OUTA told Minister Creecy how the driving licence card machine tender was manipulated, and now welcomes her announcement of an AG investigation

5 September 2024

OUTA welcomes Transport Minister Barbara Creecy’s announcement that the driving licence card machine tender award and contract will be investigated. This follows a meeting that OUTA CEO Wayne Duvenage had with Minister Creecy earlier this week, to raise concerns about, amongst other matters, the Driving Licence Card Account (DLCA) decision to appoint Idemia Identity and Security SA to provide the new smart driving licence card machine.

The DLCA is an entity of the Department of Transport, and the department announced on 1 September that it had appointed Idemia Identity and Security SA as the preferred bidder on 8 August.

The DLCA and department have refused to specify the contract price, but OUTA received evidence indicating this ballooned from the DLCA’s budgeted R468 million to as much as R898.597 million.

OUTA has for years repeatedly tried to get information from the DLCA and the department about the new driving licence card machine procurement process but this has been refused. The department has also refused to make public details of the various tenders and related bidders, including the awarded contract value.

After the department announced its decision to appoint Idemia as the successful bidder earlier this week, OUTA engaged with Minister Creecy, setting out key concerns and evidence of tender manipulation over this procurement.

OUTA is concerned that the tender for the card machine has been deliberately manipulated to ensure that a specific bidder was awarded the contract. This included repeatedly issuing, withdrawing and reissuing the tender, along with three extensions of the price validity period, which is highly irregular and discouraged by Treasury’s procurement guidelines.

“Since OUTA’s exposure of irregularities it has identified on this tender, more people and companies are coming forward to provide us with additional evidence of manipulation and serious irregularities pertaining to this tender,” says Duvenage.

Today (Thursday 5 September), the Minister released a statement confirming the investigation (see here), in which she said the Auditor-General is investigating the procurement and she has now asked the AG to expand this to include further issues in the procurement.

OUTA is grateful to the Minister for taking fast action on this crucial issue.

“We call on the Minister to exercise her powers to instruct the DLCA to desist from awarding this tender or signing the service level agreement with Idemia. We want this crucial matter thoroughly investigated,” says Duvenage.

“We believe there is enough evidence of wrongdoing for a legal review of the DLCA’s decision on this matter. This tender should be cancelled and reopened, with extremely robust oversight mechanisms in place.”
 
The concerns identified in the driving licence procurement process

OUTA detailed the concerns in a comprehensive letter which includes 11 annexures to the Minister.

Some of the issues and concerns raised are:

The DLCA ran the tender on at three occasions between 2021 and 2023, withdrawing it and re-issuing it, without providing the details and reasons for cancellation of each tender in a transparent manner. OUTA would like to know the exact reasons these tenders were cancelled.

Some of these early tenders and requests for information have been removed from the department’s website, although OUTA believes they should remain publicly accessible to enable civil society to track such matters.

Submitting tenders for complex solutions is a time-consuming and costly exercise for businesses. Having to do so repeatedly because of tenders being cancelled without meaningful reasons provided is extremely frustrating and provides reasons to doubt the fairness of the process. Every time a tender is cancelled and re-issued (often for seemingly trivial reasons), the bidders must request updated prices from their respective suppliers and approvals from partners.

OUTA believes this conduct by the DLCA has given rise to capable bidders not submitting bids for this final request for proposals, as they had simply become fed up with the DLCA conduct and what they believe was an attempt by the organisation to manipulate this the process. This in turn reduces the competitiveness of the tender and robs government along with the public, of potentially lower quotations.

Despite the fact that 25 companies attended the tender briefing by DLCA on 25 in March 2023, only five companies submitted bids for this tender.

OUTA has information from various bidders who submitted proposals for the second tender that they were not notified of its withdrawal or cancellation.

In the final tender (DLCA/2023/01), bidders were told at least three times to extend the validity periods for their pricing. This contravenes the National Treasury’s guide which discourages extending the validity period of bids. In at least one instance, bidders were given less than an hour – at the end of the day on a Friday – to agree to such an extension. OUTA believes this unfairly prejudices bidders who are unable to do this.

OUTA’s letter notes that “we are told that it had become clear to many of the tenderers that DLCA were doing everything they could to reduce the number of participants in this next tender”. This strategy appears to have been successful, with bidders reduced to five companies, whilst 25 interested parties attended the DLCA tender briefing session. “We contend that DLCA had been successful in discouraging potential bidders from participating,” said OUTA’s letter.

OUTA found two Bid Evaluation Committee reports, dated the same day, for submission to the Bid Adjudication Committee, which each showed different bid values for Idemia’s bid. This “points to the high probability of gross tender manipulation,” said OUTA’s letter. OUTA attached both these reports to the letter.

OUTA also has copies of correspondence showing that, on 4 April 2024, the Bid Adjudication Committee chair wrote to the DLCA acting CFO, saying that the committee had discussed concerns on 28 March that its budget of R468 million was insufficient and that the Idemia bid was R762 million.

The DLCA acting CFO wrote back to say that the DLCA had budgeted “without the knowledge of the actual costs of the equipment” and had asked National Treasury for “additional funding in a form of a refund of surplus funds previously surrendered to the tune of R448 million as well as to retain the 2022/2023 surplus amounting to R268 million”. Another Bid Evaluation Committee report shows the Idemia bid as R898.597 million. OUTA attached these documents as annexures in its correspondence with Minister Creecy.

OUTA received information that there was tampering with the pricing envelopes in the bids submitted for the second (cancelled) tender. This was discovered by bidders who were “disqualified” in the technical evaluation process, before pricing was evaluated by the Bid Evaluation Committee, which required that the pricing bid envelopes should have remained sealed.

These bidders requested the return of the “unsuccessful” tender documents from the DLCA, and discovered that their sealed “Pricing” envelope had been tampered with. This implies the DLCA had broken the rules and opened this document, revealing the tender price to people inside (and possibly outside) the DLCA, says OUTA’s letter. This raises the possibility of competing bidders being alerted to their competitions’ prices.

OUTA received information that at least one bidder was wrongly marked down on aspects for which it should have received additional points to get their tender over the technical evaluation section of the tender process. This bidder provided a substantially lower price than Idemia and would most likely have been the successful bidder.

The DLCA made last-minute changes to the tender requirements, including a supplier specific technical specification that favoured Idemia, which is dubious and irregular.

OUTA raises concerns about the recent cancellation of a contract awarded to Idemia by the Airports Company SA, also a Department of Transport entity, and the reports of irregularities and unethical conduct pertaining to this contract.

Issued by Wayne Duvenhage, CEO, OUTA, 5 September 2024