In a judgment handed down on 1 October 2025, the Supreme Court of Appeal ruled that the lack of collective capacity of the highest-ranked bidder across multiple related tenders was an objective consideration that justified the award of some of the tenders to the next-ranked bidders.
The matter arose from seven tenders issued by the South African National Roads Agency (SANRAL) for civil engineering services. The appellant had submitted bids for all seven tenders and achieved the highest score on price and preference across the board.
SANRAL was concerned about the appellant’s capacity to perform all seven projects simultaneously. The appellant was a relatively new entrant to the market with a modest track record, a small permanent staff complement, and a heavy reliance on external specialists who were already committed elsewhere. Following a capacity and risk assessment, SANRAL awarded three out of the seven tenders to the appellant and the other four to the next-ranked bidders.
The appellant challenged the award of the latter four tenders on the basis that:
- SANRAL was not permitted to conduct a capacity and risk assessment and displace the highest-ranked bidder in favour of the next-ranked bidders; and
- instead, all of the tenders should have been awarded to the appellant as the highest-ranked bidder in each instance.
The court explained that our procurement law permits a deviation from awarding a tender to the highest-ranked bidder if that deviation is justified by objective criteria. In addition, the court observed that the terms governing these tenders required awards to be made only where the bid:
- presented no unacceptable commercial risk; and
- demonstrated sufficient capacity and competence.
Accordingly, the court endorsed SANRAL’s approach to have assessed the appellant’s capacity collectively across the seven tenders. The court stated that it would have been unworkable for SANRAL to ignore the totality of the tenders being performed at the same time and that the appellant’s capacity was a function not only of any single project’s demands but also of the appellant’s aggregate workload.
SANRAL was therefore entitled to assess whether the appellant had the capacity to perform all seven projects simultaneously, and to award the tenders accordingly, otherwise SANRAL might have been exposed to unacceptable commercial risk.
The court dismissed the appeal with costs and upheld the tender awards.
This judgment illustrates that a state entity should not award a tender in isolation of surrounding circumstances that may impact on the highest-ranked bidder’s ability to deliver the required goods or services.