Judge raps metro for manipulating R450m contracts

An generic image of calls for tenders.
An generic image of calls for tenders.

Ekurhuleni metro has been hauled over the coals in court for manipulating the outcome of two R200-million plus tenders.

The High Court in Cape Town told the ANC-led council on the East Rand to readvertise the tenders for mini-electrical substations‚ saying Cape Town company Jocastro was excluded on spurious grounds.

The court heard that one of three successful bidders reported no turnover in the previous financial year‚ and another operated from a suburban home.

Acting Judge Deidre Kusevitsky said “on any rational construction” two of the successful bidders “could never have met the bid criteria”. Yet they were awarded contracts worth more than R450-million.

Kusevitsky rejected Jocastro’s plea that it should be awarded all the contracts‚ saying the other dozen rejected bidders also deserved another chance. She awarded costs against Ekurhuleni metro.

Jocastro told the court the case highlighted the main weakness in the public procurement regulatory framework‚ which was that a tender process “could be rendered illusionary” by vague criteria.

According to Kusevitsky’s judgment‚ the company argued that this resulted in tenders being awarded at “hugely inflated prices” after officials manipulated the outcome.

Jocastro’s bid for one contract was R181.7-million‚ 25% less than a bid from Memotek Trading - based in a Boksburg house - and 13% less than BSA Holdings. Yet the two companies were appointed to share the job. In the other tender‚ Jocastro bid R228-million and the successful bidder‚ Actom‚ R236-million

In both cases‚ Jocastro’s bids were thrown out because the company did not name its technical adviser‚ even though the tender documents did not require it to do so.

Meanwhile‚ Memotek failed to submit a tax clearance certificate - a requirement stipulated in “big bold letters”‚ according to the judge - and BSA did not submit financial statements. Actom did not identify its technical adviser‚ yet Jocastro’s cheaper bid was rejected for the same reason.

The Cape Town company‚ established in 1969‚ told the judge that “perversion” of the procurement system resulted in “a situation where an organ of state selected two completely unknown service providers‚ which operate from suburban homes and with no track record in the specified industry‚ at a price that was millions of rands higher than well-established competitors”.