(a) declare the legal rules or principles that govern the subject matter;

(b) prohibit the procuring entity from acting or deciding unlawfully or from following an unlawful procedure;

(c) require the procuring entity that has acted or proceeded in an unlawful manner, or reached an unlawful decision, to act or to proceed in a lawful manner or to reach a lawful decision;

(d[i]) annul in whole or in part an unlawful act or decision of the procuring entity or approving authority other than any act or decision bringing the procurement contract into force; revise an unlawful decision by the procuring entity or substitute its own decision for such a decision, other than any decision bringing the procurement contract into force;(Emphasis supplied)

(e) require the payment of compensation for any reasonable costs incurred by the supplier, contractor or consultant submitting the complaint or dispute as a result of an unlawful act, decision or procedure followed by the procuring entity or approving authority; or
(f) order that the procurement proceedings be terminated.”

You may note from the provision of 82 (2) and (4)(d) of the Act that PPAA can not bring to an end the procurement contract which is in force. Otherwise, it can only award a reasonable compensation to the aggrieved bidder/supplier/ contractor or consultant. However, said “reasonable compensation” may sometimes not be awarded as speculative kind of business claims which can not not be easily subsitantiated for lack of assuarance of winning a particular tender .
 

[b]Experience from elsewhere [/b]

I n December 2007, the European Union has adopted EU Directive 2007/66/EC (the new remedies directive) in the public procurement which amends the original Remedies Directive 89/665/EEC. The directive is implemented by EU members as such for UK was implemented on 20 December 2009, by the Public Contracts (Amendment) Regulations SI 2009 No 2992 (the amending regulations) which amend the existing Public Contracts Regulations SI 2006 No. 5 (the regulations). The purpose behind the new remedies directive is to provide an effective remedy for (and a deterrent to) breaches of EU and national procurement law.

The directive observes that the old regime for the remedies in the public procurement was not adequately protecting the contractors’ rights in the event of the Procurement Authority failure to abide to the procurement rules. For example where there is an illegal direct award of a contract without advertisement or where the standstill period has not been observed, hence depriving the contractor to challenge the award decision before the contract is entered into.

By then the position was that, once a public contract has been entered into, an aggrieved tenderer’s only remedy was a claim for damages which could not always match with the commercial benefits of winning a contract.

Under the old regime, the contractors who wished to hold up contract award had to apply to the court for an injunctive order usually as an emergency measure during the standstill period (before signing contract). Through such application, the had to satisfy the court on the following:
• That there is a serious issue to be tried
• That damages are an inadequate remedy; and
• That the “balance of convenience” favours holding up the procurement.

In the process, the applicant was to deposit for the security for costs as a commitment to compensate the procurement authority for any loss it suffers as a result of the injunction if the court subsequently finds that the injunction should not have been granted.

Therefore, the consideration was that until the injunction is actually obtained, the claimant is at risk of losing the contract for good.

Under the new regime, if the contract has not been entered into and the aggrieved contractor starts legal proceedings, the contracting authority must not enter into the contract. This is referred to informally as the ”automatic injunction” and although it does not arise by order of the court, it can truly be said to be automatic as it has immediate effect. The automatic injunction remains in place until the court sets it aside or the proceedings come to an end.
[u][i]

RJM

Thanks for your response. I will now try to answer each of the questions that you put forward in your maiden submission

Question 1

[1] Is the PPAA mandated to issue such order and can it be enforced?

According to section 82(4),

The Public Procurement Appeals Authority may, unless it dismisses the complaint or dispute, recommend one or more of the following remedies:

(a) declare the legal rules or principles that govern the subject matter;
(b) prohibit the procuring entity from acting or deciding unlawfully or from following an unlawful procedure;
(c) require the procuring entity that has acted or proceeded in an unlawful manner, or reached an unlawful decision, to act or to proceed in a lawful manner or to reach a lawful decision;
(d) annul in whole or in part an unlawful act or decision of the procuring entity or approving authority other than any act or decision bringing the procurement contract into force;
(e) revise an unlawful decision by the procuring entity or substitute its own decision for such a decision, other than any decision bringing the procurement contract into force;
(f) require the payment of compensation for any reasonable costs incurred by the supplier, contractor or consultant submitting the complaint or dispute as a result of an unlawful act, decision or procedure followed by the procuring entity or approving authority; or
(g) order that the procurement proceedings be terminated.

I think based on what I have quoted above, I think that PPAA are mandated to issue such an order and it can be enforced unless parties chooses to refer the matter for Judicial Review under Section 85. To quote section 82(6)

The decision ofthe Public Procurement Appeals Authority shall be final unless an action is commenced under section 85 of this Act.

Question 2

[2] Is the PPAA third party to the contract?

I do not think that PPAA is a third party to the contract, but according to the law they are given mandate to review complaints. I understand that they order cancelletion of contract which RJM have just described above as being

null and void even if the contract is in force.

. Unfortunately RJM the PEs under those circumstances are part and parcel of the award process, and for them it would be impossible to see it that way and therefore order for the termination of the contract.

Question 3

[3] Can third party influence the termination of the contract?

I am not sure. I need to go to school for this one. However PPAA ruling is normally a directive to the PE to terminate the contract and always it has been in cases where it has established that the contract is null and voild.

Question 4

[4] In case PE want to terminate the contract base on such directive, which provision of the contract PE will cite? As we all know contract is discharged either by performance, breach, force majeure or convenience.

Can't they site that the termination is a result of the rulling by PPAA?

Question 5

[5] How can the failure of PE to observe the requirements of the procurement legislations in the tendering process have effect to the contract into force?

Here there are two scenario:

(1) In case the failure relates to the legal capacity of selected firm, then as asserted by RJM, the contract is null and void and must be terminated by the PE .

(2) In the case the failure is due to some other mistakes by the PE to observe some requirements ending up in selecting a particular bidder- then it may or may not have effect to the contract in force depending on the gravity of the ommision. I need again to go back to school to cite some specific examples.

Question 6

[6] Can the PE challenge decision of the PPAA in the court?

Yes it can be challenged in the Court in accordance to Section 82(6) and 85 reproduced below

82(6) The decision ofthe Public Procurement Appeals Authority shall be final unless an action is commenced under section 85 of this Act.

85. The Court of competent jurisdiction shall have Jurisdiction over actions pursuant to section 79 and petitions for judicial review of decisions made by bodies or failure of those bodies to make a decision within the prescribed time-limit, pursuant to sections 80, 82 and 83.

M.Chilongani and others let's hear you out.

RJM

Before I go into answering your questions, let me put one question to you to kikstart the responses.

Suppose, in the course of review PPAA discovers that the company that won the contract was not eligible? For example the contract was won by a contractor who is in Class VII for a job whose limit should have been for a contractor of Class V? Should they let the contract continue?