The National Social Security Authority (NSSA) has lost a legal bid to have a US$10,4 million software contract with a local firm declared invalid and its money returned.
The High Court declined jurisdiction to hear the matter, ruling that it should have been brought before the Administrative Court.
The latest High Court decision brings the spotlight back to the origins of a decade-old dispute that began when NSSA sought to modernise its pension management ICT infrastructure.
In 2013, NSSA, the State authority responsible for the country’s social security, required a modern digital system to manage its database of pensioners and contributors.
After an initial public tender failed to yield results, NSSA initiated a “closed tender”, a private selection process.
Twenty Third Century Systems (TTCS) was selected.
By late 2013, two contracts were signed, and three years later, NSSA had paid approximately US$10,4 million to TTCS.
The funds covered high-end SAP software, specialised hardware and the technical expertise required to establish the systems.
A crumbling partnership
By 2017, the partnership began to deteriorate.
NSSA claimed the system provided by TTCS was not fit for purpose, arguing it was never officially finished or commissioned.
Conversely, TTCS alleged that NSSA had breached the contract by exceeding its software usage, claiming the authority utilised 498 licences when they had only paid for 200.
TTCS subsequently issued invoices for millions of dollars in additional licence fees and maintenance costs, which NSSA refused to pay.
The largest single claim, an invoice dated October 2017, totalled approximately US$5 million for “discounted licence fees” related to 298 additional users.
This was followed by a US$1,47 million claim for maintenance fees covering a 15-month period between 2016 and 2017.
Costs continued to mount into 2018, with TTCS billing an additional US$831 222 for the annual maintenance of the original 200 licensed users, bringing the consolidated claims to US$7,3 million.
In 2020, NSSA took a drastic legal step.
Rather than suing for a simple breach of contract, they sought to have the entire contract declared void.
NSSA argued that because the original 2013 tender process violated procurement regulations, the contract was illegal.
Consequently, they argued that TTCS should be compelled to refund the US$10,4 million paid by the state pension fund.
The question of jurisdiction
Jurisdiction was argued at length by Mr Edely Mubaiwa, representing TTCS and Mr Tawanda Zhuwarara, representing NSSA.
It is a fundamental principle that where a court lacks jurisdiction, it is precluded from hearing a case, even on preliminary issues.
Any attempt to do so renders the proceedings a nullity.
Consequently, a court must definitively establish its jurisdiction before exercising its judicial power.
Alleged illegality of the process
NSSA’s primary contention was that the special tender was unlawful due to non-compliance with public procurement regulations.
The authority asserted that this procedural failure invalidated the subsequent agreement, rendering any process born from the foundation a nullity.
NSSA further argued that it was seeking a declaratur under Section 14 of the High Court Act, maintaining that the Administrative Court lacks the jurisdiction to grant such relief and does not hold an exclusive monopoly over these matters.
TTCS argued that NSSA’s complaint concerned an irregularity in the tendering process should be before the Administrative Court, the proper forum.
It posited that the grievance was directed at the procurement board’s decision to proceed via a special tender that was allegedly executed unlawfully.
Mr Mubaiwa maintained that since the complaint was rooted in the propriety of the tendering process, its determination falls exclusively within the purview of the Administrative Court.
Before addressing the merits of the case, specifically whether the software was functional or if NSSA was entitled to a refund, Justice Jacob Manzunzu first had to determine the preliminary point of law regarding whether the High Court had jurisdiction to adjudicate the legality of a Government tender.
Justice Manzunzu’s decision focused on the Administrative Court.
Under the Procurement Act, if any person or entity is dissatisfied with a decision made during a tender process, they are legally required to appeal to the Administrative Court, which possesses the specialist expertise to handle such matters.
Justice Manzunzu noted that NSSA’s entire case relied on the premise that the tender was handled incorrectly.
He ruled that the High Court’s general powers could not be used to bypass the specialised role of the Administrative Court, stating that if the High Court attempted to make a ruling on a procurement irregularity, that ruling would be a nullity and hold no legal weight.
Justice Manzunzu declined jurisdiction because NSSA chose to frame the dispute as a procurement fight.
“The decision to conduct the closed tender in the manner done falls within the specialist power and competence of the Administrative Court,” ruled Justice Manzunzu.
“It is to that court that NSSA must go. The preliminary point challenging the jurisdiction of this court must succeed.” – Sunday Mail
