Procurement Tzar attacks corrupt tenders, blocks R50m job awarded for R378m

The long road to reversing endemic corruption in the public sector tender processes has begun. South Africa’s new chief procurement officer Kenneth Brown told Parliament yesterday he blocked a Prisons Department contract worth R50m awarded for over seven times that much. In February’s Budget, reinstated Finance Minister Pravin Gordhan announced all State tenders worth more than R10m will henceforth be scrutinised by Brown’s team. In a recent update the Office of the Chief Procurement Officer’s showed how deeply the tender fraud cancer was embedded with the example of support materials for Limpopo schools that were worth R150m actually costing the State R700m as “tenderpreneurs” ripped off the system. Brown was one of the top four officials at National Treasury earmarked for “redeployment” by the proposed Van Rooyen-led Gupta takeover which sparked Nenegate – much like a Gordhan-installed team was removed after Zuma appointed former Prisons Department chief Tom Moyane as head of SARS. Join the dots. A Biznews community member yesterday sent us an example where his tender, at R25m was the lowest of five – but that the award went to the second highest at an R8m premium. He doesn’t want to go public, but asked for advice. The CPO can be reached at [email protected]. Hope Springs. – Alec Hogg

By Jenni Evans

Cape Town – The Department of Correctional Services (DCS) wanted to overpay a company by more than R300m for providing IT services that should have cost the taxpayer R50m.

The government’s Chief Procurement Officer (CPO) Kenneth Brown revealed in Parliament on Wednesday that the DCS had signed-off on a contract for R378m to supply and maintain an integrated inmate management system.

An aerial view of Zonderwater prison in South Africa.
An aerial view of Zonderwater prison in South Africa.

Briefing Parliament’s Standing Committee on Appropriations, Brown said: “We did [an] assessment and we saw the tender should have been awarded for around R50m.” Brown heads the relatively new Treasury-based division which tracks and streamlines government tenders.

He told News24, on the sidelines of the committee, that the bid was selected through a “two envelope process”.

The bid was aimed at updating and expanding the department’s IT capacities in line with modern innovations like electronic fingerprinting, electronic monitoring for parolees, and even to allow it to use IT to let victims know more about parole hearings.

He explained that in that particular tender, the first envelope bids submitted contained information on whether the bidding company met all the administrative and functionality requirements that stipulated they could do the job if chosen.

The second envelope contained the price that they would charge for doing the work.

“So, if you fail on the functionality side, then the price [second envelope] doesn’t get opened.”

‘Why was this company disqualified?’

He said only one bidder – Integritron Integrated Solutions – met the “first envelope” functionality requirements, so only their envelope was opened to establish pricing.

Brown said there was no clear information yet on how the bid was deemed to be competitive.

“Did the department [of Correctional Services] do market research to say ‘for infrastructure of this nature, how much would this actually cost?’.”

Brown said that during the evaluation phase, “we [government] opened the other documents and the lowest price was R90m, by a company doing fairly the same thing in the prisons already. Why was this company disqualified?”

On further investigation, the CFO’s office, which does not award tenders, said it should actually not cost more than R50m.

Brown explained that, as an interface system, it plugs into the departments of police and justice.

“It is similar to the system already used on the CPO’s central data base, which drops into other systems and draws information.

“We put this system in for R8m. How is it possible they can put this system in for R378m?”

SITA not consulted

Solly Tshitangano, chief director for governance monitoring and compliance in the office of the CPO, said that there was also no evidence yet that the State Information Technology Agency was consulted, which is a requirement for state IT-related tenders, in terms of the SITA Act.

He said, once they had been asked to look into the tender, they sat in on a meeting at which the company made its presentation after having passed the first two hurdles.

“During the day of the company’s presentation, we went to observe the process and, looking at the minutes, that is where we intervened, ourselves.”

By that stage, administrative processes had already been done and evaluation had already been done.

“After we looked at the documents and the amounts, we advised the department and said if we conclude with this tender, it will not comply with Section 217.1 of the Constitution.”

Earlier during the sitting of the committee, Brown said “draconian” new laws were about to be introduced to cut down on tender manipulation. – News24

  • Who is Integritron Integrated Solutions? See News24 on Thursday morning for an exclusive report.

Source: http://www.news24.com/SouthAfrica/News/correctional-services-tried-to-overpay-r300m-for-it-system-20160413

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