Limpopo Department of Health awards maintenance contracts without competitive bidding
THE Limpopo Department of Health has awarded maintenance contracts worth R149 million without competitive bidding, thus contravening the Public Finance Management Act (PFMA) and National Treasury regulations.
According to official documents seen by African Times –including bid evaluation reports, appointment letters and internal memos –the department appointed a panel of 11 contractors without any clear evaluation criteria before awarding them multi-million contracts through quotations.
In terms of supply chain management rules, all bids above R500 000 have to be advertised and subjected to competitive bidding which include evaluation based on administrative criteria, functionality, pricing and BBBEE.
The beneficiaries include Ba-Phalaborwa 72 Constructions; Belta Services; Bicacon; Procost & Associates; Quality Sales & Services; T and C Civils; Thenga Holdings; and Wanga Power Project.
Some of the companies have been accused by local officials of doing shoddy work and charging inflated prices for renovating and maintaining hospitals across the province.
The department has denied any wrong-doing and accused its detractors, especially Forum of Limpopo Entrepreneurs (Fole) secretary Siviko Mabunda, of fabricating “false and malicious” allegations of tribalism to pressure it to give them jobs outside procurement processes.
According to the advert which appeared in the September 23, 2016 Tender Bulletin, the panel of contractors was appointed “to be used as and when required by all health facilities for a period of 36 months to provide infrastructure maintenance and refurbishment services for the Primary Health Care, Community Health Centres, Forensic Pathology Services, Emergency Medical Services, Malaria Centres, District Offices, Provincial Head Office, Nursing Colleges, Schools and Hospitals”.
The contractors were subsequently allocated between five and 16 facilities each to maintain – for the next three years – at a combined value of R149 million per year.
In one instance, a contractor scored an R11 million deal for “repair of vinyl floors, paintwork and roofing leaks” at the Nkhesani Hospital in Giyani after submitting a three page quotation in February this year, in what officials described as a “blank cheque” given to the panel of contractors.
The contractor quoted between R6 000 and R763 000 per job – after being appointed last year – and was paid R9.7 million between April and September this year.
Limpopo has a massive infrastructure backlog worth billions of rands.
Most of its hospitals have dilapidated wards, leaking roofs and broken equipment which often force patients to do without hot water.
Sources in the department said officials had used the panel system as a ploy to award multi-million contracts without either competitive bidding or applying for exemptions from Treasury.
“There was no competitive bidding. Had they done this process correctly from the beginning, there would not have been any need for the contractors to send quotations and prices later because that would have been agreed to during evaluation. What they did was to cut corners to avoid applying for exemptions,” said the source.
“If there was competitive bidding, there would have been specifications or terms of reference.
“The advert would not have been ambiguous. Secondly, in the specification there would have been evaluation criteria which would normally have administrative criteria, functionality, price and preferential points.
“Every bidder would have been evaluated along those stages. In their case, if the rates are requested after closure and award, what does that mean?
“Who is competing with whom? Once you give me a district or hospital as a contractor, there is no competitive bidding. It means I can give you any price I want if you want to fix anything.”
Provincial Treasury has since launched an investigation into five dubious contracts awarded by the Department of Health.
This came after Fole alleged tender fraud, corruption, nepotism and tribalism in the department in a dossier dated June 23, 2017 submitted to Treasury MEC Rob Tooley.
He has now instructed Health MEC Dr Phophi Ramathuba to surrender all documents related to maintenance, security, de-bushing and fumigation services contracts.
“This letter serves to confirm that the Limpopo Provincial Treasury will commence a review of Health contracts identified as per the complaint from Forum of Limpopo Entrepreneurs dated June 23 2017. The review will be conducted in terms of section 18(2)(f) of the Public Finance Management Act which provides that Provincial Treasury may investigate any financial management and internal control applied by a provincial department or a provincial public entity.
“You are therefore requested to avail all documentation pertaining to the following contracts,” said Tooley in a letter dated July 19, 2017.
In the dossier, Mabunda accused Dr Ramathuba and her senior officials of tribalism.
He claimed that companies owned by Venda-speaking contractors had been favoured because Dr Ramathuba, Chief Financial Officer Justice Mudau and General Manager for Maintenance Pandelani Ramawa were also Venda-speaking.
“There are reasons why the Department of Health is doing corruption like this. That Department is in fact “Republic of Venda”.
“The MEC is from Venda, the Chief of Staff Nyambeni [Matshivha) from Venda, the CFO Mudau from Venda, the GM Infrastructure Ramawa from Venda and the Manager Infrastructure Ramulai from Venda. Now just understand, if things are like this in a particular department, what do you expect?” Mabunda asked Tooley.
Tooley this week confirmed the probe.
“What we have done in conjunction with the National Department of Health is to deploy four Chartered Accountants to analyse all procurement issues in the department.
“Having met with Fole as you are aware, we have taken the allegations seriously hence our intention to understand whether the costs have been inflated amongst other matters related to supply chain processes.”
Thabiso Teffo, spokesperson for the Limpopo Department of Health, said the department had appointed a panel of contractors in response to the urgent need for urgent maintenance as identified by the Development Bank of South Africa’s conditional assessment.
“The department advertised in the Provincial Tender Bulletin inviting qualified service providers to be on the panel for both electrical, mechanical and civil maintenance of facilities.
“There was no amount attached to appointments of all the panellists,” Teffo said.
“An R11 million order was issued…for work to be done – which would be in phases.
“Amounts are paid to this company as and when the scheduled work is completed.”
However, the R11 million purchase order number does not specify the phases in which the work would be done and payments made.
Teffo denied that the contracts have been awarded without competitive bidding and suppliers given blank cheques.
“As explained above, a panel of contractors was appointed in a competitive bidding process and companies were allocated work. No company was appointed on a quotation basis. The allegation reflects a horrible lack of understanding of government processes and a fishing expedition by Mr Siviko Mabunda.”
Asked whether the department thought taxpayers got value for money for the maintenance contracts, he replied: “Up to so far the department has no reason to believe that it is not getting value for money. Where there would be shortcomings, the department will use retention funds to cover rectifications.”
Teffo conceded that most senior officials responsible for maintenance were Venda-speaking, but insisted that they were appointed by Dr Ramathuba’s predecessors.
He said she found Matshivha in the department and appointed six staff members in her political office from other tribes.
Teffo said Mabunda was a “bitter man” who targeted the MEC for attack after falling out with some of the contractors who had sub-contracted him over payments.
“The allegations of tribalism cannot be used to pressure the department to give Mr Shiviko or anyone work outside the supply chain management prescripts. As a matter of fact, these allegations are false and malicious,” he concluded.
The contractor that won the R11 million tender after submitting a quotation declined to comment.