Western Cape High Court

[Johannesburg, 29 August 2014]

Sanral welcomes the ruling of the Western Cape High Court. The judgment was granted with the declaratory effect that no person will be permitted, unless authorised by Sanral or the court, to disseminate, publish or distribute any part of the administrative record, the City's supplementary founding papers and the papers in the interlocutory confidentiality application before the hearing of the review application. In addition, no order was granted as to the costs.

In approval of the argument put forward by Sanral, the court held that any papers filed by parties to any litigation should only be available to those parties and to any person able to show a direct legal interest in the matter. Public access to the parties' papers and information could only take place once the matter was called in court, not before. This is so for two reasons: Firstly it ensures that the parties' privacy is protected and secondly it ensures that when parties produce documents for the purposes of litigation, they can do so fully with the comfort that documents will not be used for a "collateral or ulterior purpose".

"This is a landmark judgment with implications for the disclosure of any administrative record in the future and is particularly relevant for future challenges against state institutions during the tender process," says Nazir Alli, CEO of Sanral.

Ultimately, the court held that the information which Sanral sought to keep confidential, will remain sealed from the public until such time as review application is heard in court, and even so, it will be for the court hearing the review to determine to what extent the papers before it should not be open to the public.

"As a result of the declaratory effect of the judgment, Sanral and the preferred bidder are afforded protection. We are pleased with the outcome. However, we are in discussion with its legal team as to how it will proceed in protecting the confidential information until the tender is awarded," says Alli.

Sanral has the statutory mandate to manage and control the Republic's national roads system and take charge, amongst others, of the development, maintenance and rehabilitation of national roads within the framework of government policy. In this process Sanral implements national policies and legislation which have, for more than 20 years, included the funding of roads by means of a user-charge (tolling).

Recognising the substantial constraints on the national fiscus government introduced tolling as a funding mechanism to ensure the on-going maintenance and upgrading of national roads in a manner which is both cost effective and ensures the best value for money for South African citizens.

In the Western Cape there is already a toll road in place at the Huguenot Tunnel. In fact the Western Cape Provincial Government ran a similar tender for a toll project for Chapman's Peak some time ago.

Thus, it was not a new concept for South Africa, or the Western Cape Provincial Government or the City of Cape Town, when Sanral commenced the tender process for the tolling of sections of the N1 and N2, better known as the Winelands Route.

In line with tendering processes Sanral publicly invited companies to submit competitive bids for this project. Bidding companies provide confidential commercial information including their proposed engineering and construction plans, their allocation of legal and financial risks and, in this case, their intended toll fee structure. The bids are confidential.

This is the information used by Sanral, like any other public entity, to reach a decision on the successful bidder, to shortlist candidates, or to negotiate better terms and conditions. The toll strategy of each of the bidders on the Project was unique and constituted just one of the many elements of the bids which made the entire tender process so competitive.

These elements included the manner each of the bidders would structure how, when and where toll fees will be charged. This is a quintessential aspect of the competitive nature of this project. It is patent how premature disclosure of this kind of information in the bids, before the tender has actually been awarded, would severely disadvantage Sanral in its negotiations with any of the bidders. Premature publication of this type of information would easily allow bidders to fix rates and strategies across the board, giving Sanral little to no leeway to move between bidders and negotiate a concession, including a toll strategy, that is in the best interest of the consumers.

It is important to note that the Winelands route process is currently at the stage where a preferred bidder has been identified by Sanral following a comprehensive evaluation of three bids. A further phase in the bid process is still outstanding and, more importantly, the tender has not yet been awarded.

The City claims that Sanral's appointment of a preferred bidder constitutes an award of a tender. An irreconcilable difference or perhaps a stark contradiction to the City's own position held in relation to the appointment of preferred bidders on its projects: City's Announcement of the Preferred Bidder for Green Point Stadium Construction. To illustrate this some notable excerpts have been lifted from an article published on the Western Cape Provincial Government's Web site:

"The City's Bid Adjudication Committee recommended that the City Manager approves the preferred bidder and authorises the head of the City's 2010 team, Mike Marsden, to start negotiating with the consortium. The negotiations with the preferred bidder will be to actively interrogate their tendered price, rates and qualifications to achieve a reduced total overall cost. The estimated cost for the stadium in the joint City and Provincial 2010 business plan is R2.49 billion and funding committed by the three spheres of government totals R2.48 billion.

The negotiations with the preferred bidder will start as soon as possible. When the negotiation process has been completed, a further report will be submitted by the City's 2010 World Cup team to the Bid Adjudication Committee with a view to awarding the tender. The Municipal Management Finance Act determines that tenders can only be awarded if all funds for the project are available."

"Indeed, it is our view that despite the fact that the City clearly understands the nature of the process, the City persists in litigating against an ‘incomplete administrative process'," says Alli.

As the recipient of the intellectual property of others, the Public Finance Management Act applies to Sanral, to the State and all State Organs during their procurement processes and places a duty on them to keep such intellectual property confidential. To disclose it prematurely would be a gross dereliction by Sanral of its legislative duties and would put all future bidding processes at risk. It would have a ripple effect on the integrity, not only of Sanral, but of all state agencies and organs at national, provincial and local government levels.

"Why would any commercial company trust Sanral, or a government department, or even the City of Cape Town, if there is a possibility that sensitive commercial information will be divulged to competitors before a final tender has been awarded?" asks Alli.

It is alleged that Sanral is engaged in a secret tender process and intends to withhold information from the public. This is then equated with the so-called "Secrecy Bill" and a doomsday scenario is painted of a future South Africa where citizens will have no access to information that is in the possession of the state. This is incorrect and demonstrates a fundamental lack of understanding about tender processes. It fails to distinguish between the concepts of "confidentiality" and "secrecy".

"We are committed to transparency and fully support the right of the public to have access to information pertaining to our business and our decisions. Sanral's position has nothing to do with secrecy but is only intended to ensure the integrity of a competitive bidding process which is currently ongoing," concludes Alli.

Statement issued by SANRAL, August 29 2014

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