1. Introduction

In South Africa, public procurement is governed by a constitutional and administrative-law framework designed to ensure that government contracts are awarded through processes that are fair, equitable, transparent, competitive and cost-effective. Section 217(1) of the Constitution is the starting point for this framework. Procurement decisions by organs of state are generally subject to judicial review under the Promotion of Administrative Justice Act 3 of 2000 (PAJA) when they constitute administrative action. (SAFLII)

The importance of PAJA review is that courts do not ordinarily reconsider a tender simply because another bidder or the court might have reached a different commercial conclusion. The central question is whether the decision-making process complied with the Constitution, applicable legislation, tender conditions and the requirements of lawful, reasonable and procedurally fair administrative action. (SAFLII)

2. Constitutional and Legislative Framework

A. Section 217 of the Constitution

Section 217(1) requires an organ of state contracting for goods or services to use a procurement system that is:

Fair

Equitable

Transparent

Competitive

Cost-effective

This constitutional requirement operates together with legislation such as the Preferential Procurement Policy Framework Act 5 of 2000 (PPPFA), the Public Finance Management Act 1 of 1999 (PFMA), the Municipal Finance Management Act where applicable, and relevant supply-chain-management policies. (SAFLII)

B. PAJA

PAJA gives practical effect to the constitutional right to administrative action that is lawful, reasonable and procedurally fair.

Section 6 permits a court to review administrative action on specified grounds, including:

failure to comply with a mandatory and material procedure or condition;

bias or reasonable suspicion of bias;

failure to comply with an empowering provision;

irrelevant considerations or failure to consider relevant considerations;

decisions based on an error of law;

unauthorised decisions;

decisions taken for an improper purpose;

irrationality;

unreasonableness;

procedural unfairness; and

other grounds specifically recognised by PAJA.

In procurement litigation, these grounds must be understood in the context of section 217 of the Constitution.

3. Procurement Decisions as Administrative Action

A decision to award or refuse to award a public tender is generally regarded as administrative action and can therefore be reviewed under PAJA. This principle has been repeatedly recognised by South African courts. (SAFLII)

The SCA confirmed in TMT Services & Supplies v MEC: Department of Transport, KwaZulu-Natal (2022) that a decision to award a tender constitutes administrative action under PAJA. The court also emphasised that PAJA ordinarily provides the statutory basis for reviewing administrative action rather than simply relying directly on section 33 of the Constitution or the common law. (SAFLII)

Thus, an unsuccessful bidder may challenge a procurement decision where there is an identifiable PAJA review ground.

4. The AllPay Principle

The leading authority is AllPay Consolidated Investment Holdings (Pty) Ltd v CEO, South African Social Security Agency.

The Constitutional Court established an important methodology for procurement review.

The court explained that the procurement principles in section 217 do not operate independently of PAJA. Rather, they inform and give substantive content to the PAJA review grounds. A failure concerning fairness, transparency, competitiveness, equity or cost-effectiveness may amount, depending on the facts, to procedural unfairness, irrationality, unreasonableness or another recognised ground of review. (SAFLII)

The basic analytical sequence is:

Step 1: Determine factually whether an irregularity occurred.

Step 2: Determine whether the irregularity constitutes a ground of review under PAJA.

Step 3: Consider the materiality of the irregularity by examining the purpose of the relevant legal or procurement requirement.

Step 4: Determine the appropriate remedy.

This approach prevents courts from automatically invalidating every technical deviation in a tender process. (SAFLII)

5. Mandatory Tender Requirements

One of the most important grounds of review concerns failure to comply with a mandatory tender requirement.

Where legislation or the tender documents prescribe a compulsory condition, the procurement authority normally cannot simply ignore that requirement.

In AllPay, the Constitutional Court emphasised that procurement requirements established under the constitutional and legislative framework are not merely informal internal guidelines that officials may disregard at will.

The principle has subsequently been applied in cases involving public entities, including Eskom. In Waco Africa (Pty) Ltd v Eskom SOC Ltd, the court stated that section 217, the PPPFA, Eskom's procurement policies and the invitation to tender formed the legal framework governing the procurement process. (SAFLII)

Therefore, a bidder can potentially succeed in review proceedings where the successful bidder failed to satisfy a material mandatory requirement and the authority nevertheless treated that bidder as compliant.

6. Materiality of an Irregularity

Importantly, not every irregularity automatically invalidates a tender.

Courts examine whether the deviation was material and whether it undermined the purpose of the applicable requirement.

The recent Thru Rainbow (Pty) Ltd v National Treasury (2025) decision illustrates this approach. The court considered allegations that successful bidders had failed to comply with mandatory tender requirements. It held that an authority does not possess an inherent power to condone non-compliance with a truly peremptory requirement. At the same time, minor deviations that do not materially alter or depart from the tender conditions should not automatically result in invalidation. Materiality depends on the purpose served by the relevant requirement. (SAFLII)

This produces an important distinction:

Material breach → potentially reviewable

Minor/non-material deviation → ordinarily insufficient by itself

7. Procedural Fairness

Procurement processes must be procedurally fair.

For example, a decision may become vulnerable where:

bidders are treated differently without lawful justification;

evaluation criteria are changed after bids are submitted;

a bidder is given an opportunity unavailable to competitors;

material information is withheld in circumstances requiring disclosure;

the bid evaluation process departs substantially from the advertised procedure; or

decision-makers are affected by undisclosed conflicts of interest.

The focus is on whether the procedure complied with the requirements of administrative justice and the procurement framework.

8. Rationality and Relevant Considerations

A procurement decision must have a rational relationship to the purpose for which the power was exercised.

A court may therefore examine whether the procurement authority:

considered irrelevant matters;

ignored relevant information;

relied on materially incorrect facts;

applied criteria inconsistently; or

reached a decision lacking a rational connection with the procurement objectives.

In H & I Civil & Building (Pty) Ltd v City of Cape Town (2024), the High Court reiterated the AllPay approach that section 217's constitutional procurement requirements inform the PAJA review enquiry. The court specifically considered whether the challenged action was rationally connected to the purpose of the applicable procurement framework and information before the administrator. (SAFLII)

9. Material Error of Fact

A procurement decision may also be challenged where the administrator acted on the basis of a material mistake of fact.

The 2026 SCA judgment in Smada Security Services (Pty) Ltd v Department of Justice and Constitutional Development considered whether an alleged material error of fact constituted a reviewable irregularity under sections 6(2)(e)(iii) and 6(2)(f)(ii)(cc) of PAJA. The court ultimately dismissed the appeal because the necessary reviewable irregularity had not been established. (SAFLII)

The case demonstrates that merely identifying an incorrect factual assertion is insufficient; the factual error must satisfy the applicable statutory requirements for judicial review.

10. Unreasonableness

PAJA also permits review where administrative action is unreasonable.

However, judicial review is not an appeal on the merits. Courts generally do not substitute their own commercial preferences for those of the procurement authority merely because they would have assessed the bids differently.

The distinction is important:

Appeal: Was the decision correct?

Review: Was the decision-making process lawful and constitutionally compliant?

South African procurement jurisprudence strongly emphasises this distinction. The question is ordinarily whether the decision falls within a legally permissible exercise of public power rather than whether it represents the court's preferred procurement outcome. (SAFLII)

11. Procurement Policies Have Legal Significance

An important principle from AllPay and subsequent procurement cases is that applicable procurement policies and tender conditions cannot simply be treated as optional administrative instructions.

In Waco Africa v Eskom, the court expressly recognised the legal significance of Eskom's procurement policies and tender invitation. They formed part of the framework governing the procurement process. (SAFLII)

Consequently, an organ of state should normally follow:

Constitution → legislation → regulations → procurement policies → tender conditions → evaluation methodology.

A departure from this framework may generate a PAJA review issue.

12. Failure to Take a Decision

PAJA review is not restricted to an actual award.

Section 6 also permits review where an administrator fails to take a decision within a reasonable period.

For example, in Wina Njalo (RF) Proprietary Ltd v Minister of Trade, Industry and Competition (2025), the High Court recognised that failure to make a required licensing decision within the applicable timeframe can be reviewable under PAJA. The court referred to section 6(2)(g), concerning failure to take a decision, together with section 6(3). (SAFLII)

In procurement, unreasonable administrative delay may therefore itself become a basis for judicial intervention.

13. Procurement Review and Energy Law

These principles are particularly important in the energy sector because entities such as Eskom and other public institutions frequently procure:

electricity-generation equipment;

transmission infrastructure;

distribution equipment;

engineering services;

maintenance services;

renewable-energy projects;

grid-management systems;

fuel and energy-related services; and

major infrastructure construction.

In Waco Africa v Eskom, the dispute directly concerned Eskom's tender awards, demonstrating how PAJA review principles operate within an energy-infrastructure procurement environment. (SAFLII)

For energy procurement, compliance with constitutional procurement principles therefore interacts with broader requirements of energy regulation, public finance, infrastructure governance and administrative justice.

14. Remedies

If a procurement decision is successfully reviewed, PAJA permits a court to grant an appropriate remedy.

Possible remedies include:

declaring the decision unlawful;

setting aside the award;

remitting the matter to the decision-maker;

directing reconsideration in accordance with lawful procedures;

granting a just and equitable order; and, in appropriate circumstances,

other relief necessary to correct the unlawfulness.

Courts must nevertheless consider the public interest and practical consequences of invalidating procurement decisions, particularly where essential public services could be disrupted. The remedy question is therefore distinct from the question whether an irregularity occurred. (SAFLII)

15. Important Case Laws

16. Conclusion

The review of procurement decisions under PAJA is fundamentally concerned with lawfulness, procedural fairness, rationality and compliance with the constitutional procurement framework, rather than allowing courts to substitute their own commercial preferences for those of procurement authorities.

Section 217 of the Constitution provides the foundational standards of fairness, equity, transparency, competitiveness and cost-effectiveness, while PAJA supplies the principal statutory mechanism for reviewing administrative procurement decisions. The AllPay methodology is especially significant: courts first establish whether an irregularity occurred, determine whether it amounts to a recognised PAJA ground, assess its materiality in light of the purpose of the applicable requirement, and then determine an appropriate remedy. (SAFLII)

The modern cases, including Thru Rainbow (2025) and Smada Security Services (2026), show that procurement review remains highly fact-specific. A serious departure from a mandatory tender requirement can invalidate an award, while a minor deviation that does not undermine the purpose of the procurement requirement will not necessarily justify setting the award aside. (SAFLII)