Panicked metro overspent R300,000 on PPE

When the first case of Covid-19 was confirmed in SA in March last year, the Nelson Mandela Bay municipality was sent into a tailspin, over-stocking on overpriced personal protective equipment (PPE).

According to a leaked Nelson Mandela Bay management report by the auditor-general, the municipality violated the Municipal Finance Management Act when equipment was bought through disaster management instead of supply chain management (SCM).

Because of poor planning, the municipality incurred more than R300,000 in possible irregular expenditure after buying PPE at higher prices than those recommended by the National Treasury.

The report comes after President Cyril Ramaphosa tasked the Special Investigating Unit to probe alleged PPE corruption.

The Hawks are also investigating.

Auditor-general office corporate executive Vanuja Maharaj said the metro paid R331,257 more than it should have on PPE.

Maharaj said this was done between March 15 and September 30 last year.

“Nine transactions out of a sample of 15 transactions that were randomly selected were ordered in prices in excess of the maximum prices prescribed by the National Treasury,” Maharaj wrote.

“A total amount of R331,257 was paid in excess of the maximum prices prescribed by the National Treasury and should be regarded as irregular expenditure.”

Maharaj said the scope of one contract was extended to the tune of R2.4m and there had been no competitive bidding.

Asked about the company whose scope of work was extended by R2.4m, municipal spokesperson Mthubanzi Mniki declined to comment, saying the AG’s report was yet to be discussed in council.

Maharaj’s report identified severe control deficiencies, adding that there was no proper planning for the procurement of PPE which had resulted in the over-stocking of the expensive N95 masks.

“The procurement process was performed in the disaster management office instead of the supply chain management unit, which is in contravention of the MFMA SCM Regulations 7(1),” she said.

Maharaj said the city did not have formally developed disaster management plans for the Covid-19 pandemic and how they would fund, procure, warehouse and distribute PPE.

The metro had committed R321m to respond to the pandemic.

Maharaj said different departments told auditors they determined PPE needs based on their staff establishment.

However, the officials failed to produce those assessments, she said.

“All user departments visited indicated that since the state of disaster was declared, they did not receive guidance on the ordering of PPE and there was panic ordering resulting in over-ordering.

“Cases of excess stock of N95 and head covers were identified at the occupational health and safety department,” Maharaj wrote.

PPE procurement in the city has been a subject of investigation by the Special Investigating Unit (SIU) .

The SIU released a report about alleged irregularities with a R24m toilet tender awarded to Free State-based company HT Pelatona Projects.

A June 2020 report by The Herald showed the majority of PPE in the city was bought at a higher price than the guidelines issued by the National Treasury in a circular.

On Thursday, Bay mayor Nqaba Bhanga welcomed the AG report, saying he was the one who had opened a case regarding the city’s Covid-19 spending.

Bhanga opened a case on July 15 at the Humewood police station which is now being probed by the Hawks and the SIU.

“I believed there were irregularities with the spending and I opened a case.

“The SIU reports which have since come out, confirmed this.

“I even tabled an SIU report in council recently,” he said.

Bhanga criticised the city’s supply chain management, saying it was the biggest problem in the metro.

“I’ve raised the issue of supply chain with Scopa at a meeting last week.

“We have a leadership problem with the SCM unit.

“There are internal fights with leaders in that department but we’re busy trying to stabilise things,” Bhanga said.

He said he would write to the National Treasury requesting that they look at strengthening SCM policies and capacity.