A municipal tender provided that the municipality did not have to accept the lowest tender and was entitled to cancel the tender or reject all tender offers at any time before formation of a contract. It was held in City of Tshwane v Nambiti Technologies (Pty) Ltd that this was not administrative action and could not be challenged on review by one of the tendering parties.
The decisive reason why this could not be done is because action is not administrative action unless it adversely affects the rights of some person and has a direct external legal effect. When a tender is cancelled no-one loses any rights. If the tender is cancelled none of the tenderers has any rights in relation to, or arising from, the tender. A decision not to procure services by tender does not have any direct, external legal effect.
The court also found that it was not a decision of an administrative nature. Administration is concerned with the implementation of the policies and functions of government. A decision not to do something does not easily fit into that framework. When the municipality put out a tender for SAP support services but subsequently withdrew the tender, the court refused to review the cancellation decision.