Sanral unsure of corruption in adjudication of cancelled tenders valued at R17.5bn

Board expects further tender cancellations due to failure to comply with board resolution.
Sanral chair Themba Mhambi says the board has instructed management to create the necessary conditions for the cancelled tenders to be re-advertised and allocated within the next four months. Image: Moneyweb

The SA National Roads Agency (Sanral) board is unsure if any corruption took place in the adjudication of the tenders – collectively valued at R17.473 billion – that it cancelled last week.

On Monday Sanral board chair Themba Mhambi was also unable to state unequivocally that there would not be further tender cancellations.

Read: Sanral cancels R17.47bn in adjudicated tenders

Mhambi said the background to the cancellation of the adjudicated tenders was the discovery by the board in January 2020 that the contractor bid evaluation process in Sanral had “a major, potentially corruptive, flaw”.

He said the process allowed the same service provider to do design drawings for an infrastructure project, develop the technical specifications for the tender for that project, and determine the technical bid to be recommended for award by the bid evaluation committee if it met other criteria.

Themba Mhambi, Sanral, Sanral chair

Themba Mhambi, chair of the Sanral board. Image: Sanral website

Mhambi said Sanral’s board on January 28, 2020, adopted a resolution that the consultants who are involved in design and development of the technical specifications should not be involved in the evaluation of technical submissions by bidders.

“The rationale for the resolution was to ensure that there was a separation and segregation of duties, which is a well-known governance principle.

“We are here today partly because, for reasons yet to be objectively determined, more than a year down the line the board discovered that that separation was not effected, thus violating an internal control, and so effectively rendering irregular the awards the board was asked to note by MBAC [Management Bid Adjudication Committee],” he said.

Mhambi said in light of that violation of a crucial internal control and its fiduciary responsibility, the Sanral board had no option but to refuse to sanction the planned awards.

Read: Sanral board dismisses construction industry concerns after cancelling R17.5bn in tenders

He said in three of the five cancelled tenders, there were other compelling reasons for the board’s refusal to endorse the award recommendation.

The cancelled tenders were:

  • The Mtentu River Bridge tender valued R3.4 billion, one of the country’s presidential priority projects;
  • The EB Cloete Interchange Improvements tender valued at R4.3 billion;
  • The N3 Ashburton Interchange tender valued at R1.8 billion; and
  • The R56 Matatiele rehabilitation tender valued at just over R1 billion.

The Gauteng Freeway Improvement Project (GFIP) Open Road Tolling (TCH Operator) tender valued at R6.872 billion also lapsed.

Mhambi said Sanral’s board does not know whether corruption was involved with the cancelled tenders but does know that an internal control that was intended to ensure that no semblance of corruption could happen was not respected.

“Therefore we cannot guarantee … that there was no corruption in the same way that we cannot say conclusively that there was corruption,” he said.

More cancellations possible

Commenting on the possibility of further tender cancellations, Mhambi said tenders below R750 million never get seen “in deep detail” by Sanral’s board.

The board has told acting Sanral CEO Lehlohonolo Memeza it also needs to know about tenders below R750 million in value that were awarded that also did not comply with the board resolution.

Mhambi expects there will be further tenders that did not comply with the board resolution.

“With regard to those that must [still] come to the board … and where this resolution has not been implemented, we are publicly rejecting them here and now because consistency is part of the requirement of being a board and therefore our decision in relation to these will apply to any other that is brought to us if our resolution has not been observed,” he said.

Mhambi denied these tender cancellations are indicative of a breakdown of trust between Sanral’s board and its management, stressing that only a few Sanral employees deal with the adjudication of tenders.

Mbalula to hold Sanral’s board accountable

Addressing the media briefing on Monday, Transport Minister Fikile Mbalula said the strategic nature of the projects in question requires of the Department of Transport to ensure that governance principles are not undermined and that the adjudication process can withstand scrutiny.

“We must do everything in our power to ensure that the integrity of the award process is not brought into question.

“Failure to uphold supply chain management principles will result in awards being challenged in courts, holding up the implementation of the projects. We have first-hand experience at Prasa [Passenger Rail Agency of South Africa] on such litigation that has the potential to hold up projects for years,” added the minister.

“Those who are aggrieved by the decisions of the board in this regard have recourse in law and can approach the courts to adjudicate the matter,” Mbalula said.

He stressed that it is his intention to hold Sanral’s board accountable for its decisions and to ensure that it acts in the best interest of the company and the country.

“I will therefore not hesitate to act against the board if there is evidence that the board was derelict in the execution of its fiduciary duties. It is equally my expectation that the board will not hesitate to implement consequences management against those found culpable for the lapses that have resulted in the decision not to award these tenders,” he said.

Read: Is Prasa in crisis?

Meanwhile, Mhambi said Sanral’s board is as concerned as everyone in the industry that the cancellation of these tenders will delay the implementation of critical infrastructure projects and possibly impact the construction industry.

Mhambi said to mitigate the lost time and opportunities, Sanral’s board has instructed management to create the necessary conditions for the tenders to be re-advertised legally and allocated within the next four months.

He added that Sanral’s board has also decided to secure the assistance of an independent public institution with infrastructure procurement expertise to assist with the process of getting the five tenders advertised, evaluated and adjudicated for recommendation to the board.

Listen to Sanral spokesman Vusi Mona explain why the tenders were cancelled (or read the transcript):  

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Perhaps a retired consulting engineer can inform us, but would it not be normal practice for the (independent) consulting engineers that set the technical requirements to also evaluate compliance and in most cases subsequently act as owner agent in overseeing the project? Obviously they cannot be involved in the bid itself.

It would end up in a mess if one expert sets the requirements, another evaluates meeting of bid requirements and yet another oversees construction to requirements. That is how power stations end up with multi billion rand flaws imho. And then it is nobody’s fault.

It is and was Johan except that maybe these engineers (well some of them; like at Eskom) have vested interests. Also the tender conditons are amateurish, convoluted, racist and subject to subjective interpretation, deliberately so, then easily challenged.

My take is that the Mbalula fuss is to give players aligned to the current ruling faction of the ANC another chance. That is about all.

Viva ANC
BEE-E at work !!!
Black Engineering Excellence – Exemplified !!!!!!!!!!!!!!!!!!!!

End of comments.

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