|2012 05 29 R10bn bid: parties to do battle|
HE losing bidder for a R10 billion social security contract will argue before the North Gauteng (Pretoria) High Court today that the tender be reviewed and set aside because it was marred by procedural unfairness.
The Star Africa understands that AllPay Consolidated Investment – the main rival of the winning bidder, Cash Paymaster Services (CPS) – will question the South African Social Security Agency's (Sassa's) motives for introducing last-minute changes to the rules.
The firm will argue that members of the bid adjudication committee were "aggressive" and dismissed its technical solutions presented at a meeting in Cape Town without having assessed them.
The Star Africa has learnt that AllPay will also try to convince the court to not entertain the merit of the technical report, on which Sassa based its decision to award the tender, because the rules and procedures were breached already.
The controversial contract was awarded to CPS in January by Sassa, a unit of the Social Development Department, after Absa's tender was not renewed.
CPS is wholly owned by Net1 UEPS Technologies, which is listed on the Nasdaq Stock Exchange.
The tender, for the dispensing of grants to 14,8 million of the "poorest of the poor and the most vulnerable members of our society", had sparked ructions between politicians, officials and big corporates after allegations of political interference, manipulation and bribery emerged.
Three months after AllPay and other losing bidders took the department to court, demanding a review of the CPS tender because of alleged irregularities and conflicts of interest, rival parties will finally argue their cases before the court this morning.
The losing bidder has brought its application in two parts – to interdict Sassa from taking any steps to implement the contract and a review of the contract later.
Sassa is opposing AllPay's application.
Both parties were expected to file their heads of argument today.
The Star Africa has learnt that all parties involved – AllPay, CPS and Sassa – filed 1 600 papers.
A total of 6 500 papers were filed before the court by all parties on April 28.
The Centre for Child Law and Empilweni intervened as friends of the court. Empilweni is the losing bidder for the Mpumalanga leg of the tender.
AllPay will apparently argue that:
l The tender specifications were changed at the 11th hour and that the shifting of biometrics verification from "preference" to "requirement", through bidders notice number two, was prejudicial. Biometrics verification is the use of fingerprints to verify the authenticity of grant recipients;
l The notice changed the rules of the game days before the closing date rather than merely clarifying them;
l It was summoned to give a technical presentation in Stellenbosch at short notice (within 48 hours), without being told what questions were to be asked;
l Members of the bid adjudication committee were aggressive and tore into AllPay's technical solutions without properly assessing them;
l Some members of the bid evaluation and adjudication committees had relationships with CPS's BEE partners; and
l The evaluation committee neglected its duties by failing to properly assess the capacity of CPS's BEE partners.
However, The Sunday Independent previously reported accusations against Absa for allegedly ripping off the social grants beneficiaries as the battles for the billions got uglier.
Sassa is expected to argue that:
l Its decision was above board and the subject of a thorough process spanning nine months;
l Various bid committees were established to oversee different stages of the bidding process in line with its supply chain management policy and Treasury regulations;
l Special bid committees were established for the purpose of the contract and were made up mainly of senior government officials employed in different departments;
l It complied with administrative, technical, financial and preference criteria and recommendations when awarding the contract;
l CPS got the tender after AllPay failed to meet the minimum threshold of 70 percent on technical points, and
l The processes followed by the bid evaluation and adjudication committees were monitored by independent process monitors.
Based at the University of Pretoria, the centre is expected to focus its argument on the need for appropriate relief should the decision to award the tender be set aside and any service level agreement between Sassa and CPS declared invalid.
It will argue that such a decision was likely to disrupt the payments of grants and adversely affect more than 10 million children who survive on social grants.
This was because CPS would lose any right to dispense the grants, be obliged to hand over the documentation and the whole adjudication process would be re-started.
The centre will propose the following:
l That the declaration of the contract as invalid not automatically lead to invalidation of related decisions;
l Acts such as the actual payments of after April 1, 2012, should not necessarily be the subject of rescission because of the invalidation of the tender;
l The court retains the power to determine whether to suspend the operation of the order of validity for any period; and
l For admission that sometimes a legally invalid act was capable of producing a valid and binding consequence.
Both Serge Belamant, the CEO of Net1 UEPS, and Social Development Minister Bathabile Dlamini's spokeswoman Lumka Oliphant have repeatedly denied any wrongdoing, political interference or manipulation of the tender.
The Sunday Independent reported last month that a mysterious R1,4 million was deposited into the private bank account of the Human Settlements director- general, Thabane Zulu, a month before he took part in the awarding of the tender.
Zulu dismissed the allegations as "preposterous" and challenged critics to report him to the law enforcement agencies.
The Mail & Guardian reported that Human Settlements Minister Tokyo Sexwale was linked to the contract through Mvelaphanda Resources's former director and employee, Brian Mosehla.
The businessman's company, Mosomo Investment Holding, acquired a 20 percent stake in CPS.
CPS announced two weeks after winning the tender that it had brought in Mosomo as one of its BEE partners. However, The Sunday Independent reported last month that the two had sealed a deal way back in October.
Mosomo reportedly has one year to attain 19,9 percent of Net1's shares at $8,96 a share.
Mvelaphanda is Sexwale's holding company and Mosehla has interests in its subsidiaries.
Mvelaphanda has repeatedly denied any involvement in the tender. The Mail & Guardian previously reported that President Jacob Zuma's legal adviser, Michael Hulley, was also allegedly involved in the tender, but Hulley has dismissed the accusation.