Business Maverick

TENDER RUCTIONS

Sanral sticks to its guns on controversial new procurement system

Sanral sticks to its guns on controversial new procurement system
Construction in progress along Klipspruit Valley Road on 13 July 2022 in Soweto, South Africa. (Photo: Gallo Images / Fani Mahuntsi) | Unsplash / Patrick Tomasso | Ramain Dancre

The state-owned entity’s board and executive management have refuted claims that its new preferential procurement policy for tenders has created tensions within the agency.

Management of the South African National Roads Agency Limited (Sanral) has strongly denied suggestions of an exodus of staff following changes made to the state-owned entity’s (SOE) procurement policies on tenders for road and bridge construction projects. 

Sanral’s board chair, Themba Mhambi, has refuted claims that the SOE’s new preferential procurement policy for its tenders has created tensions within its management structure to the extent that several senior staff members have resigned or summarily been suspended. 

“We don’t have a single staff member who has left on the basis of any issue between them and the organisation — either in situations where they have committed wrongdoing and we have charged them,” said Mhambi during a briefing to journalists on Wednesday.

Speculation came to a head in August when Sanral suspended its chief financial officer, Inge Mulder, and Inba Thumbiran, the head of supply chain management, reportedly over the board’s new procurement policy changes. The suspended Sanral officials were not available to speak to Daily Maverick.

Some Sanral managers (believed to include Mulder and Thumbiran) have reportedly pushed back against the implementation of the new scoring system mandated by the board on tenders as it might contravene the Preferential Procurement Policy Framework Act and regulations on procuring goods from companies with a favourable Broad-Based Black Economic Empowerment (BBBEE) status.

On Wednesday, Mhambi was not willing to comment on the reasons behind the suspension of Mulder and Thumbiran, both of whom would have been closely involved in overseeing the SOE’s policies and systems on procurement, including the new changes. 

Without naming Mulder and Thumbiran, Mhambi suggested their suspension was related to “a normal disagreement between an employer and employees”. Disciplinary processes had been instituted against the pair and were ongoing, he said.

“Despite their suspension, those two people are innocent as we are sitting here today. We don’t know what the outcome of the disciplinary processes between Sanral and them will be. I want to emphasise that they are innocent,” said Mhambi.

Changes to procurement policy

Sanral ruffled feathers when its board implemented a new scoring system in May which the SOE uses when adjudicating tender bids.

The tender adjudication system of government departments and state organs is based on a points system where companies with favourable BBBEE profiles earn more points, thus being in a stronger position to win tenders.

In the past, Sanral used a bidder’s BBBEE rating to allocate 10 or 20 points regarding compliance with the SOE’s preferential procurement requirements. Companies with a Level 1 BBBEE rating (the highest and most coveted empowerment status) could automatically receive the full amount of points.

In May, Sanral changed the weighting of the 10 and 20 points for preferential procurement, which has angered players in the construction industry.

Sanral’s changes, said construction company H&I Construction, would relegate a bidder’s BBBEE level rating to a mere one point, in the case of a 90/10 tender (where the tender is valued at more than R50-million), or two points in the case of an 80/20 tender (where the tender has a value equal to or above R30,000 and up to R50-million).

“[As a result of amendments to the tender scoring system] Sanral has elevated black ownership and sub-contracting to targeted enterprises to respectively five points (10 points in the case of 80/20) and four points (eight points in the case of 80/20) of the scoring of tenders that use the 90/10 scoring regime,” argued H&I Construction.

H&I Construction and Wilson Bayly Holmes-Ovcon, supported by 11 other construction companies (including Raubex and Stefanutti Stocks), have dragged Sanral to court in an effort to overturn the board’s new scoring system on tenders.

They have argued that the new system would significantly downgrade their BBBEE status and leave them unable to do business with the state and its organs.

Sanral CEO Reginald Demana said the construction companies would not deter Sanral from pursuing real transformation within the sector. 

“As Sanral, we are determined to make sure that the resources at our disposal benefit all classes of society and every South African. We don’t exist to benefit one part of society over the other,” he said.

“Transformation is an imperative that we believe in as it is in the Constitution. We will drive it for as long as we are involved in the governing structure of Sanral.” DM

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