Contractor Falcon Projects shows that it is possible to get government’s attention for non-payment of bills: exercise a lien over the property. A lien is a right to claim or keep possession of property belonging to another person until a debt owed by that person is settled.
Falcon Projects, a small BEE builder that won three tenders for the upgrade of kitchen equipment on behalf of the Department of Defence in Pretoria, has been exercising a lien on the property because of the mounting unpaid invoices for more than a month.
Pleas had been falling on deaf ears
Writing letters, pleading and pointing out the contractual obligations of the Department of Public Works and Infrastructure (DPWI), which is the body responsible for funding state-owned properties of this kind, came to naught.
But once Falcon instructed its attorneys ENSAfrica to exercise a lien on the property, things started to move in the right direction.
Moneyweb understands that the DPWI has agreed to settle the outstanding bill by the first week of July.
Falcon’s legal advisor, Douglas Molepe of ENSAfrica, tells Moneyweb the lien will remain in place until the bill is finally settled.
In 2017, Falcon Projects won three contracts for the upgrading of kitchen equipment, two of them at the army facility at Thaba Tshwane in Pretoria, and the third at the SA Army College, also in Pretoria.
Two of the contracts were for R12.85 million each and the third was for R16.7 million – a total of R42.4 million.
Work commenced on the building shortly thereafter, but DPWI started to fall into arrears on payments on all three projects from September 2018. This eventually accumulated into total short payments of around R49 million across all three projects, which includes interest and other amounts.
“This is what can happen to small contractors dealing with government,” says Molepo.
“It can be a life and death matter for a small business and while the sum outstanding may seem like a large amount of money, that is money that the contractor has to find from other sources.”
In email correspondence seen by Moneyweb, Falcon was paying security of R40 000 a month on the property which was under construction.
In effect, it was paying for the DPWI’s security while the DPWI was ignoring repeated calls to settle its bills.
DPWI officials seemed surprised
A trail of email correspondence between government officials and Falcon Projects shows surprise on the part of senior executives in DPWI as to why it had taken so long to pay the outstanding invoices.
In one exchange between government officials, it appears that DPWI lacked the funds to settle the invoice.
“Hopefully, this matter can now be brought to a close,” says Molepo.