R10bn tender ‘cooked’

Published Apr 15, 2012

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A recording of a secret meeting has exposed how the R10 billion social grant contract was allegedly manipulated and three government officials, who helped to illegally influence the tender, received R500 000 each.

The controversial contract, which has sparked ructions between politicians, bureaucrats and big corporates, was awarded to Cash Paymaster Services (CPS) after Absa’s contract was not renewed.

Absa – through its subsidiary Allpay – and other bidders are challenging the decision to award the contract to CPS.

The meeting was held at an undisclosed location shortly after the SA Social Security Agency (Sassa), an agency of the Social Development Department, awarded the controversial tender to dispense grants countrywide.

According to the official caught on tape, Sassa shifted biometrics verification from “preference” to “requirement” at the eleventh hour to “kill off” CPS’s competitors and eliminate them from the race on technical grounds.

Biometrics verification is the use of fingerprints to verify the authenticity of grant recipients.

The agency’s official records, minutes and other documents showed that biometrics was not a specific requirement when Sassa first announced the bid specifications during the request for proposals.

The bid adjudication committee had raised concerns about the changes at its November 25, 2011 meeting.

The official can be heard on tape claiming that bureaucrats who participated in the drafting of the technical report and helped justify the disqualification of CPS’s opponents were rewarded with R500 000 each.

Reports of the bid evaluation and adjudication committees revealed that CPS’s main rival – Absa’s Allpay – was eliminated from the final stages of the adjudication process for failing to meet technical requirements.

But Serge Belamant, the CEO of CPS’s parent company, Net1 UEPS Technologies, denied that the company benefited from the change of rules.

He said “arrogant” Allpay “deserved to be eliminated” because of its “sub-standard proposals”.

Lumka Oliphant, spokeswoman for the Social Development Department, said: “This is not a new story. We stated then and we are saying it again that these are all matters before the court and we will deal with them next week when the case resumes.”

The official, who was recorded at a restaurant, said Sassa’s sudden demand for biometrics verification resulted in bidders such as Standard Bank and FNB withdrawing from the race.

After Sassa changed biometrics verification from “preferable” to “requirement” in a letter dated June 9, 2011, Allpay’s technical points dropped to 58 from 70.

This prevented the company from proceeding to the final stages of the adjudication process, known as the financial evaluation, where it would have squared up with CPS on pricing.

After meeting technical requirements, bidders are awarded 90 points for pricing and 10 for ownership by historically disadvantaged individuals.

The elimination of Allpay on technical grounds left CPS in a one-man race, because it was the only one that scored the minimum 70 points required for technical solutions. CPS eventually won grant contracts across all provinces after scoring 93.72 points.

The source claimed Allpay were eliminated on technical grounds out of fear that they might beat CPS on prices.

“What that (the biometric requirement) effectively did is that at the very late stages of the process, it changed the rules of the game. All of a sudden now, people were being told to master biometrics. They are using biometrics as a key thing to kill off all the bidders, because CPS are claiming that they are the only ones that are doing biometrics… It first killed everyone because it said you needed biometrics for every form. So, immediately the banks withdrew,” the official can be heard saying. - The Sunday Independent

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