The South African National Roads Agency (SANRAL) has abandoned its contractor panel system. The agency will revert to open tenders following court rulings that found its procurement processes unconstitutional and riddled with irregularities.
The Gauteng High Court in Pretoria declared SANRAL’s R9.5 billion routine road maintenance tender unconstitutional and unlawful in July. This happened after two construction firms successfully challenged the agency’s decision to award contracts to a panel of 20 companies.
BCB Solutions and Botle Ba Afrika Roads took SANRAL to court after their bids were rejected in favour of the panel system. The panel system sought to consolidate work previously managed by 251 contractors.
Outgoing SANRAL CEO Reginald Demana, announced the procurement shift during a media briefing in Centurion this week. He admitted the agency was “ill-equipped” to manage the panel system.
Multiple procurement failures
The routine road maintenance tender was not the only procurement process to fail. In June, the High Court also declared the tender for Category 2 engineering consultants unlawful. This came after Lathiso Consulting Engineering and Zutari challenged irregularities in the adjudication process.
Investigations uncovered numerous problems including non-compliance with SANRAL’s own tender procedures, lack of price competition, flawed bid evaluation processes, and possible fraudulent conduct by some bidders. For instance, issues included late opening of tenders, missing tender opening registers, and questions about the legitimacy of some awarded entities.
The court also criticised SANRAL for delays, non-compliance with court rules, and disrespecting the court during the discovery process. As a result, this led to a punitive costs order against the agency.
Rather than defend the indefensible, SANRAL conceded the court cases to avoid wasting more public funds on legal fees.
Hawks investigation under way
The Directorate for Priority Crime Investigation has subpoenaed SANRAL for documents spanning 15 years related to routine road maintenance tenders. Demana confirmed he was named in the subpoena but said the agency is cooperating fully.
SANRAL has commissioned an external law firm to investigate suspected fraudulent conduct. This includes allegations that contracts were awarded to non-existent entities and that board-approved decisions were reversed whilst the CEO was on leave.
The agency has committed to consequence management. Therefore, disciplinary action will be taken where oversight and unlawful conduct is uncovered.
Road maintenance continues during transition
SANRAL resolved to open new tender processes without delay. Incumbent contractors will remain in place until 30 November to ensure uninterrupted road maintenance during the transition.
The agency has already issued a limited number of tenders in the Western Cape and Northern Cape provinces. It will issue additional tenders in batches in the coming days.
All panel appointments have fallen away and no work may be allocated under the set-aside tenders.
SANRAL received approximately 401 tenders for the routine road maintenance work but recommended only 20 successful bidders. Supply chain management had advised that a smaller panel would be quicker and more efficient to procure. In addition, it would be less complicated to manage.
Demana said SANRAL has learned important lessons from the litigation. This includes that the agency needed more time to prepare for such a significant change in its operating model. In addition, it needed to better understand the socio-economic impact on service providers.
Procurement reforms implemented
SANRAL is implementing several reforms including standing bid specification and evaluation committees, an expanded adjudication pool, and strengthened internal assurance processes.
The agency will revert to its historical practice of issuing individual, open tenders for routine road maintenance and engineering consultancy services on a route-by-route basis.
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