City contract is irregular – AG
CITY MANAGER TOOK TOTAL CONTROL OF IT Over R455m paid to GladAfrica since August 2017, apparently illegally.
Tshwane city manager Moeketsi Mosola has five days to provide documentary evidence against damning preliminary findings by auditor-general (AG) Kimi Makwetu on the city’s controversial contract with GladAfrica Project Management.
Makwetu’s office served its detailed audit findings on the contract on the city on Monday. After five days, the AG will finalise the findings. He also wants Mosola to give him a copy of the preliminary report of law firm Bowmans, which is investigating the matter on the instruction of mayor Solly Msimanga.
Last month, Mosola obtained an interim order in the Labour Court to stop Msimanga and city speaker Katlego Mathebe from tabling the preliminary Bowmans report in council. Unless Mosola can provide the AG with compelling evidence to change his findings, Makwetu will rule that the expenditure on the contract was irregular (unlawful). GladAfrica has received payments of over R455 million from the city since August 2017.
According to the AG’s preliminary findings, Mosola took total control of the procurement process that led to GladAfrica’s appointment.
He initiated the process, determined the project management unit’s demands and approved the process to be followed. This should have been done by the supply chain management department.
In his preliminary report, Makwetu said the concentration of duties contravenes the applicable law and best practice of separating duties in supply chain management. This is “to minimise the likelihood of fraud, corruption, favouritism and unfair and irregular practices” as stipulated in the Municipal Finance Management Act.
Tshwane appointed Ariya Project Management (GladAfrica) on November 3, 2017. Makwetu found some payments were made to another GladAfrica entity, GladAfrica Consulting Engineers, without a valid contract and before GladAfrica Project Management had been appointed.
The contract Tshwane entered into on November 3 was procured on the basis of paragraph 32 of the Municipal Supply Chain Management Regulations, which provide for an organ of state to “piggy back” on the procurement process of another organ of state to procure the same goods/services.
The city got permission from the Development Bank of Southern Africa (DBSA) to “piggy back” on its procurement process to appoint a panel of companies to assist with infrastructure projects’ roll-out. The panel companies were supposed to submit quotations to Tshwane for the work. This bypasses the city, preventing it from following its own competitive procurement process. This is only permissible with demonstrable discounts or benefits, which the AG said the city didn’t show.
The AG found the city’s executive adjudication committee resolved all 29 service providers on the panel should be invited to submit quotations, but the city selected only six, including Ariya Project Management, GladAfrica’s predecessor. This rendered the process unfair and inequitable. Once the GladAfrica agreement was concluded, the terms and conditions differed so much from the DBSA agreement that it fell outside the scope of paragraph 32, the AG found.