The National Treasury has backed the South African National Road Agency (Sanral) board’s decision to cancel road construction tenders totalling R17bn.
This was the outcome of a Treasury review that was launched after internal fights between the Sanral board and management over the tenders.
Management has been accused of defying a board resolution that “engineering consultants will not be permitted to participate in the evaluation of tenders where they have done the design and drew up the specifications”.
The board says the resolution was aimed at preventing conflicts of interest on the part of the engineering consultants and collusion with bidders.
“The resolution was communicated to Sanral management and employees. Furthermore, the resolution was ultimately incorporated directly into Sanral’s supply chain management [SCM] policy,” said the agency’s spokesperson Vusi Mona.
The Treasury, in a report on the matter, agreed and said Sanral management had “deliberately” failed to effect the changes to the SCM policy as resolved by the board.
Although the SCM changes were not applicable when the tenders were advertised, the board's resolution was meant to be a control measure and had been communicated to management months earlier, the Treasury said.
The tenders included the N2 Wild Coast Mtentu Bridge; R56 Matatiele rehabilitation; work on the Ashburton interchange; improvements to the EB Cloete interchange near Durban; and open-road tolling for the Gauteng Freeway Improvement Project.
The Treasury found that they “did not adhere” to the board resolution and were thus in contravention of the Public Finance Management Act (PFMA). The tenders were cancelled in February after a Sanral board intervention.
“National Treasury found that the bid adjudication committee (BAC) that recommended the bidders is comprised of the Sanral officials and engineering firms. The BAC meetings were chaired by Sanral officials,” reads the report.
“The engineering firms also participated in the technical analysis of the bids, [and] the consolidated report that goes to the Sanral BAC consists of inputs from the engineering firms as well as Sanral officials.”
It is important to emphasise that the board proactively ensured that Sanral did not irregularly award approximately R17bn worth of tenders which involve public funds
— Sanral spokesperson Vusi Mona
The report raised alarm over how engineering firms appointed to design the projects and assist in drawing up specifications “happened to be in evaluation of tenders”.
The engineering firms should have been limited to designing the projects and compiling the specifications, not sitting on the technical evaluation committee that recommends which companies should be appointed to carry out the work, the Treasury said.
Sanral management was slammed for “serious violation of the ethical imperative” and breaching corporate governance.
The report concluded that “if management of Sanral had a different view with regards to the board resolution, that view ought to have been tabled at the board meeting prior to the evaluation of the bids”.
“It is important to emphasise that the board proactively ensured that Sanral did not irregularly award approximately R17bn worth of tenders which involve public funds,” said Mona.
“The board has also announced measures to ensure that the procurement process for the tenders in question is revised and has appointed the Development Bank of Southern Africa to manage the procurement.
“The tenders have since been readvertised and the process of ensuring that Sanral delivers the affected infrastructure projects is now in motion. Sanral is committed to good governance and to the proper utilisation of state resources.”
The board said it would ensure there were consequences for members of Sanral management who failed to comply with the board resolution and tried to circumvent the PMFA.
An external company had been appointed to conduct a probe, it said, but it was premature to name those under investigation.
The auditor-general’s report on Sanral, which will include the cancelled tenders, is expected to be released this week.
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