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KZN Department of Health’s processes, policy implementation questioned as security companies sue for R24m over breach of contract

LK Security and Sharks Protection are taking the department to court over a breach of a contract signed in November 2014.

LK Security and Sharks Protection are taking the department to court over a breach of a contract signed in November 2014.

Published Mar 24, 2022

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DURBAN - Two security companies are suing the Department of Health in KwaZulu-Natal for more than R24 million for breach of contract.

The sheriff of the Pietermaritzburg High Court issued the summons to the department last Thursday.

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LK Security and Sharks Protection are taking the department to court over a breach of a contract signed in November 2014.

The department had agreed that both security companies would provide guarding services to hospitals in the province on a month-to-month payment basis.

In November 2017, before the contract expired, the department agreed to extend it, also on a month-to-month basis, with the understanding that the department was facing challenges replacing the current service provider. The department was also in the process of finalising the bidding process for the provision of security services.

Three years later, according to the summons, the department had failed to conclude its processes owing to appeal papers being lodged against the bidding process, seeking to replace the contract with LK Security and Sharks Protection. Thus the department contractually committed to yet another month-to-month extension.

The tender process to replace the two security companies was tainted and challenged at a Bid Appeals Tribunal in 2019, where it was found that the process was unlawful and invalid, and should be started all over again.

In the combined summons, the department is said to have created an expectation that LK Security and Sharks Protection would continue to provide their services until such time that the bidding process was properly carried out.

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The contractual breach occurred at the end of May last year, when the department allegedly illegally awarded a contract and removed the companies from the sites where they were providing security services.

Sharks Protection had made attempts to obtain an interdictory order against the decision in order to bring to the attention of the department the alleged arbitrary nature of its decision to terminate the existing contract without following due process.

The department’s supply chain management director, Khondlo Mtshali, filed answering affidavits, opposing the matter being dealt with on an urgent basis, citing that Sharks Protection would still be able to cover its losses if an order was not granted in its favour.

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As a result, the two companies argued that they had been subjected to prejudice and financial loss, which they continue to bear the brunt of, resulting in a claim of R12 685 345 for past loss of income for six months and prospective loss of revenue for six months.

The department was given 20 days to file answering affidavits.

KZN Health spokesperson Ntokozo Maphisa said the department could not comment as the matter was sub judice.

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The DA’s spokesperson on health, Dr Rishigen Viranna, said the issue of service providers suing the department had been raised with the portfolio committee countless times.

“The department’s supply chain management is the reason it received a qualified audit. It has been an issue raised with the portfolio committee that the Department of Health has no structure for service provider contracts, whereas there should be regular tender processes.

“Contracts should be regularised to ensure that the department does not accrue irregular expenditure. Billions could be saved with proper planning. At the moment, there is no value for the money it spends on contracts. Again, it is a failure with the internal processes of the department,” Viranna said.

IFP spokesperson for health MPL Ncamisile Nkwanyana urged the department to implement policy positions it pronounced on before it was unable to recuperate financial losses.

“The department runs the risk of never recovering from the mismanagement of funds, as it continues to take money out of the health-care purse.

“It is apparent that the MEC has a lot to say on policy position, yet there is no implementation. That needs to change. It begins with these irregular contracts,” Nkwanyana said.

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