Telkom is not a victim, says legal expert
Law firm, Cliffe Dekker Hofmeyr has said that it is unlikely that Telkom is viewed as ‘fair game’ for court action by losing bidders as it claims, reasoning that the harsh consequences of losing is enough to deter frivolous applications.
Earlier this month (April 2012) Telkom expressed its concern over the recent trend of firms challenging the awarding of key tenders in the courts, without foundation.
The group was forced to stop its planned R13 billion network overhaul after infrastructure provider, ZTE Mzansi, won a court order on Friday, 30 March 2012, to halt the project.
Telkom Group CEO, Nombulelo Moholi said: “It is Telkom’s Procurement Policy and Procedures that are on trial here. I am confident that they will not be found wanting.”
“Telkom is often considered to be fair game by losing bidders, who may feel entitled to be awarded business by the company. We are often taken to court on review without any foundation whatsoever.”
Tim Fletcher, director of dispute resolution, litigation, arbitration and mediation at the SA law firm said that “the consequences for an unsuccessful party are not only that they will probably have to abandon their challenge to the tender award, but also that will have borne the high cost of an urgent court application, and they will have to pay a substantial portion of the other side’s legal costs. These consequences are certainly harsh enough to deter frivolous applications.”
Fletcher noted that, what appeared to be of more concern to Telkom, is that the projects are stalled while the dispute over the award of the tender is decided.
“Whilst one has rights to challenge administrative actions, unfortunately, the loser in this case is the end-user – our customers who have to wait for months on end, and sometimes even years, to receive quality service,” Telkom’s Moholi said.
According to Cliffe Dekker Hofmeyr , Telkom’s concern is the flipside of the challenge that faces a party whose bid has been rejected, and who wishes to challenge the outcome of the Request for Proposal (RFP) process.
“It is an unfortunate reality that legal process takes time, and if a project continues notwithstanding a challenge to the fairness of the bid process, a court may be reluctant to set aside the award of the tender which has been running for as long as 6 months or even longer by the time the case is finalised.”
“The court will be mindful that the successful bidder will have spent a lot of money gearing up for the execution of the tender, [and] may have employed a number of people for the purpose – and if the tender is then set aside people may lose their jobs and the successful tenderer may lose a lot of money,” Fletcher continued.
The firm said that in order to protect its position, a disgruntled bidder will usually apply to court for an order freezing the process until a decision is made by the court on the challenge to the tender process.
“To get such an order the disgruntled bidder must satisfy the court that there is a good chance that the court will set aside the tender award; that the bidder will suffer irreparable harm if the status quo is not maintained until the review is heard; and that there is no other satisfactory way of the disgruntled bidder protecting its position until a final decision is made by the court on the tender award.”
“These interim court orders are not there just for the asking – the requirements are clear and the courts generally apply the requirements strictly,” Fletcher stressed.
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