Three days is not a tender process: Fidelity Security Services v Transnet
A R300 million security contract for Transnet’s rail infrastructure was advertised for three days. Treasury Regulation 16A6.3(c) requires a minimum of twenty-one. That single fact was enough to render the entire tender process unlawful from the outset and the Gauteng High Court said so plainly in Fidelity Security Services v Transnet. What elevates this judgment beyond the facts of the case is the court’s treatment of the three overlapping failures that compounded the initial irregularity: irrational evaluation, arbitrary rescoring, and the preferential treatment of a winning bidder whose own regulatory non-compliance was overlooked.
Fidelity, an unsuccessful bidder, was disqualified at the technical evaluation stage for allegedly failing to achieve the mandatory 80% threshold. It scored 66.67%. It challenged that outcome on review, arguing that the process was flawed at every level: from the compressed advertisement window to the manner in which its bid was scored and the manner in which the winning bidder’s material deficiencies were ignored. The court agreed on all counts.
An internal policy cannot override a binding regulation
The starting point and the most unambiguous of the grounds concerned the advertisement period. Treasury Regulation 16A6.3(c) is not aspirational. It sets a minimum standard of twenty-one days, with a narrow exception for urgent cases where the accounting officer has made a formal determination of urgency. The court was clear: compliance with the regulation is a jurisdictional prerequisite for a lawful tender process. Without it, the process is constitutionally defective from inception.
Transnet’s answer was that it had conducted the procurement as a limited bidders’ mechanism under clause 8.9 of its internal Procurement Manual for Activities Directed at Revenue Generation, which permits a shorter response period. The court rejected this. An internal policy manual cannot authorise a departure from a binding Treasury Regulation. The regulation sets the floor; no internal document can lower it. Moreover, Transnet had not even complied with its own manual’s preconditions: the manual required a reasonable period of not less than forty-eight hours, and prior written approval from the Chief Procurement Officer for anything shorter. The record contained neither.
The court also noted the internal contradiction in Transnet’s urgency argument. The RFP stipulated a bid validity period of 180 business days, ending in April 2026. A genuine emergency requiring a three-day advertisement window is inconsistent with an eight-month evaluation timeline. The extended validity period demonstrated that Transnet had anticipated a lengthy process – fatally undermining any belated claim of operational urgency. The court went further: on the probabilities, the compressed window was not a response to an emergency at all. It was a design feature that served to limit competition.
Ignoring the evidence in front of you is irrational
Even if the advertisement period had been lawful, the disqualification of Fidelity’s bid was independently fatal to the process. The evaluators marked Fidelity down for failing to address its fifteen-day takeover plan. The record told a different story.
Fidelity’s Business Continuity and Transitional Plan (attached to its supplementary founding affidavit) explicitly and repeatedly stated that it could deploy within twenty-four hours. It set out a detailed, hour-by-hour start-up execution plan achieving full operational readiness within that period, covering recruitment, deployment, and employee takeover. The evaluators’ conclusion that the transitional plan did not address recruitment within fifteen days was, on the face of the document, demonstrably false.
This is not a case, the court was careful to note, of a reviewing court substituting its own technical judgment for that of the evaluators. The principle that courts should not second-guess procurement decisions in matters of expertise is well established. But that principle has limits. It does not protect a decision where the record shows the evaluators simply ignored the evidence before them. The test for rationality – whether there is a rational connection between the decision and the purpose for which the power was conferred – was not met. This is a ground of review under section 6(2)(e)(iii) of PAJA: failure to consider relevant material.
The arbitrariness of the original evaluation was further exposed by what happened next. After Fidelity requested a roundtable meeting, Transnet re-evaluated the bid and increased Fidelity’s score from 66.67% to 71.67%. No explanation was offered for the revision. The court treated this as telling: if the original score were unimpeachable, there would have been nothing to revise. The unexplained upward adjustment confirmed that the initial evaluation had not been a proper application of mind.
Equal treatment requires equal scrutiny
The third strand of the court’s reasoning concerned the treatment of the winning bidder. Sinqobile’s bid included a Private Security Sector Provident Fund Employer Status Confirmation Letter recording an outstanding late-payment interest liability of over R8.4 million and a warning of non-compliant status. This was a material fact going directly to the financial discipline, regulatory compliance, and operational sustainability of a bidder for a labour-intensive, multi-million rand security contract.
The procurement record contained no evidence that Transnet had considered this at any point in its risk or functionality assessment. The court’s conclusion was direct: by ignoring this red flag while rigidly applying a technical disqualification to Fidelity, Transnet acted in a manner that was neither equal, nor fair, nor rational. The constitutional standard of fair and equitable procurement cannot be satisfied when the same evaluative rigour is not applied to all bidders.
The cumulative effect of these three failures was, in the court’s assessment, profound. The process was unlawful from the outset. It was rendered substantively irrational by the evaluation of Fidelity’s bid and the unequal treatment of Sinqobile. Multiple grounds of review under section 6(2) of PAJA were established. The award was set aside and the matter remitted to Transnet for a de novo tender process conducted in compliance with the Constitution, the PFMA, and applicable Treasury Regulations.
On remedy, the court declined to order disgorgement of profits from Sinqobile. Applying AllPay II, it noted that Sinqobile had simply submitted a bid and was not shown to have been complicit in Transnet’s conduct. The primary fault lay with Transnet. With the contract nearing completion, a disgorgement order would be highly disruptive and would effectively penalise the wrong party. Remittal for a fresh process was the more proportionate and constitutionally appropriate remedy.
For organs of state engaged in procurement, the lesson is clear. Treasury Regulation 16A6.3(c) is not a procedural inconvenience to be routed around by internal policy. The twenty-one day minimum is a constitutional standard. Departing from it requires a formal urgency determination by the accounting officer, properly recorded. Absent that, nothing that follows is lawful – regardless of how the evaluation itself is conducted.
For bidders who believe they have been irrationally scored or unfairly treated relative to competitors whose own compliance deficiencies were overlooked, this judgment demonstrates that the courts will look squarely at the evaluation record. Where that record shows the evaluators failed to engage with the evidence before them, the decision will not stand.
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