Ministry orders probe of navy upkeep tender
Lucrative contract to maintain entire fleet under microscope
● A tender to maintain SA’s entire naval fleet, including vessels acquired via the arms deal, is under investigation after a formal complaint.
Defence minister Nosiviwe MapisaNqakula has demanded a top-level probe into the matter, with a report due within days, the ministry has confirmed.
“She [the minister] instructed the chief of the navy and the secretary of defence to look into the matter, [and] she has given them a deadline,” said Mapisa-Nqakula’s spokesperson, Joy Peter.
The navy this week said the probe relates to the main naval contract for “repair and maintenance of all mechanical equipment ashore and on board the South African Navy vessels”. It was awarded early last year to Durban-based RA Govender CC, led by businessman Stanley Govender.
The company has secured several naval contracts over the past few years amid widespread unhappiness about the government’s procurement system.
Documentation submitted to MapisaNqakula has raised questions over the coveted main maintenance contract, which has no fixed value and depends on the amount of work needing to be done. The navy is battling a massive repair and maintenance backlog mainly because of significant cuts to the military budget.
The documents were submitted by veteran arms deal critic Bantu Holomisa, leader of the UDM. They include a signed memo from the navy’s former head of fleet logistics, Rear-Admiral David Mkhonto, now head of maritime strategy.
Holomisa this week confirmed his submission to the minister.
The navy has its own maintenance workshops, but more than 60% of work is outsourced, according to a recent unpublished report. A report detailing the workshops’ state of neglect has not been made public. Exorbitant maintenance costs and the premium paid to sub-contractors or “middlemen” were concerns raised by critics of the arms deal, which saw investment in large frigates rather than smaller vessels.
The Sunday Times has established that:
● A document submitted to the minister shows that Govender also secured a R52m, three-year contract to clean and repair bulk fuel storage tanks in the Western Cape. The Sunday Times has been unable to independently corroborate this award;
● The company was previously awarded a tender to build two small “riverine” patrol vessels under Project Carol. However, an industry source said the project was subsequently put on hold due to unhappiness with the results; and
● In his letter to Mapisa-Nqakula, Holomisa claims tender files were “fiddled with in order to influence the bidding”.
Another key naval contract, to repair and maintain all diesel engines, was awarded to a little-known auto-engine repair firm, Grimm’s. Industry sources said the company lacks essential equipment and as a result has to subcontract some of the work. The contract was previously held by global engine heavyweight MTU, which supplied the diesel engines for the arms-deal frigates.
Stakeholders said ongoing unhappiness about suspected tender favouritism coincided with a crisis over military morale and capacity due largely to budget cuts of about R5bn in the past financial year.
Navy spokesperson Greyling van den Berg this week confirmed the probe but denied there was anything untoward.
He said the navy had only an advisory role on large tenders. The final awarding of contracts was done by the departmental commercial procurement board in Pretoria.
Van den Berg said Mkhonto had initially felt there was insufficient motivation for the tender award to Govender, but revised his opinion after receiving new information.
He denied there was irregular documentation and said the proportion of subcontracting was within the “terms and reference” of the contract.
Govender dismissed concerns about the tender as commercial rivalry, and said it was not the first time he had been investigated.
“The investigation is welcome ... We want to get over this,” Govender said. “We have done everything above board. The company has been in the marine industry for the last 24 years. Due to the nature of our country and disadvantages that black companies face, we were never given a chance to work for the military. Now that we have been given the opportunity, there is a lot of noise.”
He did not respond to specific allegations but said concerns about tender irregularities would be dealt with in the minister’s report.
Grimm’s did not respond to queries.