Transnet’s application was dismissed.

• The Supreme Court of Appeal dismissed Transnet’s application to set aside a R34 million security fencing tender.
• Transnet argued that the installed fence did not match the specifications of a sample of fence submitted by the construction company.
• The court said, however, that Transnet’s appeal was “opportunistic”.
• For more financial news, go to the News24 Business front page.

The Supreme Court of Appeal (SCA) has dismissed an appeal brought by Transnet to set aside a R34-million tender it awarded to Tipp-Con to install security fences at three Transnet sites in Johannesburg.

Transnet failed to pay the Midrand-based construction company the full complement of agreed-upon fees, arguing that the specification of the fence being installed didn’t match the specs of a sample of fence provided by Tipp-Con before being awarded the tender.

The court said that Transnet’s application was “opportunistic” as the discrepancy between the sample fence and what was delivered was already disclosed by Tipp-Con during the bidding process and Transnet went ahead anyway.

The issue arose from a Transnet tender that was put out in November 2018 for the construction of the fences. Tipp-Con was one of seven companies to submit fencing samples to a Transnet evaluation body.

One of the specifications was that the fence was “hot dip galvanised,” which the Tipp-Con sample was not. Tipp-Con disclosed this, and provided an explanation for why the sample fence had not undergone this process, which was accepted by the Transnet evaluation panel. 

By August 2019, Tipp-Con had accepted its appointment as the successful bidder for the tender. 

Tipp-Conn began installing the fence in October 2019, but less than a month later, Transnet started to ask questions about the installation.

Transnet requested information regarding “all tests performed” on “the already installed fence”.

Tip-Conn provided this and the second of three invoices submitted to Transnet was duly paid.

However, a third invoice of over R7 million was not paid by Transnet. 

Following an inspection, Transnet alleged that the specifications of the installed fence did not meet the sample provided during the tender process.

The parties entered into an adjudication process to attempt to resolve the dispute. A section of the installed fence at one of the facilities was tested by a third party and found to be compliant with the specifications in the tender. Notably, the fence was hot dip galvanised. 

But Transnet was still unhappy and barred the construction company from continuing with the installation. It took nearly a year for Transnet to institute a review of the contract, turning to the Pretoria High Court. Transnet wanted the contract to be set aside.

In the meantime, Transnet dismissed one of the three members of the evaluation panel which awarded the contract on the basis that he did not ensure that the installation matched the criteria of the fence sample. 

Transnet did not explain why action was not taken against the other two employees on the evaluation panel. 

The high court dismissed Transnet’s delayed application, arguing that Transnet only brought the review to “escape its contractual obligations”.

On 31 January, the SCA also dismissed the application, arguing that focusing on the tender sample rather than the section of the fence tested by the third party was an attempt to “circumvent the adjudicator’s conclusion”.

The SCA judgment said:

It added:

“It [Transnet] refused to recognise the outcome of an adjudicative process in which it had voluntarily participated. In fact, in the adjudication before the adjudicator, Transnet sought to enforce the very contract it now seeks to annul. The only issue was the fence’s alleged lack of hot dip galvanisation and the wire diameter. The adjudicator has rejected both issues.”

This is not the only fence-based controversy that Transnet is grappling with.

City Press reported at the weekend that the Special Investigating Unit had launched an investigation into a Transnet security fence tender upgrade, which ballooned from R90 million to R300 million.

This tender was related to the security around several ports in the country.