SCA: R3bn school workbook contract invalid

The Supreme Court of Appeal (SCA) on Tuesday ruled that the department of basic education treated two bidders in an unequal manner when it awarded the country’s biggest printing and distribution contract to the Lebone Consortium in 2017.

JSE-listed printer Novus plays a leading role in Lebone, while JSE-listed printing and publishing giant Caxton’s CTP Limited is a major player in the CTP JV that brought the initial challenge to the award and the appeal.

Although the SCA ruled the award to be constitutionally invalid and that it must be set aside, Lebone will continue to execute the contract until March 2020 to ensure that there is no interruption in the provision of learning material to 24 000 public schools countrywide.

‘Intricate process’

The contract covers the printing of 60 million books with 8.78 billion pages in 11 official languages for learners in grades R to 9. These books must be distributed to 24 000 schools in nine provinces. This happens in a cycle twice a year, with printing taking place over 95 days and distribution over 35 days. The department calls it an “involved and intricate process”.

It could be worth up to R3 billion, Moneyweb was told.

The suspension of the court order means that Lebone will execute the contract for the whole three-year term, but the possible extension of the award to Lebone that was provided for has been ruled out.

If the contract is to continue beyond March 2020, the department will have to make a new lawful award, the court ordered.

Favouritism?

The SCA agreed with CTP JV that the bid evaluation committee (BEC) treated it unfairly and that the two bids were not treated equally when assessed on functionality.

The bidders had to score 80 points to pass this phase and progress to the evaluation on price and empowerment credentials.

The members of the BEC first scored each bidder individually. CTP scored an average of 80 and Lebone 92.6. The BEC then moderated CTP’s score to 79, but maintained that of Lebone without any moderation.

This meant that CTP fell short of the functionality test, which excluded it from the rest of the process. Its price and empowerment credentials were never considered.

The High Court earlier accepted Lebone’s argument that there was no need for the BEC to moderate the Lebone Consortium’s score on functionality, as it did with that of the CTP JV. Members reached early consensus that Lebone complied, but differed about whether the CTP JV did, which necessitated further deliberations, it found.

The SCA however did not agree.

It found that although “there was no suggestion of corruption in the adoption of a consensus-seeking approach (the moderation) adopted by the BEC, it falls short of the standard required.”

‘Residual sense of unease’

The court continued: “One is left with a residual sense of unease. It cannot be said that, viewed objectively, the exclusion of CTP JV from further consideration on the ground that it had failed the functionality test, was fair in all the circumstances of the case. A high standard is required.”

It concludes that the award of the tender to Lebone cannot pass constitutional muster.

CTP raised two other arguments in its appeal that the SCA did not accept.

In drafting its remedy the SCA had regard for the right of learners to basic education. “Provision of school workbooks should continue without disruption as education is a constitutional imperative,” the SCA stated.

It rejected CTP’s suggestion that the order of invalidity be suspended until March next year, and accepted Lebone’s suggestion to suspend it until the end of the three-year period. Lebone based its suggestion on the fact that it has to start this month with the design and preparation of the work books to be delivered in January 2020, and because of the agreements it has with other parties that were negotiated on the basis that the contract would be for three years.

Caxton chairman Paul Jenkins welcomed the SCA ruling and said it vindicated his group’s contention that it had been excluded unfairly.

Novus CEO Neil Birch said the parties will study the implications of the judgment in detail before deciding on any action in this regard.

Story originally published on Moneyweb

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