The Special Tribunal has declared unlawful and constitutionally invalid a R25.8 million contract awarded by the Ngaka Modiri Molema District Municipality during the early stages of the Covid-19 pandemic, finding that the North West municipality abandoned a lawful procurement process and improperly appointed a contractor that had never participated in the bidding process.
Judge Billy Mashile ruled in favour of the Special Investigating Unit (SIU), which had sought to review and set aside the municipality’s decision to appoint Rensh CC to undertake repairs and maintenance work at wastewater treatment facilities and pump stations in the Ditsobotla Local Municipality.
The case arose from an SIU investigation launched under a presidential proclamation authorising probes into allegations of corruption, maladministration and procurement irregularities linked to Covid-19-related spending. The investigation focused on the refurbishment and repair of four pump stations and a wastewater treatment plant in Ditsobotla, a municipality that had long struggled with sewage spills and deteriorating water infrastructure.
According to evidence presented before the tribunal, the municipality had already begun a formal procurement process before the Covid-19 pandemic was declared. In November 2019, it advertised a tender for emergency refurbishment work on dysfunctional pump stations, and several service providers submitted bids and bills of quantities in response.
The municipality had also appointed engineering consultancy Themak Consulting Civil Engineering Consultancy to assess the infrastructure and prepare technical specifications and cost estimates. Following its assessment, Themak compiled a bill of quantities valued at approximately R36.9 million.
However, despite the existence of an active procurement process and multiple bidders, municipal officials later turned to Rensh CC, a company that had not submitted a bid or participated in the advertised tender process.
The tribunal heard that in March 2020, shortly before the declaration of a national state of disaster, a senior municipal official contacted Rensh director Rashida Cader by telephone and requested a quotation for the work. Rensh subsequently submitted a quotation of about R25.8 million.
After the country entered a national state of disaster later that month, municipal officials invoked emergency procurement provisions contained in Regulation 36 of municipal supply chain management regulations. A deviation memorandum was prepared and approved, allowing Rensh to be appointed without a competitive bidding process.
Judge Mashile found that the municipality’s reliance on the Covid-19 pandemic as justification for the emergency appointment was unsustainable because the sewage and infrastructure problems predated the pandemic and had already prompted the municipality to initiate a formal tender process months earlier.
The judgment noted that municipal officials failed to explain why Rensh was selected over other companies that had participated in the tender process. The Tribunal found that the municipality abandoned the lawful procurement process without explanation and instead awarded the work to a company that had not competed for the contract.
The SIU’s investigation was supported by findings from both the Auditor-General of South Africa (AGSA) and Parliament’s Standing Committee on Public Accounts (SCOPA). During inspections conducted in 2020, SCOPA found little evidence of meaningful infrastructure improvements despite approximately R93 million having reportedly been allocated to address water and sanitation challenges during the pandemic.
The AGSA’s subsequent investigation uncovered what it described as material irregularities in the procurement process. Among the concerns raised were allegations that the municipality falsely relied on Covid-19 emergency provisions to justify the deviation from normal procurement rules and that procurement specifications were altered without proper approval.
Particular scrutiny was directed at the acquisition of diesel generators. The original project specifications called for generators of a certain capacity, but larger and significantly more expensive units were eventually supplied and paid for. The AGSA questioned the justification for these changes and found insufficient evidence supporting some of the expenditure claimed under the contract.
The Auditor-General also found that certain items reflected in payment certificates could not be verified during site inspections and that contingency amounts worth more than R4.3 million had been claimed despite a lack of documentation showing additional work had been performed.
Although Rensh argued that its appointment was lawful under emergency procurement provisions and maintained that the work was successfully completed, the Tribunal concluded that the municipality had failed to comply with constitutional procurement requirements.
Judge Mashile held that the procurement process was neither fair, equitable, transparent, competitive nor cost-effective, as required by Section 217 of the Constitution. The judgment emphasised that the municipality deprived itself of the opportunity to compare bids and select the most advantageous offer.
The tribunal also rejected arguments by Rensh that the SIU had waited too long to bring the review application. While acknowledging that the review was launched several years after the contract had been awarded, the court found that the delay was adequately explained by the SIU’s administrative and litigation challenges during and after the pandemic. It ruled that condonation should be granted in the interests of justice.
In a strongly worded judgment, the tribunal criticised municipal officials for abandoning a lawful procurement process and for invoking emergency procedures in circumstances where the underlying infrastructure problems were already known before Covid-19 emerged.
The court found that the municipality could not have acted in good faith when it discarded an existing tender process and appointed a contractor that had never participated in it. According to the judgment, the use of emergency procurement provisions appeared to have been designed to circumvent established procurement rules rather than respond to a genuine emergency.
The tribunal indicated that declaring the contract invalid was necessary to uphold the rule of law and ensure accountability for the expenditure of public money.
sinenhlanhla.masilela@iol.co.za
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