Nguyen Huu Hong v Tenders Board of the Government [2004] VUSC 18; Civil Case 159 of 2004 (16 December 2004)

IN THE SUPREME COURT OF
THE REPUBLIC OF VANUATU
(Civil Jurisdiction)

CIVIL CASE No. 159 of 2004

BETWEEN:

NGUYEN HUU HONG
Claimant

AND:

TENDERS BOARD OF THE GOVERNMENT
First Defendant

AND:

THE DIRECTOR OF PRE-SCHOOL, PRIMARY AND SPECIAL EDUCATION
Second Defendant

AND:

SNOOPY STATIONARY & OFFICE SUPPLIES LTD
Third Defendant

Mr. Daniel Yawha for the Claimant
Mr. Frederick Loughman from S.L.O. for the First and Second Defendants

JUDGMENT

This is an amended application for Judicial Review dated 24 November 2004. It claims for:-

1. An order to quash the decision of the Second Respondent dated 27 July 2004 recommending the Tender award to Snoopy Stationary and Office Supplies Limited for Primary Schools Stationary 2005.
   
2. A declaration order that the claimants tender complied with the tender process.
   

3. Damages and costs.

The challenge is based on three (3) grounds:

First, it is alleged that the Second Respondent, the Tender Board breached the Tender process by recommending for award a Company “Snoopy Stationeries and Office Supplies Limited “ who has not submitted his tender in accordance with the Tender Conditions and information made under the Government Contracts and Tender Act No. 10 of 1998. (§4, §14 and §7 of the Tender Conditions and Information).

Second, the Tender Board wrongly interpret §13 of the Tender Board and awarded the Tender for supplies of Primary School stationary 2005 to the Snoopy Stationeries Limited.

Third, the Tender Board did not make his recommendation for acceptance to the Council of Ministers.

The Claimant filed two (2) sworn statements in support of the claim. The Defendants filed a sworn statement in reply. The deponents of the statements were cross-examined. There is no dispute about the major facts in this case.

• Sometime in June 2004, the Department of Education advertised the Tender Conditions to the stationary suppliers for the supply of Primary Schools stationary 2005.
  
• The Tender Conditions prescribe the set procedure for interested applicants to follow.
  

The Tender Conditions provide, among other matters, that all the tenders must be submitted to the Director of Pre-School, Primary and Special Education – Department of Education, PMB 028, Port-Vila by Friday 16 July 2004 at 4.30PM, the latest.

The Claimant is an interest applicant. Before the closing date, the owner of the company read the Tender Conditions and had some queries about a particular provision of the Tender Conditions (§13). He went to see the Director of Primary Education, Mr. Pierre Gambetta, at the Ministry of Education and asked him to clarify the meaning of §13 of the Tender Conditions.

After he was satisfied of the meaning of paragraph 13 of the Tender Conditions, he submitted his Tender application to the Ministry of Education before the closing date.

Three other applicants apply also for the Tender. One of the three was Snoopy Stationary and Office Supplies Limited. The application of Snoopy Company was addressed and received by the Secretary of the Tender Board before the closing date. When the Office of the Tender Board received the application of Snoopy Company, the Secretary of the Tender Board, called on Mr. Jim Knox, a Senior Officer of the Ministry of Education for acknowledging the receipt of such an application.

The Tender Board met on 27 July 2004 to consider applications from the bidders for the supply of 2005 Primary School Stationary supplies.

• A quorum consisting of the Chairman, the Secretary of the Board, the Representative of the Attorney General, the representative of the DG of Finance, the Representative of the Department of Education, were present before the commencement of the meeting to decide on the tenders.
  
• Three bidders send in their applications on time and met the requirements for datelines. Then the Board sat to consider their applications on the said date.
  
• All the applications were received on sealed envelopes and the Board proceeded to open the envelopes and consider the applications.
  
• The first bidder was an Australian Company trading as Lyle Agnew and Associates. The Board after opening this named Company’s application found that the bidder had not made any offer as to the price it offered the Board for the performance of the contract. The overall budget for the Government for this tender is VT12,000,000 and where a bidder has not made an offer it would be difficult for the Board to ascertain whether or not the bidder’s price was well within the Government Budget. The Tender Board rejected this application.
  
• The second bidder was that of the Claimant. The Claimant offered a price of VT10,834,043. The bidder stated before the board that his offer did not meet the cost of re-packaging and re-shipment. The Board then informed the Claimant, that it will open the last envelop containing the application of the last bidder and assess it before it could re-assess the Claimant’s offer.
  

The last bidder was that of Snoopy Stationary supplies. Snoopy Stationary made an offer of VT11,669,221, and this offer included the cost of re-packaging and re-shipment to the Islands.

The Board then awarded the tender to Snoopy Stationary Supplies as the successful bidder which is now challenged by the Claimant.

THE LAW

The following constitutes the relevant provisions of the government contracts and Tenders Act No. 10 of 1998 and the Tender Information and Conditions:-

The Government Contracts and Tenders Act No. 10 of 1998.

“PART THREE
TENDERS AND QUOTATIONS

REQUIREMENT TO OBTAIN TENDERS AND QUOTATIONS

8. When entering into a Government Contract or a contract for the contracting out of a Government service or the purchasing of goods or services, a Minister, or Director General of a Ministry, or any other person authorized to do so, must comply with the quotation or tendering process in accordance with this Act or with any regulations made under this or any other Act. [Emphasis added].
   

PART FOUR
TENDERS BOARD

TENDERS BOARD

9. There shall be established a Tenders Board comprising those persons specified in section 10 which will report and be responsible to the Council for receiving, assessing, approving (where applicable) and recommending acceptance of government tenders with a value of more than VT5,000,000.
   

BOARD

10.(1) The Tenders Board will consist of the following persons:

(a) a Chairperson;

(b) the Director-General of the Ministry which is procuring the goods or services, or his representative;

(c) the Director-General, or his representative;

(d) a representative of the Ministry responsible for procuring the goods or service who has detailed knowledge of the requirements of the Ministry in relation to the contract to be performed;

(e) where the Government Contract is of a value of VT10,000,000 or more, the Attorney-General or his representative.

(2) There must be minimum of three persons to constitute a quorum and where applicable the Attorney General or his representative.

(3) No tender may be recommended to the Council without the approval of the Board.

(4) The Chairperson shall have a casting vote at Board meetings.

(5) If a member of the Board stands to gain financially or has a conflict or interest in a contract he must not continue to be a member of the Board considering tenders for that contract.

(6) A Secretary, provided by the Director-General, will attend all meetings and will keep detailed minutes.

(7) The Board may co-opt any person for the purpose of providing technical advice and such person will not be entitled to a vote.

(8) In all of its activities the Board must act independently, and is not to be subject to interference or influence from any person.

(9) No member of the Board, other than the Chairperson, will be paid by reason of his membership of the Board.”

“PROCEDURE

12. (1) The Board must recommence the tender process when it cannot made a recommendation or its recommendation is declined by the Council.

(2) The Board must not consider a tender or make a recommendation to Council in respect of a letter from a person, body corporate, company or entity who has not submitted the tender in accordance with, and followed the prescribed procedure under this or any other Act or regulations made under this or any other Act.

(3) The Board must not consider a tender or make a recommendation to Council where the tender is submitted after the time and date specified for the submission of the tender has expired.

(4) The Council must not decline a recommendation for acceptance of a tender from the Board unless there are compelling reasons to do so, and where the Council does decline a recommendation it must table its reasons to the Board within 14 days of making that decision.

(5) The Council must not accept a tender unless the tender has been through the tender process in accordance with this Act.”

“BREACH OF TENDER PROCESS

13. Unless the breach is of a minor, trivial of technical nature, a contract entered into a breach of the tenders provisions of this Act, or regulations made under this Act, will not be binding on the State or the Government.”
    

PART SEVEN
MISCELLANEOUS

REGULATION

17. The Minister may make such regulations as are necessary for giving full effect to this Act and for its proper administration, including regulations for all or any of the following:
    

(a) prescribing the procedure and method that must be followed when arranging a Government Contract;

(b) prescribing the procedure and method that must be followed when entering into a Government Contract;

(c) prescribing the rules, procedure and method to be followed in arranging or calling for, and approving or recommending quotations and tenders for Government Contracts and the contracting out of Government services or purchasing goods, services or supplies on behalf of the State or Government.”

TENDER CONDITIONS

“GOVERNMENT GOUVERNMENT

OF THE REPUBLIC DE LA REPUBLIQUE

OF VANUATU DE VANUATU

PRIMARY EDUCATION ENSEIGNEMENT PRIMAIRE

Private Mail Bag 028 Sac Postal Réservé 028

Port-VIla – Vanuatu Port-Vila – Vanuatu

Telephone: [phone] Fax: [phone]

ANGLOPHONE AND FRANCOPHONE SCHOOLS

STATIONARY ORDERS FOR 2005

June 2004

The Department of Education wishes to inform the Stationary Suppliers that the tender for Primary Schools Stationary 2005 is now advertised. The Tender Conditions are outline below:

TENDER INFORMATION AND CONDITION

1. There are separate order forms for Anglogphone and Francophone Stationery.
2. There is only one tender for the Anglophone and Francophone Stationery Orders.
3. Only one Stationery Supplier can win the tender.
4. The date line of sealed Tender envelopes to be received by the Education Department is on Friday 16^th July 2004 at 4.40PM, the latest.

...

5. Suppliers are informed that the quantities of items submitted are made so as to approximate the budget allocated for each province.
6. The decision on the supplier who wins the tenders will be made by the Central Tender Board.
7. The Suppliers that fail to comply with the tender condition will be automatically disqualified.
8. It is compulsory that suppliers must indicate through a copy of their licence their eligibility to order and supply stationery.
9. The stationery items must reach the Provinces by the beginning of the new academic year.
10. The winning suppliers ensure that samples of exercise book covers are submitted to the Department of for viewing, before dispatching to the Provinces.
11. The paper and cover must be of the standard quality.
12. The initial deposit of payment due for stationery shall be 25% of the total cost.
13. The Supplier is responsible for re-packaging and re-shipment to the Provinces.
14. All tenders must be sealed as Confidential; Primary Schools Stationery 2005, addressed and sent before the due date to the following address:-
    

Acting Director

Pre-School, Primary and Special Education

Department of Education

PMB 028

PORT-VILA.

Label the sealed envelope: PRIMARY SCHOOL STATIONERY 2005

This tender condition is approved.

Mr. Pierre Gambetta

Acting Director

Department of Education

CC: Mr. Nicholas Brown, Minister of Education, MP

Mr. Abel Nako, Director General of Education”

THE APPLICATION OF THE LAW

It is a fact that the application of Snoopy was not sent to the Ministry of Education but directly to the Tender Board. The submission of the Claimant that it is in breach of the condition of Tender is refused as it is a minor breach under Section 13 of the Act. Further the Tender Board is entitled by law to receive Tender Applications. Section 9 of Part III of the Tenders and Quotations of Government Contracts and Tenders Act No.10 of 1998 provides specifically as follows:

“9. There shall be established a Tenders Board comprising those persons specified in section 10 which will report and be responsible to the Council for receiving, assessing, approving (where applicable) and recommending acceptance of government tenders with a value of more than VT5,000,000.” [Emphasis added].

Both parties argue about the meaning of the paragraph 13 of the Tender Conditions, which reads:-

“13. The supplier is responsible for re-packaging and re-shipment to the provinces.”

It is submitted for the Claimant that it does not include freight charges for shipment to the Islands. The Defendants submitted the supplier is responsible for the costs for re-packaging and re-shipment to the Provinces.

To understand the meaning of the paragraph 13 of the Tender Conditions it has to be read with other clauses of the Tender and in particular clauses 5, 9 and 10. It becomes then clear that §13 means that the supplier is responsible for the re-packaging and re-shipment to the Provinces. The submissions of the Claimant on that point cannot stand and is rejected.

The Claimant submits also that the Defendants breached the terms of the conditions of Tender and/or the Government Contracts and Tenders Act No. 10 of 1998 which prejudices the Claimant. The Defendants submit the Board observed the tender process in accordance with the Tender Act.

The fact shows that the value of the Government tendering contract of the supply of stationery to Primary School is VT12,000,000. The value is more than 5,000,000 Vatu. Section 9 of the Act is the relevant section for consideration.

By perusing the language of Section 9 of the Act, the Tenders Board is responsible to the Council for receiving, assessing, approving (where applicable) and recommending acceptance of Government Tenders with a value of more then VT5,000,000.

The evidence of the Tenders Board Secretary Alick Kokona which is confirmed by the minute of the meeting of the Tender Board of 27 July 2004 which was produced into evidence show that the Tender Board decided on the Tender Application of the winner of the bid and made an award to the Applicant, Snoopy Stationery and Office Supplies Limited, for a Tender/Contract of supply of Vatu 11,669,221. This is beyond the power of the Tender Board to so decide. The function of the Tender Board is to be responsible to the Council for receiving, assessing, approving (where applicable) and recommending acceptance of Government Tenders with a value of more than VT5,000,000. What the Board is required to do in this case is to receive, assess and recommend acceptance of the Government Tender to the Council of Ministers as the value of the Tender contract is more than 5,000,000 VT.

The Tender Board was also misled by paragraph 6 of the Tender Conditions which provides specifically that:-

“6. The decision on the supplier who wins the Tenders will be made by the Central Tender Board.”

Paragraph 6 of the Tender Conditions is in breach of Section 9 of the Act. By Section 9 of the Act, the Tender Board is to recommend the acceptance of the Tender Contract to the Council of Ministers for its decision when the Tender contract price is more than 5,000,000 VT. In the case, the value of the Tender contract is of 12,000,000 VT and paragraph 6 should reflect the legal provision spelt out in Section 9 of the Act so that it should be read “the decision on the supplier who wins the Tenders will be made by the Council of Ministers”.

For the foregoing reasons, the decision of the Tender Board awarding the Tender for the 2005 Stationery Supplies to Snoopy Stationery whole sale is hereby quashed.

ORDER

1. The Decision of the Second Defendant awarding the Tender for the 2005 stationary supplies to Snoopy Stationary Whole Sale is hereby quashed.
   
2. The Ministry of Education via the relevant authorities must issue new Tender Conditions for the supply of stationary to Primary Schools for 2005 in compliance with the tender process set out in the Government Contracts and Tenders Act No. 10 of 1998.
   
3. The Claimant is entitled to costs to be agreed or determined.
   
4. Other relief sought by the Claimant are refused.
   

DATED at PORT-VILA this 16^th day of December 2004

BY THE COURT

Vincent LUNABEK
Chief Justice