Why Sanral cancelled more than R17bn in ‘priority project’ tenders

‘We hear what industry is saying – that this is chaos, but I think it would be more chaotic if board resolutions are ignored’: Vusi Mona, Sanral.

NZINGA QUNTA: Sanral [South African National Roads Agency] has cancelled tenders to the value of over R17 billion, saying there were material irregularities.

Read: Sanral cancels R17.47bn in adjudicated tenders

Sanral spokesperson Vusi Mona joins me on the line. A very good evening to you, and thanks much for your time. It’s good to be speaking to you tonight. Just explain to us what type of tenders were cancelled, and why?

VUSI MONA: Good evening. It is a total of five tenders.

One is a monumental bridge [Mtentu River Bridge] that we are building in the Eastern Cape, there is the EB Cloete Interchange [improvements project] in Durban, the R56 Matatiele [rehabilitation project in the Eastern Cape], you’ve got the open road tolling tender here in Gauteng, the fifth one there escapes me [N3 Ashburton Interchange in Pietermaritzburg] – but in total it is five tenders.

The reason why these were cancelled – on January 28 in 2020 the Sanral board took a decision that our design consultants who were involved in the design and the development of technical specifications should not be involved in the evaluation of submissions by bidders.

Now this decision was not implemented by management in the evaluation of the five affected tenders. How did the board come to know about it? This was established by a proactive assurance exercise that is usually conducted by internal audit and the legal department for tenders above a certain value. Tenders above R750 million are subjected to a proactive assurance exercise so that the board can satisfy itself that management has done the right thing.

So it was established that we did not comply with that board decision.

That was also bolstered by an external legal opinion. So the board did not just look at the opinion by Sanral internal audit and legal. It subjected the outcome of that assurance exercise to an external legal opinion.

An important conclusion flowed from that exercise, which basically said the participation of design consultants in the technical evaluation was non-compliant with the board’s resolution, and therefore constitutes a material irregularity.

NZINGA QUNTA: Okay. Was there a time period that the cancelled tenders fell under, and was that resolution that you’ve just described to me about people who were part of the design the only reason or resolution that was breached with these tenders?

VUSI MONA: Well, in terms of the board resolution, a specific board resolution, yes. But there were other lapses that occurred in the tender process which resulted in irregularities.

For example, there was a bid that should have been conceived as non-responsive and therefore disqualified, because it was not submitted in the prescribed and required format, as given in the specifications.

But that bid found its way to the board for approval, when it should have been disqualified.

There is another one in the five that I’ve spoken about where the scope of works was increased with additional roads in order to accommodate what is a 30% subcontracting requirement at Sanral.

Just to explain this, we put this project up for tender; the bidder says, look, I can’t meet on this project at 30%, but if you give me additional roads, I will meet it. Now that’s increasing the scope of work.

And, still on the 30% requirement, there’s one instance where, without board approval, the 30% requirement was reduced to 15% – things which require board approval.

And the board then said to management, sorry, we can’t find our way out of this. You’re going have to go back to the drawing board. And the board is alive to the fact that this is going to be a blow to the construction industry.

So they said to management, you do this in the quickest time possible. Within four months, you should have re-evaluated our debt, because we are alive to the impact on the construction industry, but critically we need to deliver the infrastructure to stimulate the economy, to create jobs.

So that’s the instruction from the board.

NZINGA QUNTA: Okay. Mr Mona, very briefly – but I’ve got a lot of points that I’d like to cover – just some more clarity. So I read you saying, in response to the kind of blowback that you’ve received, that the alternative to not following governance procedures is chaos.

A response from CEOs like Lucas Tseki from Concor is that this, what you have done as Sanral, is chaos, and the economy that you’ve just spoken about and the rebuilding – you are holding people back and you’re doing [what is] contrary to stimulating the economy. So I’d just like to find out your response to that one.

And, two, [what are] the kind engagements you’ve had with those affected service providers, if any?

VUSI MONA: Well, we hear what industry is saying – that this is chaos. But I think, with respect, it would be more chaotic if board resolutions are ignored. I’m sure the said captain of industry that you are quoting – certainly in this company they don’t do business that way, where the board of that company makes decisions and management just slides to disregard those decisions. That would be chaotic.

So, from where we sit, the Sanral board is actually avoiding a situation where there is a breakdown of governance occasioned by …

NZINGA QUNTA: Very briefly – my apologies for interjecting, we have one more interview, so my apologies for interjecting. I just want clarity on something that you mentioned earlier on.

These tenders were cancelled. Do people need to re-evaluate and get themselves in order, or do they have to start the procurement process from scratch and tendering from scratch for these tenders?

VUSI MONA: Most definitely, because the process has been terminated.

NZINGA QUNTA: Okay. Thank you so much for your time on the SAfm Moneyweb Market Update this evening. Vusi Mona, the spokesperson of Sanral, was speaking to us there about cancelling tenders to the value of R17 billion and more.

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Have you ever heard so much hogwash in your life ! SANRAL Is now just another corrupt, inept , broken SOE !

and the “30%” is the hi jacked BEE cost of the projects (teasingly referred to as “subcontractors”) which must be added to the 10% or 20% premium paid for BEE “points”. With the shortage of construction work there is massive ANC infighting for these plums. And, I reckon vanity projects like the N2 Wild Coast bridges are going to come out waaay over budget, mainly due to having to bribe the locals to be able to keep working. One of these bridges has already had the contractor walk off the project due to disruption by the “local community” aka ANC aligned Business Forum thugs I reckon. Great for lawyers though.

Exactly right Paul, 2 SA, but Aussie based, mates of mine had the Mtentu bridge “jacking” contract, had their equipment and 200 tons of steel shipped into Dbn Port ready to begin, when the contract was aborted. They shipped it all out of here and resolved to never come back! So SA will probably end up with an inferior bridge, with huge cost overruns, if it ever goes ahead! The song “When will they ever learn” comes to mind!!

End of comments.

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