|2012 08 29 Press Release: SASSA tender process illegal and invalid|
ALLPAY CONSOLIDATED INVESTMENT HOLDINGS (PTY) LTD & OTHERS v CEO OF SASSA & OTHERS, CASE NO. 7477/12
28 August 2012
The North Gauteng High Court handed down judgment today in the matter of Allpay Consolidated Investment Holdings (Pty) Ltd and Others v CEO of SASSA and Others, declaring the tender process followed by SASSA illegal and invalid, but upholding the contract awarded to Cash Paymaster Services (PTY) LTD.
The case concerns an application by Allpay Consolidated Investments Holdings (Pty) Ltd (Allpay) to review and set aside the decision of the CEO of the South African Social Security Agency (SASSA) and SASSA of awarding a tender to Cash Paymaster Services (Pty) Ltd (CPS) to administer payment of all social grants, worth nearly R500 billion, to over 14.8 million recipients in South Africa.
The decision was challenged by Allpay on the basis that it was procedurally and substantively unfair and therefore violated the principle of legality as set out in the Promotion of Administrative Justice Act (PAJA). It was also challenged for failure to comply with sections 217 and 195 of the Constitution.
Section 217 requires that when an institution such as SASSA contracts for goods and services, it must do so in accordance with a system that is fair, equitable, transparent, competitive and cost effective. In sum, the challenge is that the decision breaches several important provisions of the Constitution, PAJA, the Public Finance Management Act (PFMA) and the Public Procurement Policy Framework Act (PPPFA).
The Centre for Child Law (the Centre), represented by the Legal Resources Centre (LRC), entered the matter as amicus curiae. The Centre was concerned by the likelihood of disruption of the payment of grants, particularly those grants affecting children, such as the child support grant; foster care grant; care-dependency grant; disability grant and old-age grant insofar as it is used to support children. The Centre demonstrated that children make up the largest group of people solely dependent on grants to support their livelihoods, with 10 789 595 children receiving the child support grant, 524 378 children receiving the foster care grant and 114 007 children receiving the care dependency grant. As such, any form of disruption with the payment of grants, even if only for a short period of time, will have a negative impact on children and all other grant beneficiaries who depend on the uninterrupted payment of grants.
The LRC argued that the interests of the children should play a central role in the determination of this case and that the case must not be seen as a purely commercial matter only involving commercial interests of Allpay and CPS. Any order that may be granted in the matter must not result in the discontinuation of the payment of grants.
Due to numerous procedurally and substantively irregularities in the tender process undertaken by SASSA, the court declared the tender process undertaken by SASSA illegal and invalid, and therefore, in the circumstances, Allpay succeeded in its challenge to SASSA’s decision to award the tender to CPS.
However, the court held that practicality and certainty do not require setting aside the agreement that SASSA entered into with CPS. The Court took the Centre’s submissions into account and indicated that the best interests of the children and other grant recipients requires that the contract awarded to Cash Paymaster Services (CPS) not be set aside, as this will inevitably disrupt the administration of the grants, which will have material consequences for all the grant recipients, especially the more than 10 million children. The court held that the best interests of children are of paramount importance, even in seemingly purely commercial matters.
For comment contact Ann Skelton or Karabo Ngidi of the Centre for Child Law on 012 420 4502 or Khumbulani Mpofu of the Legal Resources Centre on 011 836 9831.