The Municipal Demarcation Board has received legal advice to either cancel or review a R19-million lease with its current landlord because there would not be relocation costs.
According to a confidential internal legal advisory note sent to the board last week by the organisation’s company secretary, Kgabo Mapotse, the board should consider extending the lease with its current landlord – J209 Investments.
The document details that the chief executive of the demarcation board, Muthotho Sigidi, chose to overrule a bid adjudication committee recommendation of awarding the five-year lease agreement to SKG Africa, instead opting to deviate and award it to the second highest bidder.
According to the document, Sigidi – having considered the report from the bid adjudication committee – found that the bidder scoring the highest score, after including the relocation costs, was above market value and beyond the organisation’s budget of R19 million.
The highest scoring bidder, SKG Africa, had offered almost R17.1 million while J209 Investments had offered almost R16.4 million.
The document also mentions that although Sigidi sought advice from the chief procurement officer, who advised him to follow the legislative prescripts that allow him as CEO to deviate from the recommendations of the bid committees, he made the decision to stick with the current landlord. He informed National Treasury and the Auditor-General of the decision.
“The chief executive overruled the bid adjudication committee recommendations based on reasons that he considered to be relevant for the purposes of the award. It is not recorded anywhere that the reasons were approved by any other functionary outside the decision maker, being the CEO as contained in the preferential procurement framework legislation.
"Further, the CEO in the exercise of his powers so delegated acted outside the special conditions contained in the delegation of authority manual and outside the legal requirements as contained in the procurement legislation. In essence, there exists a prima facie view that the CEO might have acted unlawfully,” the document reads.
“Failure on the part of the board to prove exceptional circumstances that existed for the deviation at award stage and that such deviation has been approved by the relevant authority and recorded for audit purposes might render the award unlawful.”
The document advises the board to seek external opinion on the matter before making a final decision as the litigation risk and the reputational management risk that might have to be done may run into millions of rands.
Thabo Manyoni, who was appointed as chairperson of the board in March, confirmed that the board received the memo last week, but said it was yet to be discussed.
“The board has scheduled meetings. I obviously can’t preempt the board’s decision on this or any matter,” Manyoni said.
Board spokesperson Barileng Dichabe declined to respond to a request for comment relating to whether Sigidi did indeed award the multimillion-rand contract to the company because of the relocation costs, even though the bid adjudication committee had scored another company overall higher.
Dichabe also urged this journalist to file a Promotion of Access to Information Act application to her to be able to disclose the information, including how much rent the organisation is currently paying.