The tender for its electronic payment system is unlikely to be awarded by April 2010, says the Department of Social Development.
In April, the South African Social Security Agency (Sassa) said it would start the tender process for an automated payment solution in 12 months. However, the Department of Social Development has noted the process may only be completed once the agency has been cleaned up.
The agency is facing an investigation by the Special Investigations Unit (SIU) into alleged misuse of funds managed by pay point service providers.
Minister Edna Molewa also noted CEO Fezile Makiwane could face disciplinary measures. In July, he was placed on special leave pending an investigation into alleged irregularities. Subsequent to that, the minister informed Makiwane of possible disciplinary measures against him.
The tender, which is worth R7 billion for a period of three years, was cancelled in November 2008, due to a lack of clarity in certain requirements in the request for proposals. The tender marked an attempt by the department to co-ordinate payment for social grants nationally.
Currently, provincial departments are responsible and accountable for the administration and payment of social grants. All departments outsourced payment services to independent contractors, but there are problems with variations in the existing payment systems.
“We will follow up the allegations made by the SIU, and I applaud the CEO for recusing himself from all aspects of the organisation to ensure the smooth running of the probe. It is important to note that no one has been found guilty of any misconduct at this point, so Mr Makiwane is innocent until proven otherwise,” Molewa said.
The payment of social grants was taken over by Sassa, which said it had been awarded special approval from National Treasury to conclude 12-month contracts with its current service providers. The agency says it will sign service level agreements with these service providers, without having to go through a tender process.
However, the minister has indicated her department will deal with claims of tender irregularities before any decisions are taken.
In October 2007, the SIU investigated cases of fraud, corruption and maladministration that plagued the social grant system. Its probe revealed that since it started in 2005, close to R690 million had been paid out to fraudulent claimants. A total of 288 682 people who were illegally receiving grants was removed from the system. According to the unit, 21 587 of those were public service people who received grants illegally.
Troubled history
Sassa issued a request for proposals for the provision of a payment service tender on 23 February 2007. Nine bids were received in response. The evaluation process took place over a period of many months during 2007 and 2008.
The department then announced that none of the strategic objectives of the payment tender were met by any of the recommendations by the bidders. It said payment services offered did not provide standardised services, did not conform to Sassa's norms and standards of service delivery, and were not cost-effective.
Sassa then decided these problems rendered the entire evaluation process unreliable and recommended to its CEO that no bidder be awarded the tender. The tender has yet to be awarded.
Other options
In 2002, former minister Zola Skweyiya expressed his preference for the Post Office as government's service provider, saying it was a matter of policy.
In May 2007, Sassa and the South African Post Office, supported by the departments of social development and communications, respectively, entered into a memorandum of understanding (MOU). In terms of the MOU, Sassa and the Post Office agreed to further their collaboration and leverage each other's expertise, with the key short-term focus being a partnership in the implementation of a back-office system in the social grants payment process.
While Skweyiya remained constant in his commitment to the Post Office, current minister Molewa has yet to reveal how she wants to proceed with payout systems. However, she has said the department will deal with the discrepancies in the manner in which social grant payments are being handled by various service providers in the different provinces.
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