The review of a municipality’s own procurement decisions: PAJA or legality review?

Abstract

Organs of state are constitutionally mandated to procure goods and services in accordance with the requirements of the Constitution and any other procurement applicable legislation. When organs of state procure without adhering to existing procurement laws, there is irregular expenditure. Irregular expenditure refers to funds flowing from a procurement contract which has been concluded without complying with procurement legislation. The irregular expenditure of public funds has been on the rise in procurement across all three spheres of government (national, provincial and local levels of government). Local government (LG) is the closest to the people. It is constitutionally mandated with the provision of basic municipal services (including water and electricity). Municipalities contract with external businesses to ensure service delivery for their communities. However, consensus has it that procurement is plagued by corruption. As such, South Africa has seen a significant increase in irregular expenditure. The courts have been involved in addressing the rise in irregular expenditure, seeking ways to annul unlawfully concluded procurement contracts. Meanwhile, organs of state have at times approached the courts to overturn decisions in this regard and to seek to procure in contravention of the law through the process of self-review. This research is concerned with self-review by organs of state in LG. Self-review applications can be conducted through the Promotion of Administrative Justice Act (PAJA) or by appealing to the principle of legality. Procurement decisions constitute an administrative action and should therefore be reviewed in accordance with PAJA. However, the Constitutional Court (CC) (in State Information Technology Agency SOC Limited v Gijima Holdings (Pty) Limited (Gijima case)) unanimously decided that organs of state do not enjoy legal standing in bringing self-review applications regarding procurement contracts under PAJA. They can only do so under the legality review. This research will demonstrate that the CC erred in holding that organs of state have no legal standing under PAJA and that the Gijima case has now limited the scope of self-review of procurement decisions made by municipalities. It will also be shown that the limitation of the scope of review as provided for in Gijima is not the most effective method of curtailing the unlawful contracting by municipalities which results in irregular expenditure. Lastly, this research will argue that it is best to create space for a PAJA review as the first point of call (rather than exclusively relying on the legality review) for clean LG and promoting of legal certainty.