Thu Oct 27 14:53:24 CAT 2016

Some bidders are concerned over the role of certain firms in the R62-billion social service deal, writes ISAAC MOLEDI

By unknown | Oct 18, 2007 | COMMENTS [ 0 ]

The Department of Social Development's multibillion-rand grants payment tender is likely to be thrown into a crisis, resulting in further delays after some of the bidders complained of the appropriateness of certain companies in the running.

The Department of Social Development's multibillion-rand grants payment tender is likely to be thrown into a crisis, resulting in further delays after some of the bidders complained of the appropriateness of certain companies in the running.

The R4 billion-a-year tender, conducted under the auspices of the South African Social Security Agency (Sassa), aims to distribute more than R62 billion of government social grants to the poor in South Africa annually.

The grants tender is described as one of the biggest functions that the government has outsourced to the private sector.

Sassa, headed by Fezile Makiwane, the government's agency that was created to, among other responsibilities, oversee the entire process of grants payment, issued an invitation last October for interested parties to tender for this multibillion-rand function.

But the invitation was withdrawn before the closing date towards the end of last year.

Though no formal reasons were given for the withdrawal, the current re-issue of the same tender requires the bidders to submit their bids per province and not in predetermined provincial clusters as was the case before.

About six companies, including the country's three major banks, are bidding for this lucrative tender.

They include Standard Bank, Absa Bank through its subsidiary All Pay, First National Bank, Cash Payment Service, Empilweni, which is currently paying social grants in Mpumalanga, and Ezidlubhedu, a 100 percent black-owned Nedbank-financed outfit headed by Jongi Sisulu, a Soweto businessman.

Two other bidders, who include Dimension Data, are likely to be disqualified given that they did not conform to the vigorous tender check list.

Currently, there are three companies rendering this service on behalf of Sassa, with Cash Payment Service operating nearly 80 percent of this market.

The current tender was re-issued on February 28 with April 20 as a closing date.

However, the closing date was changed to May 4 because the department had apparently not resolved the queries posed by the bidders.

In terms of the re-issued tender document, evaluation of the bids would be completed by July 13. The preferred bidders were to be announced at the end of last month, with the service level agreements finalised and signed.

Take-over processes would immediately begin, especially in those provinces where there would be a change of service providers.

But some of the concerned bidders say not a single of these processes has happened since the submission date on April 4.

Though the department has promised to announce the preferred bidders before the end of this year, some of the bidders have questioned the appropriateness of certain bidding companies, threatening to further delay the process.

Standard Bank, FNB and Absa Bank show participation at equity level, bidding as major shareholders. Even the names of the bids are named after the banks.

The concerned bidders described as an unfair business practice for banks to engage themselves in other businesses as major shareholders other than banking, which is what they are licensed to do.

What complicates Absa Bank's participation in the bidding process is its equity partner, Mvelaphanda, chaired by Tokyo Sexwale, who is also a presidential hopeful, says one concerned bidder.

It was widely reported in the media recently that Sexwale gave shares to Thuthukile Skweyiya, the wife of Social Development Minister Zola Skweyiya, among other prominent government personalities.

Sexwale, it was reported, had, through an empowerment vehicle known as Batho Bonke, also given shares to ANC high-flyers and partners of ministers, including high-placed individuals, in what was viewed as an attempt to sway public opinion.

Also of concern, according to one bidder, is the inclusion of Cash Payment Service in the bidding process. The company currently operates more than 80 percent of the country's grants payment market.

The company is, according to the bidder, still a subject of corruption investigations and finality had not been reached or made known to the public.

The concerned bidders say Sassa should explain whether a company that is implicated in an investigation on corruption qualifies to tender.

"In fact, the question should be: can Sassa award a tender to such a company before the matter being investigated is cleared?" asked the bidder.

But the social development ministry said that, by delaying the process, the government, through Sassa, wanted to ensure that strict security and internal control measures were implemented to ensure the integrity of the process.

Ministerial spokesman Lakela Kaunda said the department was confident that the bid evaluation process was proceeding well.

An announcement of a preferred bidder/s was expected to be made before the end of the year, she said, adding that the process also involved the Treasury and the Department of Public Service and Administration.


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