Free State tender flawed

The province allegedly did not follow proper procedure in awarding the multimillion-rand tender for 38 Free State government Web sites.

Nicola Mawson
By Nicola Mawson, Contributor.
Johannesburg, 22 Mar 2013
Allegations have emerged that the award of the multimillion-rand tender for 38 Free State Web sites was not procedurally correct.
Allegations have emerged that the award of the multimillion-rand tender for 38 Free State Web sites was not procedurally correct.

Allegations have emerged that the Free State province did not follow National Treasury stipulations when awarding a multimillion-rand deal to develop 38 Web sites, and its tender process is flawed.

However, the province says it followed treasury rules when evaluating bids for the sites, and will investigate the tender to determine whether it received value for money.

Earlier this year, finance minister Pravin Gordhan stated there would be "a comprehensive review of expenditure, focusing on both spending controls and value for money in government programmes and agencies".

The province announced the award of the contract in February. The 38 Web sites, built by a consortium of Cherry Ikamva ICT Jugganaut, have officially cost the province around R47 million over two financial years, although World Wide Worx MD Arthur Goldstuck puts the expense at R97.8 million, based on the vague three-page award announcement.

Industry insiders have argued that the province did not get value for money and that the sites are riddled with security flaws.

Functionality evaluation

The Democratic Alliance's provincial leader, Patricia Kopane, says there are "indications that there may have been serious irregularities in the awarding of the tender".

Caird, an empowerment compliance firm that also interrogates the supply chain, argues that a treasury supply chain note was ignored during the process. Paul Janisch, who manages Caird, alleges this makes the "whole process illegal".

Janisch explains the second phase of the evaluation of the bid, based on the Free State's initial response to ITWeb, involved evaluating the bids on functionality. Two unsuccessful service providers failed to score a minimum of 18 out of 40 points based on functionality, which included the proposed framework of content, technical capacity, business plan and project proposal and efficiency gains, according to the province.

However, Janisch argues that treasury prescribed a process which stated that functionality must be ascertained at the outset and before evaluation is done on price. Those that do not meet the functionality must be rejected on that basis, before they go through to the evaluation of price, which is a treasury rule that came into effect for all bids issued after 15 September 2010.

Janisch argues that the Free State did not follow this process in its bid, advertised in June 2011, which means the province did not adhere to state supply chain processes. "This is a bid that is procedurally flawed and that's just on the face of it."

The treasury note states evaluation of bids must first be evaluated on functionality, and bids that do not meet requirements must be disqualified. After that, qualifying bids are evaluated in terms of the 80/20 or 90/10 preference points systems, where the 80 or 90 points must be used for price only, and the 20 or 10 points are used for historically-disadvantaged individual ownership.

Janisch adds that, as the bid was worth more than R500 000, it would have been evaluated on the 90/10 system.

Fully compliant

However, Mondli Mvambi, the province's director of media strategy and liaison, says the bid documents and the process followed to evaluate submitted bids complied fully with treasury's instruction note. "We hope this helps to clarify the matter."

Mvambi adds that, as premier Ace Magashule has said the province will look into whether it received value for money, "we can no longer comment on the issue until all internal processes that the premier has instructed on are complete".

Meanwhile, the public protector has received two complaints related to the sites, while the auditor-general is also set to probe the contract.

Despite repeated attempts by ITWeb, treasury failed to comment on the allegations that the province breached its rules.