The SA National Roads Agency (Sanral) has admitted there has been a significant delay in the adjudication and awarding of its tenders, resulting in 258 projects collectively valued at R31.7 billion being rolled over to the current 2021/22 Annual Procurement Plan.
It was planned that these contracts would be awarded in Sanral’s 2020/21 financial year to March 31 2021.
Sanral chief financial officer Inge Mulder also confirmed on Thursday that the 2021/22 plan includes the commencement of the procurement process for a further 312 projects collectively valued at R30 billion.
Mulder attributed the cause of this significant backlog to:
The clarification process between Sanral and National Treasury of the 30% subcontracting requirement in the Preferential Procurement Policy Framework Act (PPPFA) regulations, including the interpretation of “local”.
The rollout of the supply chain management reform to comply with National Treasury Regulations on procurement that were issued under the Public Finance Management Act (PFMA).
Changes to tender procedures required because of Covid-19 lockdown regulations had to be considered and published.
‘Problematic’ 30% SMME subcontracting requirement
Mulder said the clarification process between Sanral and National Treasury on the 30% subcontracting requirement and the interpretation of “local” in the regulations took 18 months to complete and led to the stalling of 64 Sanral projects because of community disruptions.
In October 2019, Department of Public Works then chief director construction management Wasnaar Hlabangwane confirmed that the department had recommended amendments to the 30% SMME subcontracting requirement in the PPPFA regulations because implementing it was problematic.
Hlabangwane said this regulation resulted in more bidders being non-responsive, many bids being awarded at higher cost, and community unrest. This led to project stoppages and the lives of all parties involved in the project being placed at risk.
Board not responsible for delays in awarding tenders
Mulder on Thursday also confirmed that the tender award delays had nothing to do with the Sanral board and the delay is not due to a lack of funding because “projects will not be planned until the funding is secured”.
“As a matter of good governance, the board does not get involved in the procurement process.
“The board only reviews, post evaluation and adjudication by management, when a tender exceeds the threshold of R750 million.
“In such instances, the board must satisfy itself that all due processes have been followed.
“Otherwise, all other bids are finalised and awarded at the Management Bid Adjudication Committee (MBAC) level. The Board does not sit at MBAC,” she said.
Mulder was responding to a Moneyweb request for comment by Sanral on claims that at least R16 billion in Sanral tenders had been adjudicated but not awarded – some for about a year – and none of South Africa’s major road contractors knew the reason for the delays.
An analyst Moneyweb spoke to on Wednesday estimated that Sanral contracts valued at a total of between R20 billion and R25 billion had been delayed.
WBHO Group CEO Wolfgang Neff said the group’s road and earthworks division was the lowest-priced competent contractor on over R10 billion worth of roadworks projects spread over about 10 different projects.
Raubex CEO Rudolf Fourie said several potential Sanral contracts worth a total of about R6.5 billion had been affected by tender adjudication and tender award delays.
Neff and Fourie were unsure of the reasons for the tender award delays.
However, Neff indicated that he believed a combination of factors was delaying the award of projects, including the possibility that Sanral’s board may not have the correct experience to determine whether a bid is competitive or not and whether the contractor will be able to complete the work.
Mulder added on Thursday that the majority of projects are not delayed between adjudication and award, but rather between closing of advertisement and completing of the evaluations.
She said 267 contracts with a total value of R33 billion have been awarded between April 1 2021 and February 28 2022.
“Some 69 contracts have been evaluated and are in various stages of adjudication.
“A further 148 projects are currently under evaluation, of which 35 closed more than six months ago,” she said.
Responding to a Moneyweb question on when Sanral will making these tender awards, Mulder said 267 contract awards have already been made in the 2021/22 financial, adding that the Bid Adjudication Committees meet on a weekly basis to consider recommendations from the various Bid Evaluation committees and to make awards.
“These awards are published on the Sanral website and others, as per the requirements,” she said.