Picture: http://www.magalieswater.co.za
Johannesburg - The R280 million tender scandal at Magalies Water involving “improper procurement processes” has temporarily scuppered a crucial pipeline construction programme at the state-owned entity (SOE).

Documents seen by The Star show how the SOE allegedly flouted procurement best practices to - according to senior sources - favour a construction company that did not meet the key tender requirements for the building of the Moretele South Water Supply Pipeline.

The pipeline construction has been interdicted by a losing bidder, Umso Construction, on alleged improprieties committed in the bid-awarding process.

Murray & Dickson Construction (M&D) was appointed in July for the pipeline construction at a bidding price of R282112295, which was not the final amount listed for M&D on the final list of the 22 bidding firms, after the closing date and time.

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M&D’s bidding price on the final list was R294099607.

Rukesh Rughubir, the chief executive of M&D, said he would not comment as the matter was before the court, adding that the company “will deal with this matter in an affidavit to be filed”.

“M&D deny any allegations whatsoever of impropriety,” Rughubir emphasised.

But sources maintain that “there were shenanigans in the tender appointment”, as M&D was not the preferred bidder to build the pipeline because the weighting for the tender was price (90) and BEE (10).

Three companies allegedly had cheaper bids than M&D at the close of the tender.

The Star has seen two covering letters to tender documents from M&D, where the first document has the amount of R294099 607 as its bidding price.

However, a second tender document from M&D - which senior sources assert was “sneaked” into Magalies Water after the tender was closed - has a paragraph “inserted”, which states that M&D would grant Magalies Water “a 5% discount (excluding VAT, contingencies and provisional sums) on our tendered amount”.

This, M&D’s contracts director PJ Naidoo added, was because it had “completed many successful contracts with Magalies Water, our good experience with prompt payment, and our view that Magalies Water is a low-risk client to (us)”.

But sources claimed that the tender letter with the “5% discount” paragraph in it was introduced after the tender’s closing date and time in order for M&D to lower its price for it to be awarded the tender.

The sources’ claims appear to be underscored by a note submitted by Pro-Plan - a consulting engineering firm that evaluated all bids - where Pro-Plan seemed unsure as to where and when the discount provision was introduced.

Pro-Plan, in the note seen by The Star, could not confirm the existence of the discount provision “and could not find the qualification letter in the hard copy made of the original tender documents. It is proposed that the qualification be confirmed should (Magalies Water) consider to appoint this tenderer (M&D).”

However, M&D’s awarded price of R282112295 was still not the lowest price for the pipeline build, as two other companies still had cheaper prices than M&D.

Meanwhile, acting chief executive at Magalies Water Sandile Mkhize confirmed that the SOE had been served with an application to interdict the tender by a losing bidder, saying the entity could not comment as the matter was sub judice.

Mkhize added: “Magalies Water is aware of certain contractors who attempted to influence the process, and these were rejected outrightly

"We welcome your queries and would gladly give you all the information once court processes have been concluded.

"We will avail all the documentation, including the entire evaluation process followed, once we are cleared to do so.”

Umso Construction's lawyers were finalising their response, which was expected on Tuesday.

The Star