Social Development on tender allegations for social grants

Statement by Chairman of the adjudication committee on
allegations of corruption in the tender for social grants

3 March 2009

On Sunday, 1 March 2009, City Press in a front-page story titled “R70
billion tender canned” alleged that the tender was “canned” after a “series of
City Press exposes showing links between the bidders and the wife of Social
Development Minister Zola Skweyiya.”

The facts relating to the tender process are as follows:

* The South African Social Security Agency (SASSA) issued a Request for
Proposals (RFP) for the provision of a payment service tender on 23 February
2007. Nine bids were received in response to the Requests for Proposals
(RFP)

* Acting in accordance with the relevant Treasury Regulations, SASSA decided
to follow a two-stage tender process: a Bid Evaluation Committee (BEC) was
appointed, and an Adjudication Committee (AC) was also appointed to review the
findings and recommendations of the BEC, and to advise the Chief Executive
Officer (CEO) of SASSA on the appointment of a service provider for each of the
nine provinces of South Africa in respect of the tender

* The BEC was composed of senior public servants of SASSA and the Department
of Social Development, and project managed by SASSA. Given the enormity,
complexity, and high importance, of the tender, the BEC was assisted by
highly-skilled technical officials, and outside lawyers, whose services were
procured by SASSA in terms of the relevant procurement regulations. The
evaluation process itself took place over a period of many months during 2007
and 2008, and was characterised by strict security measures to ensure integrity
and confidentiality. All staff working on the project was required to complete
a declaration of interests, as well as an oath of secrecy, form

* Nine bids were received

* The bids were assessed in accordance with technical, financial, and Black
Economic Empowerment (BEE) criteria

* Following the BECs recommendations, the AC was required, in respect of
each province, to review the findings and recommendations of the BEC, to
confirm, reject or amend its findings or recommendations, to give written
reasons for its conclusions and to make a recommendation in writing to the CEO
in relation to the award of the contract for each province

* The AC itself was composed of two Directors-General, two Deputy
Directors-General appointed by Treasury, a senior, and a junior counsel.
Members of the AC were also required to comply with the relevant codes of
conduct for the public service, and for supply chain management
practitioners.

* The processes followed by both the BEC and the AC were audited on a
continuous basis by the Office of the Auditor-General (A-G). The A-G’s report
is annexed to the AC’s report to the CEO of SASSA.

* The only people who were entitled to attend meetings of the AC were
members of that committee, members of the secretariat who provided
administrative support, and members of the BEC or technical team upon
invitation by the AC. Apart from the first meeting where the CEO explained the
AC’s terms of reference, the CEO never attended any of its meetings, nor was he
invited to attend any meeting. When the AC’s report was handed to the CEO at a
formal ceremony, this was done in the presence of the Auditor-General

* The strategic intent of the payment tender was to ensure that service
providers appointed in the nine provinces provide a standardised payment
service in line with norms and standards of service delivery approved by
government in 2001, to ensure a cost-effective service with the maximum
transfer of risk to the private sector and to address the principles of BEE

* Following extensive engagement with the BEC, the AC was of the unanimous
view that none of the strategic objectives of the payment tender were met by
any of the recommendations by the BEC in its report to the AC, payment services
offered did not provide standardised services, payment services offered did not
conform to SASSA’s norms and standards of service delivery, payment services
offered were not cost-effective, the AC was not satisfied that the proposed
awards ensured maximum transfer of risk to the private sector and last, the
principles of BEE were either ignored or at best undermined. The AC unanimously
concluded that these problems rendered the entire evaluation process unreliable
and placed SASSA at huge risk

* The AC unanimously rejected the BEC’s recommendations, and recommended to
the CEO of SASSA that no bidder be awarded the tender

* The AC was at all material times satisfied that the BEC conducted itself
in a proper manner. Given the enormous complexity of the many issues to be
resolved, the BEC was also assisted by technical experts, and lawyers. At no
stage of the evaluation process was there any hint of any corruption, or undue
influence being brought to bear on the process. The adjudication process itself
comprised mainly deliberations amongst members of the AC in closed sessions,
and engagements with the BEC, and their technical and legal support teams. The
SASSA project team ensured at all material times that secrecy and
confidentiality were maintained. As indicated above, all processes were audited
by the Auditor-General every step of the way

* Accordingly, it is with much surprise, and deep disappointment, that one
reads in the City Press article that the tender process was somehow infected
with corruption, or attempts to corrupt, as well as incompetence. There is
nothing further from the truth. We therefore call on City Press to
unconditionally retract its allegations, and to publish an open apology to the
Minister, and his wife at the earliest opportunity.

The Department of Social Development has approved that the detailed report
on the process be made public.

Enquiries:
Zanele Mngadi
Cell: 082 3301148

Issued by: Department of Social Development
3 March 2009

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