Anatomy of a tender

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How the more expensive bidder was appointed for the Alicedale Sewerage Upgrade Project: a summary of Item S6.3 of the agenda for the Special Council Meeting at Makana Municipality on 30 May 2018. To be read alongside ‘Council tensions threaten Makana turnaround’.

Stage 1 – Procurement (advertising and bid committees)

23 June 2017          Tender advertised: Estimated value was R16 263 340

7 August 2017        Bidding closed

* Dates not given   Bids submitted to Bid Evaluation Committee (BEC)

*                               Bids submitted to Bid Adjudication Committee (BAC)

*                               BAC finds inconsistencies and returns bids to BEC.

*                              Two responsive bidders identified BUT:

  • Bidder 1 – the documents submitted are incomplete;
  • Bidder 2 (WK Construction) the price quoted exceeds the estimated price by R5 million.

*                              WK Construction invited for a price negotiation.

*                              WK reduces their price but still above the estimate.

*                              Makana asks Treasury if Bidder 1 can sign the necessary document to make their bid compliant and for this to be condoned.

*                               Treasury says NO.

*                               The Mayor and Chief Whip instruct Accounting Officer (i.e. the Acting MM at that time) to attend to MIG projects: Makana cannot afford to lose MIG funds due to lack of spending, they say: the Acting MM must ensure Makana spends both the 2016/17 rollover allocation as well as the 2017/18 allocation.

11 December          Acting MM (who is the chief accounting officer in Makana) calls a meeting of BAC and SCM to discuss why Makana is not spending. Acting MM is informed that the delay is because of Tender 1’s non-compliance and poor performance

There is a dilemma:

  1. Supply chain rules mean re-advertising the bid would result in further delay in getting the project off the ground (CIBD requires a 6-month cooling-off period)
  2. Bidder 2, WK Construction, is R5K more expensive than estimate. Bidder 1’s documents are non-compliant.

The dilemma is solved:

After “intensive discussion” Acting MM instructs supply chain manager to call in Bidder 1 to sign the document to make their bid compliant. The BAC asks Infrastructure Director to report on control measures to ensure poor performer, Bidder 1, will perform properly.

15 December 2017           Infrastructure Director Dali Mlenzana submits that report.

15 December 2017           Building industry compulsory shut-down

15 December 2017           Acting MM Nomathandazo Mazwai signs regret letters

January 2018                    Regret letters sent

 

Stage 2 – Appointment

24 January 2018                Acting MM Mazwai receives a letter from Deputy Director, Civil Engineering Services (Sonwabile Nomandela) citing the risks of appointing the non-performing contractor.

?? January 2018                The letter from the Deputy Director is withdrawn

30 January 2018                Memo from Acting MM Mazwai indicates that:

  • The DD’s letter is withdrawn (although, Pillay’s report states, “it is not clear… who exactly withdrew the letter”.
  • The normal bidding process must continue subject to the BAC’s recommendation (ie measures to ensure poor performer performs well)

31 January 2018                BAC meets. Acknowledging Acting MM’s instruction, recommends Bidder 1 be appointed.

31 January 2018                Acting MM Mazwai signs appointment letter

1 February 2018                Supply chain manager re-submits the appointment letter for Bidder 1 to new Acting MM, Pillay who assumes that duty that day.

  • Pillay requests all bid reports leading to the appointment letter being signed.
  • Pillay says the award must be made to WK Construction because awarding the contract to the poor performing Bidder 1 will result in more delays, hence more underspending by the municipality. Re-advertising the tender would require a 6-month cooling off – hence more delays.
  • Pillay’s report notes that someone from the Municipality had advised (Bidder 1) that BAC was recommending for them to be appointed for the contract. So when Pillay reversed that decision, on 1 February, they appealed. The Executive Mayor, in dealing with the appeal, concurred with the decision of the Acting Municipal Manager,” Pillay’s 27 May report to Council states.

27 May 2018           Pillay signs report for tabling at the 30 May 2018 Special Council Meeting. It notes:

  • The MIG-funded project was budgeted at R16 263 340
  • The awarded amount to WK Construction is R20 424 396
  •  The shortfall excluding consultancy fees is R4 161 056, taking total project costs to R24 709 956.78.
  • This shortfall will be funded by the 2018/19 MIG allocation and means other projects in 2018/19 such as Ncame Street won’t be implemented.

Service delivery protest in Alicedale, March 2015.  Photo: Sue Maclennan

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