A multibillion-rand tender for the supply and implementation of a nationwide electronic payment system for the South African Social Security Agency (Sassa) has been scrapped.
This comes after concerns were raised about the tender evaluation process, as well as a lack of clarity regarding certain of the requirement outlines in the request for proposals (RFP).
The large-scale payment service tender, valued at about R21 billion - R7 billion a year, over three years - was announced last year and nine companies had been short-listed. The RFP called for the creation of a solution that would “ensure efficiency and effectiveness of service delivery operations, reduce the cost of payment and related services and reduce fraud, corruption and leakage”.
However, last month Sassa CEO Fezile Makiwane sent a “Bidders Notice 11” to the companies vying for the contract, warning them the bid recommendation committee had advised that no award should be made in respect of the tender and that a fresh tender process should commence.
Yesterday, Makiwane informed bidders of his final decision not to award the tender and to terminate the procurement process. He also said he would defer the decision about starting a fresh tender process.
The decision to suspend the tender is based on several procedural flaws that have been identified.
According to NET 1 UEPS Technologies, one of the short-listed bidders, Sassa says a number of the bid evaluation technical criteria, specified in the RFP, are vaguely formulated and resulted in a high degree of subjectivity in the decision-making process and inconsistent scoring of bids.
Legal risk
Uncertainty and ambiguity of the RFP regarding payment solutions based on multiple payment channels resulted in an unfair and uncompetitive bidding process; while the objectives of the procurement process, relating to submission of performance guarantees by bidders, could not be achieved.
Furthermore, due to the lack of clarity in the RFP regarding the measurement of preference points, an objective of the RFP, namely the advancement of broad-based black economic empowerment, could not be achieved.
Sassa also stated that evaluating and adjudicating the payment service tender, notwithstanding the serious flaws identified in the RFP and bid evaluation process, would be inconsistent with the application of a fair, transparent, equitable, cost-effective and competitive procurement system. This would expose Sassa to a significant degree of legal risk.
The agency further argued that a decision on whether to commence a fresh tender process will require further consultation and consideration of various factors. These include the terms, evaluation criteria and specifications for a new tender, the envisaged payment solution and conditions for the acceptability and evaluation of bids, which may be based on alternative payment models.
"Due to the protracted process that Sassa undertook, this outcome is not in any way surprising," says NET 1 UEPS chairman and CEO Dr Serge Belamant.
“The outcome of the Sassa tender process clarifies our operating margin expectation for the duration of our current contracts, which may well be extended.”
This is not the first time the Department of Social Services-driven project has been under the spotlight. The evaluation process for this tender has been the subject of controversy for some time, as - in June last year - the Institute of Security Studies mentioned it in an article relating to issues of transparency and corruption in government's procurement processes.
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R21bn govt tender in limbo
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