DA makes submission to SIU on irregularities surrounding award of Correctional Services catering and training contract
Yesterday the Portfolio Committee on Correctional Services was due to have a meeting in which we were to be briefed by the Special Investigating Unit (SIU) on progress in the investigation into the award of a catering contract by the Department of Correctional Services (DCS). This meeting was cancelled on the instructions of the ANC Chief Whip, for reasons which are not clear.
Had the meeting taken place, I would have passed on to the SIU the information we are releasing today. These documents raise serious questions about the way in which this contract was awarded, which the Democratic Alliance (DA) hopes the SIU will be able to answer when it finalises its investigation.
The contract was for catering and training services in seven management areas - Pollsmoor, St Albans, Krugersdorp, Johannesburg, Pretoria, Durban-Westville and Modderbee - and was to run for three years. It has been extended twice, once for a year, and once for a further six months. The dispute between Correctional Services Minister, Ngconde Balfour, and the National Commissioner, Mr. Vernie Petersen - which resulted in the National Commissioner's recent "redeployment" to the Department of Sport - can be traced to this contract, its extension and the way in which it was proposed to be re-awarded.
The department, by its own admission, awarded this contract without having undertaken a feasibility study into whether such a contract was necessary, practical or cost-effective. Because no feasibility study had been undertaken, it was impossible accurately to determine what the successful contractor was expected to deliver, and therefore what attributes or "criteria" the successful contractor was expected to have in order to obtain the contract.
Fourteen companies participated in the bid process, of which five were disqualified on technical or procedural grounds. The remaining nine bidders were evaluated by the Committee in a two-stage process, one for "criteria", and one for price and for adherence to employment equity requirements. However, the points allocated to price and to "criteria" were the same.
The points allocated to the various companies for "criteria" were such that only two were competitive - Bosasa and Sechaba, which received 182.60 and 138.20 points respectively out of a possible 200.
Ultimately, however, the most important consideration in the award of any contract is value for money. Sechaba submitted lower bids in respect of all management areas except one (Krugersdorp), where its bid was higher by R60 753 on a R14,7 million annual contract. In respect of all other management areas, its price was lower, and in some cases, considerably lower. For example, Sechaba's quote for the Modderbee Management Area was R8 471 711 lower than that received from Bosasa.
Overall, Sechaba's quote for the annual price of the contract was R617 911 011 compared to Bosasa's quote of R724 111 274, a full 17.1% lower.
And yet Bosasa was awarded the entire contract. The question arises, why?
The reason Bosasa obtained the entire contract was because it offered the Correctional Services department a small discount (amounting to 0.8% of the entire contract price or R1 942 727) to provide a "holistic" or uniform service to all seven management areas. This is considerably less than the 17.1% lower price offered by Sechaba.
If the award of the initial contract raised questions, so did the extension of the contract. This happened in 2005, when it transpired that the contract as advertised did not include some satellite correctional centres within the management areas. For example, the Modderbee Management Area consists not only of the large facility at Modderbee itself, but also correctional centres at Nigel and Devon. The contract was therefore administratively extended to include these other correctional centres at an additional annual cost to the taxpayers of R82 095 331.00
The contract came to an end in July 2007. It was extended for a year because the Department had not taken a policy decision about how to provide catering services at that stage. In July 2008, the Minister wished to extend it for a further year, but the National Commissioner refused to do so, and extended it only for a further six months, thus kicking off the current dispute between the Minister and the National Commissioner.
Before it is re-awarded, it is essential that the unanswered questions which surround the award of the initial contract be answered. The DA trusts that the SIU will do so as a matter of urgency.
Statement issued by James Selfe, MP, Democratic Alliance correctional services spokesperson, November 19 2008
