CoA to determine alleged Math error in P1.5B Ncojane project
Mpho Mokwape | Monday March 2, 2026 06:00
The appeal arises from a tender involving China Civil Engineering Construction Corporation and Zhong Gan Engineering & Construction Corporation (Botswana) (Pty) Ltd as appellants, G4 Civils (Pty) Ltd, Landmark Projects (Pty) Ltd, and Asphalt Botswana (Pty) Ltd collectively trading as Tawana Joint Venture together with the Accounting Officer of the Ministry of Water and Human Settlement.
At the centre of the case is Clause 3.14(ii) of the Invitation to Tender (ITT), which sets limits on the percentage of a bidder’s price allocated to Preliminaries and Generals (P&Gs).
According to court papers, the clause states that a tenderer’s proposed price for establishment “shall be evaluated by checking that it does not exceed 22.5% of the total tender amount (excluding any amount allowed for contingencies and escalation).” It further provides that if the P&G percentage exceeds 22.5%, “the tenderer will be automatically disqualified.”
Tawana JV was disqualified after the Accounting Officer calculated its P&G allocation at 24.28%, above the 22.5% ceiling, but was reinstated by the High Court, resulting in the appellants seeking recourse at the CoA.
According to the debriefing minutes placed before the court, the chairperson told Tawana representatives: “Tawana JV’s Preliminary & General (P&Gs) is 24.28% against the prescribed 22.5%. This, therefore, shows that the bidder exceeds the required P&G percentage against their tender amount.”
The minutes further recorded: “The computations were done by dividing the P&Gs (382,988,806.71) by the Tendered Amount (P1,577,362,030.33), which equals to 24.28%. There is no mention of Provisional Sums.”
Tawana JV argues that this calculation was wrong in both the numerator and the denominator.
In written submissions ordered by the court following a hearing on February 4, 2026, the Tawana JV states that the P382.9 million figure used as the P&G amount included sums that were not payable to Tawana itself. They say it included provisional sums and amounts payable to the Engineer, which should not have formed part of the contractor’s “proposed price.”
“The true ‘Tenderer’s proposed price’ was only P191,107,939.64. The amounts payable to the Engineer and provisional sums do not constitute the Tenderer’s price for establishment,” the submissions state.
The respondents further argue that the total tender amount used as the denominator was also incorrect. The P1,577,362,030.33 figure included contingency at 7.5%, CPA (escalation) at 10%, and VAT at 14%. The ITT expressly required that contingencies and escalation be excluded from the calculation.
The base value of the works before these additions was P1,170,106,472.56. After contingency and CPA were added, VAT at 14% brought the total to P1.57 billion, as reflected in the Form of Tender.
According to them, the correct denominator for the Clause 3.14(ii) test is P1, 170,106,472.56, the value of the supply before contingency, CPA and VAT.
“Using the P191.1 million numerator and the P1.17 billion denominator, the P&G percentage is 16.33%, well within the permitted range. In an alternative calculation using a larger P&G figure of P255, 584,906.70, the percentage is 21.84%, still below the 22.5% cap,” Tawana VJ argued.
The dispute before the court has narrowed to a key question: should VAT form part of the denominator in the front-loading test?
The respondents argue that VAT is a statutory charge imposed by law and not part of a contractor’s commercial pricing. Referring to the Value Added Tax Act, they state that VAT “is not ‘consideration’ for services, but a separate charge imposed after the value of the supply is determined.”
In their submissions, they describe VAT as “a statutory pass-through tax collected by contractors on behalf of the fiscus” and add that it “forms no part of the contractor’s commercial price.”
They further argue that including VAT in the denominator while excluding it from the numerator creates a distortion. “Including VAT in the denominator while excluding it from the numerator mathematically distorts the percentage test,” the Court was told.
To illustrate the point, the respondents presented three scenarios. In the first scenario, VAT is excluded from both numerator and denominator. The result is 16.33%.In the second scenario, VAT at 14% is added to both numerator and denominator. The result remains 16.33%.In the third scenario which they say reflects what the Accounting Officer did VAT is included only in the denominator. They describe this as “an asymmetric and irrational application of VAT.”
The submissions state: “Either VAT must be excluded from both components (the correct position), or included in both (arithmetically neutral). Scenario C, inclusion in denominator only, is neither lawful nor arithmetically defensible.”
They also argue that VAT is “arithmetically neutral” because it is applied at a uniform rate to the entire contract value and that where VAT is added to both the tenderer’s P&Gs and the total tender amount, it cancels out in percentage terms.
Furthermore, they also submitted that purpose of the front-loading test is to detect whether a contractor has manipulated the structure of payments to gain a cash-flow advantage.
“VAT, being imposed by statute at a fixed rate, “does not vary with the tenderer’s structuring of P&Gs” and cannot evidence manipulation, ” Tawana VJ said.
Court papers further reveal that during proceedings before the Tribunal, the Accounting Officer conceded that the correct denominator excludes contingencies, CPA and VAT and Tawana VJ describe this as an implicit acknowledgment that VAT is a pass-through statutory charge that must be stripped out to give effect to the front-loading test.
They added that having initially miscalculated using a VAT-inclusive denominator and subsequently conceded the error, the Accounting Officer cannot now revert to the discredited position merely because it supports disqualification.
“The High Court was correct to intervene, saying the disqualification was based on a demonstrable error of law and fact. The analysis above shows not a mere difference of opinion but a demonstrable error,” said Tawana VJ
In conclusion, they argue that the court must now interpret the ITT and determine whether VAT should have been excluded from the calculation and decide whether Tawana Joint Venture was lawfully disqualified.
Meanwhile, the dispute is around Tender No. POU/ MLWA/ DTS/ NCOJANE WATER SUPPLY WORKS/ 0158/ 09102023, a Works Contract for Detailed Designs and Construction of Ghanzi South & Kgalagadi North Villages Water Supply Project.