Despite receiving legal advice from advocates that it was likely to lose a court case involving a R36m contract concerning hospital construction, the North West health department proceeded to appoint the very same legal team to defend the suit.
Predictably, the department lost the case, incurring exorbitant costs on the advocates who had initially warned of the unfavorable outcome.
The Mahikeng high court, ruled this month that the department had illegally appointed a contractor - MIB Infrastructure - which had submitted an expired architect’s certificate for the construction of the Lichtenburg Hospital.
The hospital is intended to replace General De la Rey Memorial Hospital and serve patients from the decommissioned Thusong District Hospital.
The contract was initially awarded to Bagale Consulting which was appointed in 2008 as project manager for the construction of the Lichtenburg Hospital.
However, in 2022, the department through a closed quotation hired MIB Infrastructure Development for a similar project, costing R27.7m.
The primary distinction between the two contracts was the number of beds in the new facility: Bagale’s contract specified 150 beds, while MIB’s contract was for 120 beds.
Acting deputy judge president Andre Petersen, found that the department had illegally appointed MIB and that Bagale’s contract was lawful, valid and enforceable.
“The appointment of MIB through a closed quotation process for a project on a site where another consultant (Bagale) already had a mandate for a major hospital development raises serious questions about transparency. The department’s decision to move the Madibogo Project to Bagale and then retract it, followed by the silent appointment of MIB, suggests a lack of transparency. A fair process would have required the department to formally settle the existing contractual relationship with Bagale before initiating a new procurement process for the same site,” said Petersen.
The department this week declined to disclose how much it had spent on the advocates in legal fees and on the legal opinion.
“Communication between a client and its legal representatives is protected by legal privilege. Accordingly, the Department will not engage in speculation or commentary regarding any legal advice or opinions that may or may not have been provided by counsel in relation to this matter, or on issues incidental thereto,” said head of department Thupi Mokhatla.
He said the department was yet to receive the judgment.
“To the extent that the court may have made any adverse findings, including those relating to the appointment of MIB, it must be noted that such findings would be contrary to the explanation advanced by the Department in its court papers. It would therefore be premature at this stage for the Department to speculate or indicate any steps that may be taken pending a full consideration of the judgment,” Mokhatla said.
The Sunday Times previously reported how advocates Lesego Montsho-Moloisane SC and Khelu Nondwangu stated there was no rational basis for appointing MIB on the same site where Bagale Consulting was already working.
However, bizarrely, Montsho-Moloisane SC, went onto represent the department in the case and later withdrew.
The legal opinion also asserted that Bagale Consulting had a valid legal claim against the department.
On the facts as they stand, the decision to appoint MIB Infrastructure, in light of the existence of a contractual relationship the department has with Bagale Consulting, was clearly irrational, particularly in light of the statement of the bid adjudication committee that Bagale Consulting ‘are experienced and capable of providing the necessary hospital.
“On the facts as they stand, the decision to appoint MIB Infrastructure, in light of the existence of a contractual relationship the department has with Bagale Consulting, was clearly irrational, particularly in light of the statement of the bid adjudication committee that Bagale Consulting ‘are experienced and capable of providing the necessary hospital’.
“We need to point out emphatically that ‘the necessary hospital’ refers to the same Lichtenburg/General De la Rey Hospital that MIB Infrastructure was appointed for. The department’s decision to appoint another service provider when Bagale Consulting was performing satisfactorily, was therefore irrational and not justified,” said the advocates in the legal opinion.
“Bagale Consulting should have been invited to make representations prior to the envisaged termination. What is astonishing is that the department has not provided any reasons and new milestones in the project and/or indicated to Bagale Consulting that it intended to appoint another service provider.
“There is no variation of the contract to justify the department’s conduct and decision to appoint MIB to the same site. The department only advised Bagale Consulting that the project would no longer be a ‘turnkey’ as was the case when appointed ... The critical issue however remains the unexplained appointment of MIB, effectively replacing Bagale Consulting without any rational basis for doing so.”
The advocates also asserted that the department’s letter of intention to terminate Bagale, sent on September 28 2023, was not legally valid. They further argued that the department could not justify its actions by claiming the project had been dormant since 2016.
The chief engineer, Mernard Manhivi, said during discussions with the advocates that the contract with Bagale Consulting was never signed.
The advocates found this claim to be false, as the department’s bid adjudication committee provided evidence of signed contracts and service level agreements between Bagale and the department.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.