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SASSA to publish new tender soon

Staff Writer
By Staff Writer, ITWeb
Johannesburg, 22 Sept 2014
Bids for a R10 million social payment grant tender open next week.
Bids for a R10 million social payment grant tender open next week.

The SA Social Security Agency (SASSA) expects to publish a new tender to handle payment of social grants in the second week of next month.

This comes after the Constitutional Court ruled the tender invalid towards the end of last year and then, in April, said the agency would have to start afresh with the R10 billion deal. The tender is currently held by Net1 subsidiary Cash Paymaster Services (CPS).

Net1 is still confident of winning the deal, despite its current contract being marred by controversy after it lost a lengthy legal battle, launched by Absa unit AllPay, which claimed irregularities in the process. The deal has also come under investigation by the US Securities and Exchange Commission and the Department of Justice's Criminal Division to determine whether there was bribery involved in the R10 billion contract with SASSA.

'Illegal' deductions

In addition, the Department of Social Development - SASSA's custodian - has alleged debit deductions from beneficiaries' accounts to other Net1 companies increased after CPS won the bid.

Net1 has maintained all transactions are above board, saying in a recent statement it has demonstrated the reliability of its financial products, collection systems and processes, and the security technology, and no unlawful deductions were made.

"The banking industry is experiencing a general problem with unauthorised debit orders. This has been well documented by the media in recent times. Grant beneficiaries, who all have bank accounts, are also at times affected by unscrupulous entities who execute unlawful debit orders. CPS is working tirelessly to eradicate the risk to grant beneficiaries through biometric technology," the company said.

Of the R9.9 billion in social grants distributed monthly, around R526 million - or 5.32% - is being collected through debit order instructions that have been authorised by card-holders, says Net1. It adds all complaints around unauthorised deductions have been unrelated to Net1 or its companies.

In a statement to shareholders today, the listed group said SASSA had filed a progress report on the status of a new tender process with the Constitutional Court, indicating the new bid should be out in the week of the 6 October to 12 October. SASSA had until 5 June to implement a new tender process and has, since then, set up a bid specification committee. It anticipates the entire process of awarding a new tender to take as long as nine-and-a-half months, its court filing shows.

According to the ruling, if SASSA's request for proposals, which tests the market, shows it is not tenable to issue a new tender, it can continue to use Net1's services.

The court's declaration of invalidity was based on two grounds: SASSA failed to ensure Net1 unit CPS's empowerment credentials were objectively confirmed, and the second bidder notice did not give enough clarity around the biometric requirements, rendering the process uncompetitive.

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