Fighting talk
Court documents shed light on MTN’S bid to overturn Transnet’s
Transnet’s tender process for mobile voice and data services was “marred with irregularities” and the rail operator’s procurement team clearly intended that Vodacom should win the contract, mobile operator MTN says in court papers.
MTN has provided these services to Transnet for years, and is refusing to hand them over to its rival after Vodacom was awarded the contract in February.
The three parties are this week due to meet in court, where MTN will ask that Transnet’s deal with Vodacom be set aside.
At the same time, Transnet and Vodacom have lodged complaints with regulators over MTN’S refusal to port numbers to its competitor. Vodacom says in its court papers that MTN’S unwillingness to play ball is costing it “hundreds of thousands of rands in revenue losses per day”.
Vodacom was left as the sole bidder for the contract — priced at R325m over three years, the court papers show — after MTN and Cell C were disqualified for filling out their bid documents incorrectly.
The process to appoint a new service provider has dragged on for years, with MTN claiming it has been treated unfairly throughout.
Transnet’s first go at the tender process started in December 2015, though it was scrapped in early 2017 after MTN flagged irregularities when Vodacom was identified as the preferred bidder.
An independent report for Transnet by forensic investigator Ligwa Advisory Services, which has surfaced as part of the court papers, recommended that Transnet redo the initial process due to “anomalies” and “irregularities”.
Ligwa’s October 2016 report found that Transnet’s procurement team ascribed “nil” value where Vodacom did not price certain items in its submission (an omission for which it should have been disqualified). This led to Vodacom’s prices being lower than MTN’S.
Ligwa also found that Transnet’s negotiating team was not appointed properly and did not include staff from the rail operator’s commercial unit. There was also evidence of unapproved correspondence directly between Transnet’s Sibusiso Mthembu and Vodacom.
While only one negotiation meeting was held with MTN, two were held with Vodacom and no minutes were taken at the second, for which Mthembu failed to sign the attendance register.
Mthembu also shared information about MTN’S existing contract with Vodacom that would likely have influenced Vodacom’s pricing in its submission, Ligwa said.
Ligwa recommended that Transnet consider carefully whether to award the deal to Vodacom, and recommended looking into “corrective measures” against Mthembu.
Then, in March 2017, Transnet told Vodacom and MTN that it was calling off the tender as neither party’s submission adhered to its guidelines.
A second request for proposals was issued the same month. Neither Cell C nor MTN made it to the second round, as they had filled out the tender document incorrectly, despite Transnet’s warnings that it would be strict this time around.
Instead of writing “R0” (zero rand) next to the names of devices it could not supply, MTN wrote “N/A”.
The company complains in its court papers that “there is simply no difference between a bidder who inserts the words ‘R0’ and one that inserts ‘N/A’ next to an unavailable device.
“The process followed indicates that the award of the tender to Vodacom was a fait accompli.”
It says the terms of the tender were relaxed to accommodate Vodacom after the other parties dropped out of the race.
However, after MTN raised its concerns, an external investigation on behalf of Transnet’s procurement ombudsman found that the state-owned company had acted lawfully by disqualifying MTN for using “N/A” instead of “R0”.
Vodacom says in its answering affidavit that “MTN has only itself to blame for its disqualification”, citing Transnet’s warning that it would be strict in the second process.
Transnet says in its replying affidavit that MTN’S use of “N/A” where it was unable to supply a device could have been interpreted to mean “not acceptable”, “not available”, “no answer”, “not applicable”, “no action”, or “unable to provide pricing”.
“If Transnet had decided to consider ‘N/A’ the same as ‘R0’, it would have opened itself to a challenge for deviating from its stipulated mandatory evaluation criteria,” it says. It had asked bidders to enter “R0” where applicable so it would not have to make assumptions, and to enable like-for-like comparison of submissions, it says.
The rail operator claims its decision to disqualify MTN was “rational” and that it used a different supply chain management team for the 2017 tender than was used for the first one.
A Transnet spokesperson says the Ligwa report “pointed out some compliance lapses” in the first tender process, which resulted in the company tightening controls.
Transnet’s ombudsman found due processes were followed in the second tender process, the spokesperson says.
Vodacom, for its part, says it “rejects the insinuation that it gained an unfair advantage” in being awarded the contract.