Johannesburg - The Constitutional Court’s decision to set aside government’s R10 billion contract to administer social grants will set a precedent for other state tenders where significant irregularities were found in the tender process.
So says Anthony Norton, lawyer for Absa subsidiary All Pay, who eventually convinced the Constitutional Court this week to overturn the massive tender.
Just over two years after All Pay took on the tender award in the Pretoria High Court, the Constitutional Court ruled that the contract between the SA Social Security Agency and Cash Paymaster Services (CPS) was invalid.
CPS was awarded the tender in January 2012 after tender committees spent nine months deliberating on it. The five-year contract allowed CPS to distribute social grants worth R500 billion to 15 million children, disabled persons, pensioners and war veterans on behalf of the agency – a unit of the Department of Social Development.
The agency must now initiate a new tender process within 30 days. The payment of existing grants must however not be interrupted. CPS, the current service provider, will continue to disburse grants until the agency decides whether to award a new tender after the tender process is re-run.
Norton this week told The Sunday Independent that the order sent out a strong message that “if there are going to be significant irregularities, there are going to be consequences”.
“In a country like ours, we are inundated with problems with public procurement. State institutions must be mindful of their obligations.
“That’s why this precedent is important. Even in the biggest of cases, there will be consequences,” he said.
While it had been a protracted matter, it is in the greater interest of the country as the tender affects the poorest of the poor, said Norton.
“The decision sets a framework and tone about the manner in which public procurement issues should be handled. You can’t let go. That's why the judgment is very important,” he said.
Norton said it was too early to give a definitive view on whether or not All Pay would sue the agency for damages.
“There is a strong likelihood that All Pay will participate in a new tender process. But it is still under consideration what additional action they will take,” he said.
The judgment was however an “absolute outright victory” for All Pay.
“We wanted a new tender process. That is what we asked for even though it was vehemently opposed by CPS and Sassa. All Pay argued that the award and contract was irregular. The battle was worth it. The victory goes beyond the facts and merits of this case.”
The Absa subsidiary had consistently argued that the agency was not fair, transparent or impartial when it awarded the tender to CPS in January last year.
According to the judgment, handed down this week, the agency had failed to ensure that the empowerment credentials of CPS were objectively confirmed.
And one of the bidders’ notices during the tender process did not specify with sufficient clarity what was required of bidders in relation to biometric verification and as a result only one bidder was considered.
The process was therefore found to be uncompetitive by the court.
Social Development Minister Bathabile Dlamini welcomed the judgment, saying there was already an advisory committee appointed to investigate and recommend to the department the best model for Sassa to take over the payment of social grants in 2017.
She said the court’s order was on the side of the poor in that it understands the role social grants play in the lives of vulnerable groups and can therefore not be disrupted