Moorosi Tsiane
LOCAL contractor, Tsoelopele Investment Holdings (Pty) Ltd, has accused the Water and Sewerage Company (WASCO) and the Ministry of Natural Resources of reneging on a M25 million contract after allegedly appointing the company as the successful bidder in 2018.
Tsoelopele has now petitioned the Commercial Division of the High Court seeking, among other relief, an order compelling the government to pay it M25 million.
The company, through its director, Pokane Chesa, claims it invested heavily in preparing to execute the tender after being repeatedly assured that the contract would be honoured.
The respondents in the matter are the Principal Secretary in the Ministry of Natural Resources Relebohile Lebeta, and WASCO Managing Director Mpeke Lebohang Makara.
In an affidavit filed before the Commercial Court this past week, Mr Chesa says the dispute dates back to 2018, when WASCO invited bids for the procurement of “Supply and Delivery of Strategic and Routine Items: Lot 2 – Meters”.
He says Tsoelopele submitted its bid in accordance with the tender requirements and was subsequently informed that it had won the tender.
“Following the evaluation of bids, Tsoelopele was informed that it had been successful. On 6 November 2018, Tsoelopele received an appointment letter informing it that it had been appointed as the successful supplier under the tender,” Mr Chesa states.
He says WASCO subsequently emailed the company on 12 November 2018 requesting it to collect its appointment letter.
“Tsoelopele regarded the appointment as confirmation that the procurement process had been concluded in its favour. The appointment was a significant achievement for the company and represented an important commercial opportunity,” he states.
Mr Chesa says that following the appointment, he attended several meetings with WASCO and Ministry of Water officials concerning implementation of the award.
“After the appointment, I attended several meetings and discussions with representatives of WASCO concerning implementation of the award. During these engagements, I was repeatedly informed that a formal supply contract would be prepared and signed,” he says.
According to Mr Chesa, WASCO assured the company throughout those discussions that there were no obstacles preventing implementation of the award.
“WASCO consistently represented that there was no obstacle preventing implementation of the appointment. We were informed that the contemplated contract would run for approximately two years. We were also informed that the anticipated value of the contract would be approximately M25,000,000.”
He says those assurances prompted Tsoelopele to begin preparing for execution of the contract.
“Throughout these engagements, WASCO encouraged Tsoelopele to prepare for implementation of the contract. At no stage was Tsoelopele informed that its appointment had been withdrawn or cancelled.”
Relying on those assurances, Mr Chesa says, the company embarked on extensive preparations.
These included contacting local and international suppliers, obtaining quotations from manufacturers, establishing supply-chain arrangements, engaging technical personnel, incurring travelling and accommodation expenses, attending meetings requested by WASCO, preparing commercial and technical documentation, and committing significant management time and financial resources towards readiness to perform the contract.
Mr Chesa further claims that the company turned down other business opportunities because it believed implementation of the WASCO contract was imminent.
However, despite those preparations, the anticipated contract was never signed.
“Despite the appointment and all assurances given to Tsoelopele, WASCO failed to execute the anticipated contract. Instead, WASCO repeatedly postponed the matter without providing satisfactory explanations,” he says.
He says the company later discovered that WASCO had changed its procurement arrangements.
“Eventually, I became aware that the procurement arrangements had been altered. WASCO authorised contractors responsible for house connection works to procure water meters independently. This effectively deprived Tsoelopele of the commercial opportunity for which it had already been appointed.”
Mr Chesa says Tsoelopele was never consulted before the decision was taken.
“Tsoelopele was never consulted before this decision was taken, no reasons were provided, and Tsoelopele was afforded no opportunity to make representations. I regarded this conduct as unfair and wholly inconsistent with the appointment previously issued to Tsoelopele.”
Despite the setback, he says the company continued engaging WASCO officials in an effort to resolve the dispute amicably.
“After Tsoelopele complained about WASCO’s conduct, I continued engaging officials of WASCO in an attempt to resolve the matter amicably. During these engagements, I was repeatedly assured that the matter would be resolved. WASCO continued indicating that Tsoelopele would either receive the original contract or be afforded another opportunity.”
Mr Chesa further claims that at one stage the then WASCO Managing Director encouraged the company to bid for another tender issued in July 2023.
“At one stage, the then WASCO Managing Director suggested that Tsoelopele participate in Request for Bids (RFB) July 2023, Reference No. WASCO/SCM/020623, and represented that Tsoelopele would be favourably considered as compensation for the loss occasioned by the failure to implement the earlier appointment,” he says.
According to Mr Chesa, Tsoelopele relied on those assurances and continued negotiating in good faith.
“Unfortunately, those assurances were never fulfilled, no alternative contract was awarded to Tsoelopele, no compensation was paid. WASCO simply continued postponing the matter. Those negotiations continued for years without any meaningful resolution.”
Mr Chesa says the company suffered substantial financial losses as a result.
“WASCO’s conduct caused serious financial prejudice to Tsoelopele. Tsoelopele lost the opportunity to perform a contract valued at approximately M25,000,000.00.”
He says the company also incurred significant expenditure on supplier engagements, logistics planning, travelling, accommodation, administration and other operational costs while preparing to execute the contract.
“Had WASCO honoured the appointment made on 6 November 2018, Tsoelopele would have performed the contract and earned the anticipated commercial benefit. Instead, Tsoelopele was deprived of that opportunity through no fault of its own.”
Explaining the decision to approach the Commercial Court, Mr Chesa says Tsoelopele believed throughout that the appointment would culminate in a formal contract.
“I honestly believed that the appointment issued by WASCO would culminate in the execution of a formal contract. Tsoelopele acted throughout honestly, reasonably and in good faith. WASCO repeatedly encouraged Tsoelopele to rely upon their representations. Tsoelopele suffered substantial financial loss because those representations were never honoured.
“It is for these reasons that Tsoelopele seeks declaratory relief and compensation from this honourable court.”
The government and WASCO had not, at the time of publication, filed their papers responding to the allegations.
