AllPay seeks suspension of social grant tender

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Johannesburg - The reality of the implementation of the R10 billion contract to distribute social grants nationally in South Africa was very different to the proposal offered by winning bidder Cash Paymaster Services (CPS), Absa AllPay argued in the Constitutional Court yesterday.

CPS, a subsidiary of listed Net1 UEPS Technologies, had not implemented the requisite biometric verification technology in any significant way at all, yet the lack of biometric capability was the reason other bidders such as AllPay were excluded during the bidding process, Absa AllPay senior counsel Gilbert Marcus argued.

“Now we’re told there will be a phased-in implementation process. This was done [at the beginning of] February on a three-days notice to beneficiaries,” Marcus said.

This was one of several arguments AllPay gave during the morning session to boost its argument for the court to suspend the contract for the social grant distribution and order a new tender process to appoint a new contractor.

The court is weighing arguments to help it determine a just and equitable remedy after it found last November that the award of the contract to CPS in 2012 was unlawful.

Marcus also told the court that deductions were being made from grants by CPS in excess of the 10 percent that was allowed by law. He said raw statistics disclosed by CPS revealed that only 44 percent of the more than 10 million beneficiaries received 100 percent of their grant. “What the statistics don’t reveal is the impact of these deductions on grants that are already meagre,” he added.

David Unterhalter, also for AllPay, argued that CPS reaped a rate of return of 144 percent on the five-year contract compared with the market average of a 13.5 percent rate of return.

“This contract goes beyond a considerable rate of return,” Unterhalter said.

The legal battle started two years ago after AllPay launched an objection to the award in the North Gauteng High Court. It said the tender process was flawed, including the composition of the bid committee. It also alleged that CPS failed to submit separate provincial bids and that the SA Social Security Agency (Sassa) failed to assess the capability of CPS’s empowerment partners to implement the tender. Sassa and CPS challenged the allegations.

Arguing in its defence yesterday, CPS said “Sassa’s decision was a rational and fair decision. AllPay’s attempts to isolate five grounds of review, none of which overcomes the fact that the decision under challenge was rationally and fairly taken, are contrived.”

While the high court did not set aside the contract, it determined that the process was invalid. The Supreme Court of Appeal overruled this but last November the ConCourt found that the tender was constitutionally unlawful because the bidders’ notice was vague.

Sassa and CPS, which has maintained innocence, have asked the court to allow the contract to run to completion to avoid any impact on the beneficiaries.

Corruption Watch, an independent watchdog of public funds, has requested Sassa to explain whether it investigated certain irregularities that were raised in previous submissions to the court. The Centre for Child Law has also approached the court to protect the interests of beneficiaries.

Judgment was reserved. - Business Report


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