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Tender awards in the power sector and the limits of discretion

Courts continue to scrutinise procurement by distribution licensees. A note on the quashing of arbitrary tender awards and the evidentiary weight of type-test compliance.

The background

Distribution licensees procure at scale: meters, transformers, conductors, switchgear. The tenders are large, the technical specifications are exacting, and the temptation to relax a specification in favour of a preferred bidder is correspondingly strong. The High Court has recently set aside a purchase order issued by a State power corporation for quality meters where the successful bidder had not furnished the required type-test report.

The legal framework

Judicial review of a tender award is not an appeal on the merits. The Court does not ask whether it would have awarded the contract to the same bidder. It asks whether the decision-making process was arbitrary, mala fide, or so unreasonable that no reasonable authority could have arrived at it. Within that narrow compass, however, one principle is firm: the tendering authority is bound by the terms of its own tender. It may not, after bids are opened, waive an essential condition for one bidder while having applied it to exclude others.

Essential versus ancillary conditions

The distinction is the battleground. An authority retains a limited discretion to waive an ancillary or non-essential deviation. It has no discretion to waive an essential condition, because to do so alters the basis on which all bidders competed. A type-test report going to the technical qualification of the product is almost always essential: it is the mechanism by which the authority satisfies itself that the equipment will perform, and it is a condition on which other bidders will have incurred cost to comply.

What this means for bidders

If you have been excluded for a deviation that a competitor was permitted, act at once. Delay is fatal in tender litigation, both because the Court is reluctant to unsettle a contract under execution and because the equities shift once mobilisation has begun. Obtain the comparative statement and the technical evaluation report, and identify precisely which condition was applied to you and relaxed for the successful bidder.

What this means for licensees

Set out in the tender document itself which conditions are essential and which are capable of waiver, and record the reasons for any relaxation contemporaneously. A decision that can be explained on the file is far more likely to survive review than one reconstructed in a counter-affidavit.

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