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Tshwane’s R12bn consent crisis

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Moeketsi Mosola.
Moeketsi Mosola.
Foto: Argief

An interim investigative report on the City of Tshwane’s R12 billion infrastructure contract with engineering consultants GladAfrica reveals that the minimum requirements for the relevant procurement process were not fulfilled.

The Bowmans report, issued to the city on October 18, preliminarily concluded that the contract did not comply with the Constitution and the Municipal Finance Management Act or regulation 32.

The final report is expected to be concluded at the end of next month.

The deal made headlines in August when it was reported that GladAfrica was running infrastructure projects for the city worth about R12 billion over three years‚ making millions in commission.

Tshwane city manager Moeketsi Mosola has argued that GladAfrica had been contracted under regulation 32 of government’s tender processes, which allows the city to use a service provider contracted by another organ of state.

According to the report, among the key conditions for the arrangement were that there should be “demonstrable discounts or benefits” for the city and that the Development Bank of Southern Africa (DBSA), which had GladAfrica among its panel of suppliers, ought to grant permission for the city to use the company.

A further requirement, outlined in case law by the high court, was that “the goods and services procured by the second organ of state are the same as that required by the first organ of state, and the contract price is the same”.

However, the Bowmans report said the city’s procurement processes were insufficient to ensure fairness, transparency, competitiveness and cost effectiveness.

Also, said the report, regulation 32 was breached because the city did not conclude a “formal agreement with DBSA”.

“To the extent that the exchange of correspondence between the [city] and DBSA may constitute a written agreement, that agreement is not for the provision of goods and services,” said Bowmans, adding that its conclusion was that “the DBSA did not consent to the procurement as required by regulation 32”.

In any case, read the report, “no specific goods and services relevant to the [city] had been secured by the DBSA under a contract at the time regulation 32 was invoked”.

Mosola wrote to DBSA chief executive Patrick Dlamini in June last year requesting to use the agency’s panel of service providers.

“It is our understanding that the companies appointed have been given letters of appointment and can be used as and when needed for their services,” Mosola wrote.

Dlamini said in an email response 10 days later that “being a panel, only responsiveness and functionality evaluation criteria were applied in the nomination of successful companies to the panel.

"No price and preference evaluation was concluded. Price and preference [are] to be evaluated on a case-by-case basis, informed by the business requirements. The appointment of companies from the panel is still subject to a competitive bidding process”.

He said “the DBSA has no objection to the [city] using this panel. Being a panel, the [city] will be responsible for its own procurement and governance requirements pertaining to the use of this panel”.

Bowmans said in its preliminary report that Mosola’s request to DBSA was only limited to an agreement “to access or use the panel”, which did not “contemplate any agreement for goods and services”.

No specific goods and services, prices, terms or the like were reflected in the document.

Similarly, said Bowmans, the DBSA’s response “makes no reference to any goods and services”, and only contained a statement that the DBSA did not object to the city utilising the panel.

The law firm said the agency’s response “does not contain any explicit consent” as envisaged in regulation 32.

“The fact that a party raises ‘no objection’ does not necessarily mean that the party has ‘consented’.”

Mosola said any publication of the contents of the report would be unlawful on the basis of this week’s labour court judgment. The judgment stopped the planned tabling of the report in council this week.

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