Eskom Successfully Appeals Judgment Declaring R16bn Tenders Lawful

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Eskom has emerged victorious in its legal battle over tenders worth approximately R16 billion, which were awarded for maintenance and outage repair services at its coal-fired power stations. The Supreme Court of Appeal (SCA) dismissed an application to review a previous judgment that declared the tenders unlawful, marking a significant legal victory for the power utility.

In August 2018, Eskom issued a request for proposals (RFP) inviting tenders for maintenance and outage repair services at its coal-fired power stations. The subsequent tender process resulted in the awarding of contracts to Actom and Steinmüller Africa in October 2021.

Disqualification of Babcock:
Babcock Ntuthuko Engineering, one of the bidders, was disqualified for failing to submit a current ISO 3834 certificate as required by the RFP. Despite its disqualification, Babcock challenged the decision in court, arguing that the tender process was irrational, unlawful, and invalid.

High Court Judgment:
In November 2022, Judge Anthony Millar of the High Court in Pretoria ruled in favor of Babcock, setting aside the tender awards and declaring the contracts unlawful. The court found Eskom’s disqualification of Babcock to be procedurally unfair and ordered a fresh tender process.

Supreme Court of Appeal Decision:
However, Eskom appealed the decision, and the Supreme Court of Appeal has now overturned the previous judgment. Acting judge John Smith, writing the SCA’s judgment, emphasized the clarity of the RFP’s requirements and upheld Eskom’s decision to disqualify bidders who failed to submit mandatory documents, including the ISO 3834 certificate.

Rational Tender Split:
Furthermore, the SCA found Eskom’s decision to split the tender between Actom and Steinmüller to be rational and in compliance with procurement regulations. The court upheld the principles of fairness and objective criteria in tender allocation.

Implications and Conclusion:
With the SCA ruling in its favor, Eskom can proceed with the contracts awarded to Actom and Steinmüller Africa, securing essential maintenance and repair services for its coal-fired power stations. The decision reinforces the importance of clarity and adherence to tender requirements in procurement processes, setting a precedent for future contract awards.

Eskom’s successful appeal marks a significant legal victory and ensures the continuity of vital services for its power generation infrastructure.

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