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Parliament – After weeks of confusion and conflict about plans to pay welfare grants to more than 17 million people from April, the South African Social Security Agency (Sassa) has confirmed that it would seek a new contract with the current service provider, Cash Paymaster Services.

Sassa's project manager Zodwa Mvulwani on Tuesday told Parliament's watchdog public accounts committee that the controversial approach to CPS would technically entail a new contract, not an extension of the existing contract, which could only be done with the permission of the Constitutional Court. "We are going to negotiate starting from tomorrow," she said.

"We will be negotiating with the service provider for a new contract."

Mvulwani confirmed that Sassa would not to go the Constitutional Court to seek approval for an extension of the contract the court declared invalid years ago. It would, however, still approach the court to file a "supplementary report" detailing Sassa's difficulty in taking over grant payments itself beyond March 31, when the court's indulgence in letting the CPS contract run so as not to compromise the poor, ends.

The director-general of the department of social development, Zane Dangor, said he expected the negotiations with CPS to conclude by Friday.

Dangor said the negotiations would be led by Mvulwani, in the absence of CEO Thokozani Magwaza who is on sick leave.

He said he had invited National Treasury to send a member of staff to the talks with CPS.

Finance Minister Pravin Gordhan's department has been thrust into a pivotal role in the grant payment debacle as the last-minute negotiations Sassa is planning will involve only one bidder. This is against public finance management rules, and Dangor said National Treasury would be asked to make a special exception for Sassa given the urgency of the situation.

"You are allowed to deviate for one bidder, but it can only be done with the permission of National Treasury."

The chairman of Scopa, Themba Godi, commented that Sassa had had years to prepare itself to take over the grant payment function but had failed to do so, and it was clear that the emergency it now faced to ensure those dependent on welfare receive their grants from April was self-made.

"It was clearly planned out to create an emergency and to hold a gun to South Africa. The critical political question is why?"

MPs across the political spectrum deplored the absence of Social Development Minister Bathabile Dlamini, who favours an extension of the CPS contract and has dismissed proposals from National Treasury that would see commercial banks and the Post Office be brought in to pay grants as an interim measure.

They were sceptical of assurances from Mvulmani that Sassa had not for some time already been negotiating with CPS, despite assurances that it was entertaining five alternative options put forward by National Treasury in a bid to avert a crisis come April.

Democratic Alliance MP, Tim Brauteseth, noted that Magwaza sent an email to National Treasury on February 7 in which he said that CPS's rates for payment of a grant could increase from the current R16.44 to between R22 and R25 in the future.

"Where do these figures come from?" he asked.

"You said you were negotiating for the first time from tomorrow?"

He added that were CPS to enter a contract based on those prices, its total value would come up to R3.5 billion, whereas the budget allocation for grant payment for the coming financial year had been fixed at R2.6 billion.

Mvulmani responded that the figures were an indication of what could be expected were CPS given inflation-related pricing in terms of an extended contract. However, this was technically not the case as Sassa had decided not to seek an extension, which would have seen it approach the court, but a new contract.

Brauteseth suggested that the demand for a deviation would see Finance Minister Pravin Gordhan "held hostage" by a crisis not of his making.

Sassa was poised ten days ago to approach the Constitutional Court with a range of potential options to follow from April.

However, it never filed an application and instead reports surfaced that Dlamini had sidelined Magwaza and then eventually suspended him last week. Dangor told the committee that, in fact, he was on sick leave for seven days because of hypertension.