Sanral shifts target for awarding R17bn ‘cancelled tenders’

The end-of-September target for awarding five tenders worth R17.4 billion cancelled by the South African National Roads Agency (Sanral) in May has been shifted to this month.

Sanral GM for marketing and communications Vusi Mona confirmed to Moneyweb on Thursday that the tenders are currently under adjudication.

Read: Sanral’s R17bn tender debacle: One bidder considers taking legal action

“Once the adjudication is finalised, Sanral will publish the winning bidders on its website. The published details will include the details of the successful bidder and the award amount.

“It is anticipated that the adjudication will be completed this October,” said Mona.

“Once this is done and all the checks are complete, Sanral will make an announcement of the awards.”

Background

Sanral cancelled the tenders due to what it claimed was a material irregularity in the tender process where a resolution made by the board in January 2020 was not implemented in the evaluation of the bids.

Sanral acting CEO Lehlohonolo Memeza said in June the anticipation was that the awards for the cancelled projects would be made by September.

Doubts about Sanral’s ability to meet the four-month deadline it had set itself were expressed by many people and entities – including former Sanral CEO Nazir Alli, Master Builders South Africa (MBSA) and the SA Forum of Consulting Engineering Contractors (Safcec).

Read:
Former Sanral boss doubts cancelled tenders will be re-awarded in four months
Sanral under pressure to award R17.4bn in cancelled tenders by end-September

Mona on Thursday attributed the failure to meet the end-September deadline to requests by the bidders for an extension because they needed more time to get prices from their suppliers, “especially in the wake of the Ukraine crisis”.

“These extensions were allowed by the bid specification committee as [it] felt it was in the best interest of these projects to allow for additional time to the tenderers.”

Sanral did not provide the new closing date for the readvertised tenders, but it is believed they only closed last week.

The tenders in question:

• The Mtentu River Bridge tender valued R3.428 billion, one of the country’s presidential priority projects intended to stimulate the economy post the Covid-19 pandemic;

• The EB Cloete Interchange Improvements tender valued at R4.302 billion;

• The N3 Ashburton Interchange tender valued at R1.814 billion;

• The R56 Matatiele rehabilitation tender valued at R1.057 billion; and

• The Open Road Tolling (TCH Operator) tender valued at R6.872 billion, which had lapsed.

In June Sanral appointed the Development Bank of Southern Africa to provide infrastructure procurement and delivery management support on these five strategic projects.

In its 2022 integrated annual report released this week, Sanral acknowledged that the re-tendering process will delay the expenditure and much-needed economic stimulus of the projects.

It said its board resolved in January 2020 that consulting engineers who did the design of a construction project may not participate in the evaluation of that construction tender due to the potential conflict of interest.

“As at 31 March 2022, 78 contracts with a contract value of R22.121 billion were awarded where consultants were part of the technical evaluation panel of the tenders where the same consultants did the original design,” it said.

“Due to the non-compliance with a board resolution, these construction contracts, excluding the related consultant contracts on the same projects, had been declared as irregular. R3.615 billion was already incurred on these contracts as at 31 March 2022.”

Awards likely to exceed R17.4bn

Concerns were previously also expressed about the increase in bid prices that would be received for these five cancelled tenders.

Alli previously said an escalation in the price of the bids was a risk, unless some of the contractors who previously submitted bids were smart and tied their suppliers to a particular price, which would enable them to negotiate prices with their suppliers.

Safcec CEO Webster Mfebe said the new bids will definitely be higher because of changes in the steel price and the escalation in the price of construction materials caused by the impact of global supply chain issues.

Peregrine Capital executive chair David Fraser said on Thursday there is no doubt that these contracts will cost the country more now than if the initial bids had been awarded as they should have been.

Industry will ‘sit idle’ for close to nine months

Fraser said it is quite easy for Sanral to blame the contractors instead of themselves.

“We await the actual awarding of these contracts because all we are hearing is that the timelines are slipping. I would anticipate these dates to continue to roll out and I would only expect spades in the ground by the earliest, maybe even in quarter two next year, versus the expectation of September this year.

“It’s unfortunate that we sit with an industry that is going to sit idle for close to nine months as a result of this situation and where the country is going to be the only loser because we are going to end up paying more.

“My concern is not who these contracts go to. I just want these contracts out there and the wheels of the country to turn. I want people to have jobs, these roads to be built and Sanral to do its job,” said Fraser.

An executive at a major contractor, who did not want to be named, said Sanral is likely to take at least two months to adjudicate the new bids for the cancelled tenders.

He added that the successful bidder would then have “a three months’ community mobilisation period” after the award before they had to be on site.

This is a reference to a requirement that contractors employ workers and sub-contractors from the surrounding community around the project site.

Apart from providing jobs to the local community, this requirement is intended to also prevent protests, which in the past have resulted in disruptions to construction sites by local communities.