Organs of state are required to comply with a plethora of legislation and policies, specifically relating to procurement and financial management, before entering into contracts. It is not uncommon for organs of state to not comply with this plethora of legislation and policies before entering into a contract. In State Information Technology Agency Soc v. Gijima Holdings (641/2015) [2016] ZASCA the court considers how an organ of state can go about setting aside such a contract. In this article, we discuss this judgment in more detail.

Background

The background to the State Information Technology Agency Soc v. Gijima Holdings (641/2015) [2016] ZASCA case is as follows:

  • State Information Technology Agency SOC Ltd (SITA) concluded an agreement with Gijima Holdings (Gijima) for the supply of information technology services;
  • about a year after this agreement was concluded, a payment dispute arose between the parties;
  • SITA held that the agreement was concluded in contravention of the applicable procurement laws. Accordingly, SITA held that the agreement was invalid and unenforceable against it in accordance with the principle of legality; and
  • Gijima argued that if SITA wished to set aside its decision to enter into the agreement, it had to do so in terms of the Promotion of Administrative Justice Act 3 of 2000 (PAJA) and could not rely on the principle of legality.

Judgment

The court held that:

  • SITA’s decision, in awarding the contract to Gijima, falls within the scope of administrative action under PAJA;
  • accordingly, SITA is required to set aside its decision in accordance with the provisions of PAJA and not the principle of legality;
  • the proper place for the principle of legality is to act as a safetynet or a measure of last resort when the law allows no other avenues to challenge the unlawful exercise of public power;
  • under PAJA, SITA is required to challenge its administrative decision within 180 days of the decision;
  • SITA did not comply with the above-mentioned 180-day rule and did not apply for an extension of the 180-day rule; and
  • accordingly, SITA’s appeal is dismissed and the agreement is valid and enforceable against SITA.

Conclusion

In summary, this judgment indicates that an organ of state must rely on PAJA to set aside its own administrative decisions and cannot rely on the principle of legality. As a result of this judgment, unconstitutional procurements could be legitimised due to the procedural technicalities of PAJA. In the minority judgment of State Information Technology Agency Soc v. Gijima Holdings (641/2015) [2016] ZASCA, Bosielo recognises this risk and held that “it is antithetical to the supremacy of the Constitution and the rule of law to compel SITA to comply with an invalid contract, solely because of a procedural technicality”.