The R20m ‘pass the parcel’ tender

The Cornubia Housing Project. Photo: Kopano Tlape/GCIS

The Cornubia Housing Project. Photo: Kopano Tlape/GCIS

Published Jun 24, 2016


Durban - Opposition parties have cried foul over a lucrative “sweet-heart deal” that saw a major construction company - PG Mavundla Engineering - cede a R20-million city contract to a “politically connected” company because of “financial constraints”.

The company is owned by Philani Mavundla who has been behind several multi-billion-rand projects including King Shaka International Airport and Sibaya Casino.

Mavundla, a former Greytown mayor who built the mall in the town and famously did not take a salary during his term, had also offered to pay the bill of President Jacob Zuma’s Nkandla homestead.

This week, ANC-led councillors in the eThekwini municipality “noted” a report by housing officials who used a Section 36 contract - that by-passed normal tender regulations - to allow PG Mavundla Engineering to cede a R19.9m contract to build 126 double-storey top structures at Cornubia housing project to another company.

The DA claimed the owner of the second company was “politically connected”.

Repeated phones calls and a text message to Mavundla were not returned by the time of publishing.

According to a report to the municipality’s executive committee, PG Mavundla was awarded the contract to build the top structures but sub-contracted the work to another company.

“The main contractor had difficulty in bringing the contract to completion due to financial constraints and has subsequently withdrawn from the tender. When the award was finalised the Human Settlement Unit was unaware of the financial constraints that the main contractor was going through,” the report said.

The report said officials investigated various possibilities of not stalling the project because of the developments and decided to cede the tender to the sub-contractor as they had already done 20% of the work.

DA caucus leader, Zwakele Mncwango, however did not buy the explanation.

“How can a big company like PG Mavundla have (financial) problems?” he asked.

“We are now having someone being introduced using section 36 and it is not really clear what criteria was used to award this company the contract”.

Mncwango said the owner of the second company was politically connected.

“Giving a tender via section 36 without any process being followed cannot be right. You cannot expect us to say fine’.

“It needs to be explained to us what went wrong and why this company (PG Mavundla) failed to complete this job. And what criteria is being used to give this other company the contract,” he said.

DA councillor, Heinz De Boer told the Daily News it was clear that the awarding of the contract was nothing more than a “sweetheart” deal between the two construction companies. He told the executive committee it was obvious there were strong political links in the deal.

“What concerns us is that section 36 can be used wrongly. And even though Cornubia is important and we need to build houses quickly, we need to follow processes because it is irregular to use section 36 anyhow. We need to be told what the criteria was used to appoint this company. We need to know this,” he said.

Nigel Gumede, chairman of the housing committee, said it was “unfortunate” that the DA believed the company being awarded the section 36 contract was linked to politically connected individuals.

“If they read the report, it asks if we can go back to the original people who tendered and ask if we can go to the six and choose or we go to the one on the ground.

“The report does explain the groundwork already covered. It says that out of 126 units, 109 foundations have already been done by the company and out of 126 units, 87 on the ground floor masonry has already been done. What motivates us to be more lopsided towards the company is not about whether they are connected, we looked at the amount of work the company has already done. The best thing is to formalise this because they are on the ground and they know what they are doing. That is the reason we have been persuaded to take this decision,” he said.

Zandile Gumede said the city’s intention was to fast-track the building of the units at Cornubia as the city faced a major housing backlog.

She said if the DA felt there was any wrongdoing in the contract they could lodge a complaint with the city’s integrity unit.

Gumede said none of them knew the company the DA alleged was politically connected and they were only making a decision based on a report from the city’s housing officials.

Speaker Logie Naidoo said it was important the city eradicate informal settlements and transit camps. “We don’t want delays and we don’t have additional funding. We are saying it is convenient for us (to cede this contract) and it won’t affect service delivery.

“The new company is there already and there is no delay in moving people from the transit camps to the houses in Cornubia. That for me is the gist of the matter,” he said.

Daily News

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