Sanral scraps panel procurement system after court ruling

The South African National Roads Agency (Sanral) has abandoned its panel system for procuring services from contractors for routine road maintenance (RRM) and engineering consultants, reverting to using an open tender process.

Outgoing Sanral CEO Reginald Demana announced this on Tuesday and said the agency has already started the process to procure these services through an open tender process.

The decision follows last week’s Pretoria High Court ruling declaring the tender award that reduced the number of RRM contractors from 340 to 20 unconstitutional and unlawful.

The court reviewed and set aside the award following legal challenges by Botle Ba Africa Roads and BCB Solutions.

Judge Anthony Millar ordered Sanral to procure future RRM services through an open tender process, which shall be evaluated on both functionality and the preference points system.

He also ordered that the incumbent contractors may remain in place until 30 November, unless Sanral requires and approaches the court for an extension at least five days before the deadline.

In June, Sanral’s engineering consultants panel award was also declared unlawful because of irregularities in the tender adjudication process, following legal challenges by Zutari and Lathiso.

There are currently no existing service providers for this service and no extensions were therefore required.

Demana said that given the irregularities identified, Sanral accepted that the procurement processes were indefensible and proposed to the court and the parties that the tenders be declared constitutionally invalid, reviewed and set aside.

He said this would allow fresh tenders to be issued while ensuring national road maintenance continues uninterrupted.

‘New’ tender process

Demana said the new open tender process must be designed and launched without delay, and Sanral has already prepared the tender packs and is running a live proactive internal assurance process.

It will be issuing tenders in batches in the coming days.

A limited number of tenders have already been issued in the Western Cape and Northern Cape – “signalling our intention to move with speed.”

Demana said it is not Sanral’s intention to go back to court to request an extension to the 30 November deadline.

Demana said the procurement lapses and breaches in the RRM tender included that:

• Tenders were not opened at the tender box about one hour after closing, as Sanral’s own prescripts require, and the tender opening register was not made available to tenderers;
• Sanral failed to require competition on price thereby undermining Section 217(1) of the Constitution, with the panel appointed on functionality alone;
• Race was made the determining factor in selecting which of the 61 functionally competent tenderers were appointed to the panel of 20; and
• There was prima facie information pointing towards possible and suspected fraudulent conduct at Sanral, including awards to companies that do not appear to exist, or whose addresses and contact details cannot be traced together with serious irregularities throughout the bid specification, evaluation and adjudication process.

He said Sanral’s new board has already introduced some reforms that must be implemented immediately to enable faster rollout of projects.

These include establishing standing bid specification and evaluation committees, an enlarged pool of adjudication committee members, restoring internal assurance processes for high-value tenders, and a consolidated delegations-of-authority document.

Consequence management

According to Demana, Sanral has now settled the litigation matters related to panels, and has instructed its legal advisors to begin consequence management processes where required and necessary, based on their recommendations.

“This, alongside rolling out new tenders, will be our big focus area.

“In certain instances, the consequence management preparation processes are already well advanced,” he said.

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Demana confirmed that there was a dispute within Sanral’s supply chain management and instructed a law firm to conduct an investigation on matters related to the RRM, including establishing whether certain employees might have failed, intervened or obstructed the implementation of a board decision related to the extension of the RRM contract.

It is believed this led to the suspension of chief procurement officer Khomotso Mhelembe, as well as Maupi Mahlo and Vukani Ndaba, two general managers in the procurement office.

The three have challenged their suspensions in the Labour Court, where judgment remains pending after arguments were heard last month.

Demana acknowledged allegations of corruption against him and referred to a social media campaign targeting him.

He also acknowledged claims that Sanral’s RRM contracts dating back to 2011 were tainted by corruption, but said law enforcement agencies are investigating the allegations and that Sanral is cooperating fully.

“I arrived at Sanral in 2023 and can only account for the period since I joined. As for the claims made against me personally, I reject them, emphatically and unequivocally.”

He also dismissed as fabricated an audio recording circulating on social media in recent days that names him personally as a beneficiary of irregular tenders.

Demana said it is not authentic, Sanral has said so formally, and he reiterated that he has never held the delegations that would make such a claim possible and he is not aware of any evidence that has been produced to support this claim.

‘Evergreen’ contracts

Demana also referred to the R9.5 billion figure that is often raised in connection with alleged corruption or “evergreen” contracts.

He stressed that Sanral does not have evergreen contracts, but since some years before he joined the company, it has been navigating historic irregular expenditure of about R9.5 billion linked to RRM contracts awarded between 2011/12 and 2018/19.

Those matters have since been resolved and fully disclosed in Sanral’s annual reports that are publicly available, he said. He added despite that irregular expenditure, Sanral has received unqualified audit opinions throughout the period because none of the confirmed irregular expenditure was linked to fraudulent or criminal intent.

Demana, who resigned earlier this month and will leave Sanral on 31 August, said he had resigned to follow his long-term ambitions and had not been asked to resign.

Sanral’s chief legal, risk and compliance officer Kaiser Khoza said he is unaware of any issues related to prima facie fraud in the way the RRM contracts were awarded.

Khoza added that Sanral is also not aware of any issues related to the Directorate for Priority Crime Investigation (the Hawks) other than being asked for information pertaining to “certain names” they said were in some documents.

“Indeed they did give us a Section 205 subpoena,” he said, adding that this record has been given to the directorate.

This article was republished from Moneyweb. Read the original here.