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CPS scores SASSA contract, again

Simnikiwe Mzekandaba
By Simnikiwe Mzekandaba, IT in government editor
Johannesburg, 06 Mar 2017
Serge Belamant, chairman and CEO of Net1.
Serge Belamant, chairman and CEO of Net1.

The social development department and the South African Social Security Agency (SASSA) have reportedly locked in a new contract deal with Cash Paymaster Services (CPS), the same company it previously accused of abusing its position as the contractor handling social grant payments.

In an interview on 702 this morning, Serge Belamant, chairman and CEO of Net1 UEPS Technologies, of which CPS is a subsidiary, said his company has agreed on two important issues with the department and SASSA.

According to Belamant, these are the commercial terms going forward and what the company will do for SASSA in terms of the technical processes it currently performs that will allow the agency to bring the payment of social grants in-house.

"These terms as far as I'm concerned were agreed on during the meeting that consisted of SASSA personnel, CPS personnel and the Department of Social Development. On Friday afternoon, we offloaded these terms to our respective attorneys for them to draft and finalise the service level agreement, which is to be signed early this week.

"So as far as I'm concerned, unless the processes that SASSA has to go through somehow go wrong, there will be absolutely no reason whatsoever why the service agreement should not be signed and therefore there should be no reason why social grant beneficiaries should not be paid on 1 April."

Deal or no deal?

CPS, a division of Net1, administers and distributes social grants in SA after it was awarded a five-year, R10 billion tender in January 2012.

That contract, however, was declared invalid by the Constitutional Court (ConCourt) in 2014, after it emerged that irregular tendering processes were followed.

Over the years, the relationship between the department, SASSA and CPS has soured as allegations of unlawful deductions and corruption persisted.

Despite being at odds with the Net1 subsidiary, the department and SASSA have been locked in negotiations with CPS to discuss the terms and conditions of a new contract, as the agency attempts to avert social payment disaster.

On Friday, a statement issued by the department noted SASSA and CPS had reached an agreement.

Minister Bathabile Dlamini insists beneficiaries will receive their social grants on 1 April. (Photo source: GCIS)
Minister Bathabile Dlamini insists beneficiaries will receive their social grants on 1 April. (Photo source: GCIS)

During a media briefing yesterday, minister Bathabile Dlamini insisted social grant beneficiaries will be paid on 1 April but failed to clarify the terms of the agreement reached with CPS.

An agency representative said there is no deal at hand. "A deal will mean a signed-off contract and a service level agreement and a signed-off contract will entail the deliverables and the cost structure, therefore there is no deal in this regard. We are still going to follow our internal processes that will lead to the conclusion of this process with the signing of the contract," said the SASSA representative.

However, Business Day reports Belamant says CPS and SASSA have agreed to the terms of a new two-year contract.

The newspaper notes Belamant would not provide details but said the fee charged each month for each of the recipients would be considerably below the R25 mentioned in the media.

Before a new contract can be finalised, the terms have to be agreed to by National Treasury, adds Business Day.

Not our problem

While National Treasury has remained mum on the signing of the "new two-year deal" between SASSA and CPS, on Friday it issued a statement noting it is not part of negotiations with CPS.

It was previously reported that finance minister Pravin Gordhan is against the reappointment of CPS as the service provider for the distribution of social grants.

Treasury said in a statement: "Following several media enquiries about National Treasury's participation in the negotiations with CPS for the contract for payment of grants, National Treasury wishes to clarify that it is not part of this process."

It adds the Department of Social Development had requested National Treasury's participation; however, National Treasury advised that such a request cannot be favourably considered for the following reasons:

* The procurement regulatory framework delegates this responsibility to the accounting officer of the respective department.

* SASSA and the Department of Social Services have announced publicly that at some point they will approach National Treasury to regularise the process under way.

* In the light of the above, the participation of National Treasury at this stage will amount to a conflict of interest.

* National Treasury remains committed to assist when required to find solutions within the confines of the constitution and the procurement regulatory framework to ensure the deserving beneficiaries of the grants do not suffer.

Trouble brewing

Meanwhile, it has been speculated that a company linked to the infamous Gupta family will take over SA's social grants system once the two-year contract with CPS is up.

Reports surfaced that former ANC member of Parliament Vytjie Mentor claims SA's "social grants system is destined to end up in the hands of the Gupta family unless urgent intervention is taken".

Mentor took to her Facebook page and said: "I am reliably informed that a Gupta family company is going to be appointed on the 11th hour to distribute grants. They will do the biometrics cards too."

As the social grants debacle unfolds, there is still the issue of the legality of pursuing business with the same distributor whose current contract was deemed invalid by the ConCourt.

After numerous failed attempts, the department and SASSA finally filed a supplementary progress report requesting the ConCourt to consider extending the CPS contract.

No further information on the filed report has been provided by Dlamini's department or SASSA.

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