Sanral’s R17.5bn cancelled-contracts debacle: One bidder considers taking legal action

At least one of the bidders for five Souh African National Roads Agency (Sanral) adjudicated tenders valued at R17.47 billion that were cancelled last week by the agency’s board are considering taking legal action to reverse the decision.

“The cancellations are unprecedented,” said one contractor on Tuesday who did not want to be named.

“So many of the things said by Sanral’s board were factually incorrect and showed that the board is not in touch with what is happening,” he added.

The SA Forum of Civil Engineering Contractors (Safcec) has confirmed that it has escalated the cancellation of these tenders for so-called material irregularities to National Treasury for further investigation.

Consulting Engineers South Africa (Cesa) said it is also challenging the decision by Sanral’s board.

Insinuations

Safcec CEO Webster Mfebe stressed that Safcec does not have any quarrel with the Sanral board exercising its governance responsibilities, and if corruption is involved in these tenders as was suggested and insinuated by the board, it will find a partner in Safcec in condemning this corruption.

Mfebe said it is however unfair to the dignity of the people and the companies involved to insinuate corruption without a shred of evidence.

Mfebe said there is also the insinuation that the management of Sanral is corrupt, which is demonstrated by the fact that another institution will be required to adjudicate the bids going forward.

This is a reference to Sanral board chair Themba Mhambi stating that the board had decided to secure the assistance of an independent public institution with infrastructure procurement expertise to assist in the process of getting the five tenders re-advertised, evaluated and adjudicated for recommendation to the board within the next four months.

‘Baffling’

Mfebe said it is baffling that it has taken the Sanral board two-and-a-half years to realise that a resolution it took on January 28 2020 had not been implemented.

“Given the high profile nature of these projects, it baffles us why, in reporting on these projects, the board did not ensure that its resolution was implemented given that they feel very strongly about it,” he said.

Mfebe said it would be shocking if some of the designers of the infrastructure are also participating in the building of that infrastructure.

He is however also puzzled by this allegation by Sanral’s board because the five projects, as advertised, are not design-and-build projects.

Mfebe said Safcec has asked National Treasury to investigate whether the cancellations, among other things, meet the conditions set out in the procurement regulations in terms of the cancellations of projects and, in this instance, due to material irregularities.

‘Material irregularities’ test

Mfebe said a test has already been established by the Auditor-General that explains exactly what material irregularities mean, adding that something cannot just be declared a material irregularity.

Mfebe said Safcec is also surprised that the Auditor-General has not picked up any of these material irregularities.

“To the best of our knowledge, there is no adverse finding on the manner in which the bids have been done [adjudicated] in the past,” he said.

Treasury to meet with Sanral

Mfebe said immediately after writing to the acting chief procurement officer at National Treasury on Monday, the matter was referred to the chief director responsible for supply chain management.

He was assured during a follow-up on Tuesday that the acting chief procurement officer will be meeting Sanral on Wednesday to gain an understanding of what transpired in these bids.

Mfebe said Safcec will wait for feedback and a report from National Treasury to avoid a situation where South Africa is regarded as not being a bankable country and both local and foreign investors may be disincentivised from further participating in the construction of infrastructure in the country.

“There has been a complaint, especially from public sector leaders, that the private sector is on an investment strike.

“These are the reasons that explain why people with fluid capital that is readily available do not deploy it for projects that will help build the country.

“It is because of regulatory uncertainty,” he said.

“You waste your money, you prepare for the bids, which costs money, and then all of the sudden they are cancelle.”

‘Lack of understanding’

Cesa CEO Chris Campbell said there is a clear lack of understanding of the role of an independently appointed design engineer in the contractor tender adjudication process.

Campbell said the role of a design engineer is to provide independent advice to the client body acting as the owner’s engineer.

He stressed that the design or consulting engineer is distinctly separate from the contractor and is bound by a code of ethics and has huge risk exposure in performing this duty.

“In fact, an engineer in this position, found to be acting unethically, could put [their] company at risk of being expelled from Cesa and the individual responsible could be disbarred from providing such professional services by the Engineering Council of South Africa.

“The appointment of the consulting engineer, as the trusted advisor to the client, is distinct from that of the contractor, so there is no conflict of interest as alleged by the current board of Sanral,” said Campbell.

He added that Sanral, as a public sector entity, has successfully delivered on its mandate since its inception in 1993 with the support of independent advisory services from consulting engineers.

He said a consulting engineer can be involved first in the design of an infrastructure project, followed by tender adjudication analysis, and then possibly in providing site supervision services – all acting as the trusted advisor to the client body, especially when such public sector clients have limited specifically-experienced resources.

“Failing to address such capacity challenges within the public sector in this manner will have significant consequences [on] our ability to leverage infrastructure development as a catalyst for our economic recovery,” he said.

Listen to Sanral spokesman Vusi Mona explain why the tenders were cancelled (or read the transcript here):