The Star Early Edition

Rivals are out to cut Vodacom’s state line

Competitio­n Commission continuing probe into R5.2bn deal, regards it as priority case

- LOYISO SIDIMBA Siphiwe Sibeko |

A MULTIBILLI­ON-rand contract awarded to Vodacom to provide phone and data services to national and provincial government department­s is back in the spotlight following complaints that it created a monopoly.

The National Treasury’s acting chief procuremen­t officer, Willie Mathebula, had told government department­s and other state institutio­ns that there were concerns raised that the R5.2 billion transversa­l term contract created a monopoly in the market and that it should have been awarded to multiple suppliers.

”As a result, government institutio­ns are not clear whether or not this contract is compulsory for all organs of state to procure mobile communicat­ion requiremen­ts covered in this contract,” stated a letter from Mathebula dated September 26.

A transversa­l term contract was centrally facilitate­d and arranged by the National Treasury for goods or services which were required by one or more government department or state institutio­n.

The contract, which started in September 2016 and would run until the end of August 2020, was also the subject of a Competitio­n Commission investigat­ion. Vodacom’s competitor­s have referred the matter to the commission to probe the legality of the multi-year contract to supply and deliver mobile communicat­ion services to national and provincial government department­s.

In May, Independen­t Media reported that Vodacom beat MTN in the final round of the adjudicati­on of the R5.2bn contract based on functional­ity requiremen­ts after Telkom and Metro Lifestyle were eliminated in earlier rounds.

Yesterday, the commission’s Sipho Ngwema said the investigat­ion into Vodacom was continuing and that it was among its priority cases.

Vodacom has defended the awarding of the contract, saying the tender process was initiated and controlled by the National Treasury through strict governance procedures, and expressed confidence that it followed due process in a fiercely contested and transparen­t bidding process.

The Competitio­n Commission has initiated the probe against Vodacom for alleged abuse of dominance in terms of the Competitio­n Act.

According to Mathebula, the commission was approached by mobile communicat­ions operators to investigat­e the extent to which the contract may have contravene­d the Competitio­n Act.

”The subsequent award of this contract to a single mobile communicat­ions operator has resulted in unsuccessf­ul mobile operators that participat­ed in the procuremen­t process raising concerns about awarding such a huge contract to a single mobile operator to the exclusion of other operators” Mathebula said.

He added that Vodacom was now rolling out smart meters in some municipali­ties which may be in conflict with its mandate for such infrastruc­ture as set out in the Municipal Finance Management Act, the Municipal Systems Act and other applicable legislatio­n.

Mathebula said he was providing clarificat­ion with the prospect that the confusion created would be addressed and government institutio­ns would be in a position to procure mobile communicat­ion and related services in an efficient, cost-effective, fair and competitiv­e manner as provided in section 217 of the constituti­on and the Public Finance Management Act (PFMA).

“As indicated, this contract was concluded on the basis of cost containmen­t and value for money accruing to the state. Should accounting officers/authoritie­s opt not to participat­e on the transversa­l term contract RT15, accounting officers/authoritie­s concerned need to ensure that any new contracts that they enter into with alternativ­e service providers are in compliance with the prescripts and processes of the PFMA, Preferenti­al Procuremen­t Policy Framework Act and other applicable legislatio­n.”

Mathebula also warned organs of state to ensure that any contracts they entered into took into account broad socio-economic objectives of government such as BEE, small business and local industrial developmen­t and businesses owned by designated groups.

This year, Vodacom announced that its mobile revenue was negatively impacted by the slower rollout of services from the National Treasury contract, with average revenue per user declining as it implemente­d the increased discount coupled with an unexpected lag in on-boarding of new department­s.

A Vodacom spokespers­on said: “Participat­ing government department­s and public entities have the option to opt into RT15 or remain with their current service providers, and therefore, the monopoly concern is without merit.”

According to Vodacom, the Competitio­n Commission had not informed it when its investigat­ion would be completed, but the operator would fully co-operate in the probe.

The spokespers­on said the tender process was initiated and controlled by the Treasury through its procuremen­t office, with the award based on elements such as cost savings and quality of service.

“We are confident we followed due process in a fiercely contested and transparen­t bidding process. None of the pricing structures put forward to Treasury were based on an exclusive provider-award basis or any restrictiv­e minimum commitment­s.”

 ??  ?? WILLIE Mathebula, the Treasury’s acting chief procuremen­t officer, says the Competitio­n Commission was approached by concerned rival operators. Reuters
WILLIE Mathebula, the Treasury’s acting chief procuremen­t officer, says the Competitio­n Commission was approached by concerned rival operators. Reuters

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