The suspension of the tender process by the South African Social Security Agency (Sassa) to find a new service provider that will be responsible for cash payments to 2.5 million elderly and disabled beneficiaries has raised fears of a sequel to the social grants crisis.
Sassa has five months to phase out and replace Cash Paymaster Services (CPS), whose contract to administer cash payments was extended in March for another six months by the Constitutional Court.
Although Net1’s subsidiary CPS is responsible for paying a portion of social grant beneficiaries (only 2.5 million out of the 10.7 million), the court was yet again forced to extend its invalid contract as Sassa failed to find another service provider. The remaining eight million beneficiaries access their social grants through Post Office outlets, bank ATMs or retail points.
The delays in replacing CPS are haunting Sassa again, which might place the livelihoods of grant beneficiaries in jeopardy.
Only two months into the top job, Social Development Minister Susan Shabangu, who replaced Bathabile Dlamini in Cyril Ramaphosa’s new cabinet, is already making unpopular decisions.
Shabangu has suspended the tender process in which service providers can submit competitive bids for the cash payment of social grants. In court papers, she said the current bid evaluation committee – the team of individuals tasked with judging tender proposals – doesn’t have technical knowledge and expertise to evaluate proposals.
Shabangu requires more time to appoint “individuals with knowledge and expertise to evaluate the technical aspects of the bids.”
It’s not the first time that Sassa’s bid evaluation committee has brought progress to a screeching halt. The Post Office, which took over a large portion of social grant payments from CPS in April 2018, was initially disqualified by the committee for not having the full capacity to administer social grants.
The committee found that the Post Office could only provide an integrated payment system, while it fell short of the other three required services including the provision of banking services (offering a prepaid debit card with a biometric data verification solution in line with the Payment Association of SA), card production capacity for social grant beneficiaries and the option of cash payments at pay points.
However, Parliament concluded that the committee’s technical assessment of the Post Office’s capacity was flawed and it qualified to fully participate in Sassa’s tender.
Shabangu said the Sassa tender specifications needed to be revisited as they do not provide accurate technical information needed by bidders to provide proper costing models. This was after one of the prospective bidders, G4S Cash Solutions, complained to Sassa that its tender documentation failed to provide bidders with accurate information regarding the number of cash beneficiaries per pay point across SA.
In a letter to Sassa, G4S said it has the necessary qualifications to tender, but its ability to do so is “dependent on having access to certain critical information which is necessary for pricing purposes”.
“It appears that either the person who prepared those responses [information pertaining to the tender] lacks knowledge and experience of the operational aspects of the cash payment system, or Sassa is deliberately withholding critical information from bidders that is required for purposes of pricing the services tendered for.”
The lack of accurate information would benefit CPS, as it already has the data relating to the number of cash beneficiaries and pay points by virtue of being an incumbent paymaster. This might pave the way for CPS to submit a bid to still be part of the Sassa payment network beyond September 2018.
Civil rights group the Black Sash has sounded the alarm, saying the decision to suspend the tender process weeks after CPS’s contract was extended is “drastic”. The Black Sash had already cautioned in the March about the lack of technical information provided to bidders by Sassa and the implication for timeframes.
“It is highly unlikely that a new service provider will be appointed and fully operational by end-September 2018. We are working with shifting deadlines yet again, as the minister’s papers give no indication of new timeframes for this tender process,” it said.
The Black Sash urged Shabangu to put in place a contingency plan for cash payments to avoid yet another extension of the CPS contract.
Sassa has not even contracted commercial banks, which are expected to play a crucial role in the social grants payment network. Banks are unhappy that Sassa wants standardised low-cost bank accounts, which they said would create problems with competition authorities and that each bank prefers to create a unique low-cost product.