Siemens loses bid to halt contract

• Judge sees no merit in claims by the local unit of the German giant that it was disadvantaged

The SA unit of German multinational technology conglomerate Siemens has lost its bid to interdict state-owned power producer Eskom from awarding a lucrative contract to American multinational firm General Electric. The tender Siemens sought to challenge relates to the construction of a new transmission power system control and monitoring system.

The SA unit of German multinational technology conglomerate Siemens has lost its bid to interdict state-owned power producer Eskom from awarding a lucrative contract to American multinational firm General Electric (GE).

The tender Siemens sought to challenge relates to the construction of a new transmission power system control and monitoring system. The power utility divided the contract into a part for the provision and maintenance of a software system, and for the provision and maintenance of front and rear projection systems.

The other bidder was Hitachi. The contested tender is the one for the provision and maintenance of a software system, as Eskom did not award a contract for the second leg of the tender.

ADVANTAGE

Eskom told Siemens that its bid failed because it lacked supporting documents.

The tender was awarded to GE in December 2023.

Siemens asked the high court in Johannesburg to stop the contract being awarded to GE, arguing that the power utility had allowed GE to enjoy an advantage over other bidders.

It said this was because GE was the provider of the existing system and thereby secured knowledge and access that placed it at an advantage to it and Hitachi. It also alleged that the tender was invalid because the validity period was unlawfully extended.

Judge David Unterhalter dismissed all review grounds put forward by Siemens. Unterhalter, who will be leaving the court to join the Supreme Court of Appeal, accepted Eskom’s argument that Siemens’ tender did not meet the overall technical scoring threshold.

He also found that the accusation that GE enjoyed an advantage over other bidders was without merit.

“GE’s engagements with Eskom in respect of the existing system were limited. Eskom sets out the basis upon which all bidders were given the same information, and bidders were not given access to Eskom’s generation information system. Eskom in its answering affidavit sets out the exposure GE had to this system,” reads the judgment handed down last week.

“On this version, I cannot find that GE enjoyed asymmetric access to information so as to skew the tender and give GE a material advantage. Nor is there sufficient evidence to warrant the conclusion that Eskom sought to assist GE to the detriment of other bidders.

“The assessment of the tenders is evidence before me. On that assessment, it appears that the bids succeeded or failed on their merits. And there is no showing that GE’s incumbency had any systemic causal impact upon the content of the tenders or their ultimate assessment.”

Siemens did not respond to requests to comment.

GE, which has a long history with Eskom, is also doing work at Kusile. GE’s scope at the power station is the engineering, procurement and construction of six turbine islands, air-cooled condensers and a wet flue gas desulphurisation plant.

ANC COMPANY

Siemens has also done a lot of work for Eskom over the years.

Hitachi’s deal-making with Eskom has often been characterised by controversy, particularly due to the Japanese firm’s relationship with the ANC’s investment company Chancellor House.

UNTERHALTER ALSO FOUND THE ACCUSATION THAT GE ENJOYED AN ADVANTAGE OVER OTHER BIDDERS WAS WITHOUT MERIT

HITACHI DEALS WITH ESKOM HAVE BEEN CONTROVERSIAL, PARTICULARLY DUE TO ITS RELATIONSHIP WITH CHANCELLOR HOUSE