Eskom succeeds in appeal over R16bn maintenance contracts dispute
Babcock brought court action after it failed to have its service contract renewed during a tender process
02 May 2024 - 05:00
by Denene Erasmus
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An aerial view of Eskom's Kriel power station in Delmas, Mpumalanga. File photo: SHAFIEK TASSIEM/REUTERS
The Supreme Court of Appeal (SCA) has upheld an appeal brought by Eskom against a high court judgment delivered in 2022 in a case brought against it by one of its long-serving contractors over the awarding of maintenance contracts.
“Eskom had always maintained that it had followed a valid and lawful procurement process and correctly excluded Babcock (and others) from evaluation due to its failure to provide a critical mandatory tender deliverable, as at tender close. The judgment by the Supreme Court found that indeed the tender was correctly evaluated and lawfully awarded. It set aside the decision of the high court,” Eskom told Business Day.
The matter was previously heard in the Pretoria high court in October 2022 when Babcock Ntuthuko Engineering, an SA subsidiary of Babcock International Group, was successful in its bid to have the contracts set aside as the court found that the disqualification of Babcock was irrational.
The company brought the court action after it failed to have its service contract renewed during a tender process. The tenders in question are worth about R16bn and were awarded in December 2021 to provide boilerserve maintenance and outage repair services at 15 coal-fired power stations.
The tender was jointly awarded to Actom and Steinmüller Africa. Before December 2021, the three companies (Babcock, Actom and Steinmüller Africa) were all contracted to perform specialist engineering services at different Eskom power stations.
Babcock’s tender was disqualified because it had failed to comply with a requirement in the request for proposals to provide an ISO 3834 certificate (a general welding certificate) issued by the Southern African Institute of Welding.
Babcock argued, among other matters, that Eskom was already in possession of Babcock’s general welding certificate as part of the company’s existing boilerserve maintenance contracts. The company also argued the ISO 3834 condition did not require the submission of an ISO 3834 certificate but merely the statement by the bidder that it had one.
At the time, Eskom was ordered to conduct a fresh tender process to be expedited and awarded within eight months. However, it then applied for leave to appeal the ruling in December 2022, which was granted in January 2023.
However, according to the SCA decision, the request for proposals was “unambiguous and required bidders to submit an ISO 3834 certificate”. The court found that “a mere statement that they had ‘ISO 3834 certification’ did not constitute compliance with that condition”.
Eskom said it was satisfied with the judgment.
“As a public entity, Eskom has a duty to ensure that its procurement takes place in accordance with applicable administrative law requirements and expresses the hope that this now puts an end to a matter two-and-a-half years in the making for Eskom’s decision to be ultimately vindicated,” the utility said.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Eskom succeeds in appeal over R16bn maintenance contracts dispute
Babcock brought court action after it failed to have its service contract renewed during a tender process
The Supreme Court of Appeal (SCA) has upheld an appeal brought by Eskom against a high court judgment delivered in 2022 in a case brought against it by one of its long-serving contractors over the awarding of maintenance contracts.
“Eskom had always maintained that it had followed a valid and lawful procurement process and correctly excluded Babcock (and others) from evaluation due to its failure to provide a critical mandatory tender deliverable, as at tender close. The judgment by the Supreme Court found that indeed the tender was correctly evaluated and lawfully awarded. It set aside the decision of the high court,” Eskom told Business Day.
The matter was previously heard in the Pretoria high court in October 2022 when Babcock Ntuthuko Engineering, an SA subsidiary of Babcock International Group, was successful in its bid to have the contracts set aside as the court found that the disqualification of Babcock was irrational.
The company brought the court action after it failed to have its service contract renewed during a tender process. The tenders in question are worth about R16bn and were awarded in December 2021 to provide boilerserve maintenance and outage repair services at 15 coal-fired power stations.
The tender was jointly awarded to Actom and Steinmüller Africa. Before December 2021, the three companies (Babcock, Actom and Steinmüller Africa) were all contracted to perform specialist engineering services at different Eskom power stations.
Babcock’s tender was disqualified because it had failed to comply with a requirement in the request for proposals to provide an ISO 3834 certificate (a general welding certificate) issued by the Southern African Institute of Welding.
Babcock argued, among other matters, that Eskom was already in possession of Babcock’s general welding certificate as part of the company’s existing boilerserve maintenance contracts. The company also argued the ISO 3834 condition did not require the submission of an ISO 3834 certificate but merely the statement by the bidder that it had one.
At the time, Eskom was ordered to conduct a fresh tender process to be expedited and awarded within eight months. However, it then applied for leave to appeal the ruling in December 2022, which was granted in January 2023.
However, according to the SCA decision, the request for proposals was “unambiguous and required bidders to submit an ISO 3834 certificate”. The court found that “a mere statement that they had ‘ISO 3834 certification’ did not constitute compliance with that condition”.
Eskom said it was satisfied with the judgment.
“As a public entity, Eskom has a duty to ensure that its procurement takes place in accordance with applicable administrative law requirements and expresses the hope that this now puts an end to a matter two-and-a-half years in the making for Eskom’s decision to be ultimately vindicated,” the utility said.
erasmusd@businesslive.co.za
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