Three out of four leases for government headquarters did not go out to tender

A reply to a DA parliamentary question received from the Minister of Public Works yesterday confirmed that the majority of leases for government headquarters did not go out to tender. 

Out of 20 leases for which information was provided, 15 were "negotiated", one was "nominated" and another was "identified" by the client department. Tenders for headquarter leases were invited in only two cases. 

The "negotiated" lease for the building occupied by the Department of Home Affairs will earn Manaka Properties (whose shareholders include Limpopo premier Cassel Mathale, the former Chairman of the Limpopo Tender Board Jannie Moolman, and the current Chairman of the National Assembly Finance Committee, Thaba Mufamadi) a tidy R265 million over the lease period. 

The annual cost of the "negotiated" leases is R242 million. Over the various lease periods, the value of these leases will be much higher. 

The Department of Public Works has previously indicated that it uses one of six leasing strategies, including nominated, open tender, qualified, quotation, shopping and two-stage proposal strategies, depending on the "circumstances that prevail at the time of procurement". 

In a department that is struggling to rid itself of a scourge of corrupt activities and wasteful expenditure, using "negotiated" leases as the apparent go-to strategy to procure leases for government headquarters seems unwise. 

This information has once again highlighted the need for an urgent review of all government leases, as promised by Finance Minister Pravin Gordhan during his budget speech in February. 

I will be writing to the Finance Minister to ask for an update on the progress with this review. The Standing Committee on Public Accounts (SCOPA) has already agreed that the report on the Treasury review will be brought to the committee for close scrutiny. In addition, I will call for the Minister of Public Works, Thulas Nxesi, to appear before SCOPA to provide clarity on his department's use of negotiated leases. 

The potential for abuse when large government contracts are not put out to tender is obvious. The Minister must explain why open tenders seems to be its least used procurement method. 

Statement issued by Dr Dion George MP, DA Spokesperson on the Standing Committee on Public Accounts, September 4 2012

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