By Pauline Larsen

A decision by the City of Cape Town to again award Jonga Entabeni (JE) the Big Bay tender could cost government both foreign and local investment, say critics.  Despite the lengthy appeal, commentators are sceptical and warn of a lack of faith in tenders for public land. 

"Foreign investors are going to give public land tenders a big miss," says DA provincial chairman Robin Carlisle.  Though a R147m tender from Irish-owned company Earthquake was recommended by the city's development facilitator, Rabcav, it was rejected in favour of JE's R115m tender. 

Mike Evans of Mallinicks, JE's attorneys, points out that half the difference would have gone to Rabcav. "So the real difference from the city's point of view is not R32m," he says. 

The reason given for the decision was that JE's black economic empowerment (BEE) component was the best. But, says Earthquake property chief Niall Mellon, "Earthquake exceeded every criterion set down by the council in its tender document and offered R32m more than the flawed JE proposal - and yet still lost." 

The tender document laid out price and development concept as the pivotal criteria but the final award was heavily weighted towards each bidder' s BEE component. 

"Given that the JE proposal clearly outlined who the beneficiaries would be, and included a wide range of individuals and groups that would have been excluded in the past, we felt it was in the best interests of the city as a whole to award the tender to the consortium," explains Cape Town mayor Nomaindia Mfeketo.  Evans emphasises that the tender gave equal weight to empowerment as a criterion.

"There was no change in the rules," he stresses.  The unsuccessful bidders are not the only people questioning the tender process.

"The DA is absolutely outraged by the outcome and we believe it needs to be investigated independently - though that's not likely to happen," says Carlisle.  Initially the city's tender and procurement committee failed to approve Rabcav's recommendation of the Earthquake tender because it failed to raise a quorum. 

The decision was then passed on to the mayoral committee, which awarded the tender to JE, despite JE's failure to include crucial financial information or a development timeframe in its original submission, say critics. 

"The city reserved the right to request additional information and then did so," says Evans.  Earthquake and another unsuccessful bidder, Italian firm Immobilfin Immobiliare Finanziaria SRI, appealed against the decision and an appeal committee was established in May this year. The decision was then referred to the goods, services & property advisory board, which upheld the award to JE. 

"I do not feel that the people of Cape Town can believe without equivocation that there was no favouritism or bias in this process," says a disappointed Mellon.  Mfeketo says she believes the process was fair and competitive and in line with the city's strategic goals. 

In all, Big Bay has rights to 37 000 m² of mixed commercial uses, up to 800 residential units and a 400-room hotel. The city calculates that a fair value for the Big Bay property is about R132m. 

"It's disheartening that the city's assets are simply being given away at nowhere near market value," says Carlisle.  Earthquake will not bother with tenders in future, it says.  But the mayor is upbeat about investment in the city. 

"Foreign investors are welcome, as our enthusiastic support for Niall Mellon's investments in Imizamo Yethu and the investment groups in the CBD redevelopment shows ," says Mfeketo.