How to rig a tender
When all else failed in the plot to hand Digital Vibes a R150m communications contract, officials in the department of health allegedly resorted to basic fraud to get the company through.
Papers filed by the Special Investigating Unit (SIU) at the Special Tribunal reveal that department officials went as far as creating fictitious companies and doctoring the scores of competitors to eliminate competition for the company, the beneficial owners of which were Mkhize’s friend Tahera Mather and his former personal assistant, Mather’s niece Naadhira Mitha.
Digital Vibes made use of inside knowledge of bid specifications and created fictitious employees to meet the criteria.
“The procurement process was … a sham, designed and conducted to reach the predetermined result that Digital Vibes would be appointed,” lead investigator Rajendra Chunilall said in the SIU’s founding affidavit.
Former health director-general Precious Matsoso told the SIU that Mather began work at the department immediately upon Mkhize’s appointment as minister.
Matsoso said she received a text message from Mkhize three days after the department had unsuccessfully tried to appoint Mather as a communications consultant on the National Health Insurance (NHI) scheme in July 2019, instructing her to ensure that Mather was hired.
Ten days later, the department asked the National Treasury to approve a R133m NHI communications contract with Digital
Vibes without a bidding process. The Treasury refused, advising the department to advertise a public tender.
But instead of advertising, the department broke all the rules and issued a closed tender to 10 companies.
Forensic accountant Hesti le Roux’s investigation uncovered that:
Two of the 10 companies issued with the request for proposals (RFP) did not exist and were made up from e-mail addresses;
Six of the companies did not respond to the bid as it fell outside of their scope of business. One was a change advisory firm, one supplied computer equipment and another did graphic design; and
Before the RFP was sent out, Mather allegedly created a fraudulent profile for Digital Vibes with the requisite skills and experience by creating a “fictitious team” to boost the “nonexistent credentials of Digital Vibes”.
It was later found that some of these individuals never worked for Digital Vibes and were never paid.
As a consequence of the alleged rigging, only two companies responded, Digital Vibes and Brandswell. Brandswell had the upper hand because its R69m quote was less than half of the R141m Digital Vibes wanted.
But then, said Le Roux, the department inexplicably issued a second RFP and amended the specifications.
When it came to scoring, Le Roux said, Brandswell was prejudiced by the department’s five-member tender evaluation committee (TEC), which included deputy director-general Anban Pillay and head of communications Popo Maja. One of Brandswell’s scores was lowered, leading to the company scoring below the required 60% to get the contract.
On the other hand, the more costly Digital Vibes was incorrectly awarded full scores for experience although it submitted only one of two reference letters needed.
Le Roux found that the TEC “irregularly and irrationally” marked down Brandswell, “a long-standing and reputable communication solution service provider”.
She concluded: “Clearly, the recommendation by the TEC to award the contract to Digital Vibes was invalid in terms of the provisions of the constitution, because the procurement process was not fair, equitable, transparent, competitive and/or cost-effective. Therefore, the service level agreement that was concluded with Digital Vibes should be declared invalid.”