Pretoria - Public Protector Thuli Madonsela has called for urgent steps to be taken to cancel an agreement between the Limpopo Department of Roads and Transport and On-Point Engineering.
This is one of the remedial actions recommended in her report on investigations into allegations of improper conduct, including corrupt practices relating to the awarding of contracts for goods and services by the department to the company.
The total amount paid by the department to On-Point in terms of the contract at the end of June 2012 amounted to R43 868 900.
Briefing the media on her findings on Wednesday, the Public Protector said there was failure by the department, specifically the Bid Committees and the HOD, to notice obvious discrepancies in the company's bid.
She pointed out that On-Point's Tax Clearance Certificate and company registration documents, showed the company to be not older than five months, while the bid document claimed nine years of experience.
This left a lot of questions that needed to be answered regarding the relationship between the HOD and some or all of the departmental players that took part in the bid process and On-Point.
"That On-Point was given preferential treatment is without doubt. The unanswered questions are further compounded by the fact that evidence suggests that On-Point knew about and started preparing for the bid some time prior to September 2009," she said.
Madonsela did not make a finding on the possibility that such relationships may have been in violation of the Prevention and Combating of Corrupt Activities Act, leaving this to be decided on in the investigation currently underway by the Hawks.
"The Public Protector accordingly reserves her findings on whether or not the awarding of the tender constitutes a corrupt practice as envisaged under the Prevention and Combatting of Corrupt Activities Act," she said.
However, Madonsela found that "On-Point should never have been awarded the tender for the PMU as it did not qualify by a long stretch".
The bid presented to the department for the tender consisted of a deliberate and fraudulent misrepresentation in respect of the profile, composition, experience, personnel, assets, annual turnover and contribution to youth business development, and therefore the functionality and track record of the company, she pointed out.
In reality at the time of submitting the bid document, On-Point had existed for approximately one month, had no employees, no assets or annual turnover and several of the purported key management personnel and staff members were not involved with it at all, she said.
As a company, On-Point had no profile, track record and experience and therefore no functionality that could have made it eligible to be considered as a competent bidder, she added.
"The submission of the bid therefore violated the provisions of clause 23.1(a) of the General Conditions of Contract and amounted to an abuse of the supply chain management system, which is prohibited by Treasury Regulation 16A9. The conduct was unlawful and constituted fraud. The Public Protector is accordingly of the view that the crime of fraud has been committed," she said.
The failure by officials to properly interrogate the bid presented; perform a due diligence test; and verify of the company's functionality and compliance with the requirements of the bid, was improper and constituted maladministration, Madonsela found.
"The awarding of the tender by the department to On-Point was unlawful, improper and constitutes maladministration," she said.
With regards to the conduct of the department, Madonsela said no indication could be found during the investigation that the HOD applied his mind to the disqualification of bidders.
He made no effort to ensure that the awarding of the bid to On-Point was in accordance with the principles of a system that promotes competition and cost effectiveness and failed to pick up obvious anomalies in On-Point's bid document, she pointed out.
"The conduct of the department, specifically that of Mr Letebele the HOD and the BEC and BAC failed to meet the standard stipulated under the PFMA [Public Finance Management Act], particularly section 38, thereof and relevant Treasury Regulations... The conduct was accordingly unlawful, improper and constitutes maladministration," Madonsela said.
With regards to remedial action recommended, Madonsela said the Head of the Department should take urgent steps to immediately cancel the agreement between the department and On-Point.
The head of department should also instruct the State Attorney to institute legal proceedings against On-Point and its shareholders that benefitted from the awarding of the tender.
This was in order to recover any amount to which the department is entitled to, due to On-Point's fraudulent misrepresentation in respect of its bid and the improper financial benefit that it and its shareholders gained as a result, she said.
The head of department should also take urgent steps to recover the total amount of double and other undue payments made to On-Point, as well as institute disciplinary steps against the officials who failed to perform their functions diligently.
She called for the acting National Director of Public Prosecutions and the Head of the Asset Forfeiture Unit of the National Prosecuting Authority to take note, that the evidence and information obtained during her investigation disclosed the commission of the criminal offences, fraud and a contravention of section 12 of the Prevention and Combatting of Corrupt Activities Act, 2004.
They should take urgent steps to deal with the evidence of the commission of the criminal offences in the appropriate manner, she said. - SAnews.gov.za
