Can tender validity periods be extended?

All tenders are subject to certain time periods. Once the tender closes, a decision must be taken within a certain number of days, as to who has been awarded the tender.

It is usually stated upfront that the period in question would, for example be 30 days, 60 days, 90 days, and so forth. This period is not only predetermined, but also known to all the bidders when they submit their respective bids on the closing date.

This is known as the “validity period” and bids can only be evaluated and adjudicated during that particular period.

If the validity period is, for example 60 days, the 60 calendar days start counting the day after the tender has closed and includes Saturdays and Sundays. As soon as the 60 days have passed, the tender has reached the end of the period for which it was valid.

This means that all the bids must be evaluated during this time so that the organisation which advertised the tender is able to determine who the preferred bidder is, that is, who will receive the tender.

The preferred bidder who has won the tender must be informed during this validity period that his bid was successful while the other bidders must equally be advised that their bids were not successful.

Once the validity period has been exhausted, the tender is no longer valid. At this point the evaluation and adjudication process must stop even if a preferred bidder has not yet been selected.

There is, however, a way around the scrapping of the process at this stage.

If it becomes apparent that the tender (evaluation and adjudication) process will not be finalised within the validity period, the organisation which has advertised the tender must write to all the bidders in good time and ask them to agree, in writing, to an extension of the validity period.

They must also be told by how many days (or months) the validity period is to be extended.

The bids of all the bidders who agree, in writing, to the validity period being extended, remain part of the tender process.  The bids of all the bidders who do not respond, fall away and are no longer considered.

The High Court decision in the matter of Joubert Galpin Searle and Others v Road Accident Fund and Others [2014] is instructive.

The court considered, amongst other issues, the legal effect of the expiry of the tender validity period. In this instance the validity period had expired before the Road Accident Fund (“RAF”) had completed the evaluation and adjudication of the bids received.

After the date on which it had expired, the RAF wrote to each bidder and requested the amendment and renewal of its bid to reflect a validity period of one year. This conduct was challenged in court.

The High Court held that once the tender validity period had expired, there was nothing to extend. The tender had been concluded, albeit unsuccessfully.

The court said that the RAF had no power to award the tender after the expiry date of the validity period, and it also did not have the power to extend the tender validity period once the tender had become invalid at the end of the validity period.

In practical terms this meant that the entire process had to start again from the point where the tender was advertised.

Why is this judgment important?

The importance of this judgment is, inter alia, that it specifically identifies the fact that the evaluation and adjudication of bids must be finalised during the validity period.

If the organisation sees that it will not finalise the process during the validity period, it must invite the bidders in good time to agree to the extension of the original validity period.

Once the validity period has run its course and come to an end, it also ends the bidding or tender process.