New bid to freeze welfare tender

LOSING bidder Empilweni has launched an urgent court bid to stop one leg of a controversial R10-billion social security tender from going ahead.

The SA Social Security Agency (Sassa) said in January that Cash Paymaster Services (CPS) - owned by Net1 - had landed the deal to distribute R100-billion a year in payments to 10million welfare recipients in all nine provinces from April.

Rival bidder AllPay, which is owned by Absa, lodged a court bid to review the tender after claiming there were numerous "irregularities".

Now another losing bidder, Empilweni, has lodged a court application to interdict Sassa from implementing the CPS contract in Mpumalanga - where Empilweni has held the contract for 12 years - pending a ruling on whether the tender was properly awarded.

The matter will be heard in the High Court in Pretoria on Tuesday.

But, as CPS was awarded the contract for the entire country, Empilweni's court bid could stop the tender from being implemented nationwide.

"The ramifications could be wider," said Empilweni MD Charmaine Mabuza. She said that if CPS did get the tender, "we would have no choice but to shut down".

Net1 CEO Serge Belamant said: "If a judge has to find they have a case in Mpumalanga, I would think ... that argument could be used in the rest of the country." He said CPS would challenge Empilweni because, if their bid succeeds, "it would be devastating for the beneficiaries" and would disrupt the payment cycle.

"We don't believe there were any irregularities ... I don't understand how you could go backwards on this. It's not practical," he said.

In its court papers, Empilweni said the tender was "fraught with irregularities", bias by some members of Sassa and "conflicts of interest".

Eric Mabuza, chairman of Empilweni, said in his affidavit that his company's bid was "vastly cheaper" and the tender specifications were changed late in the process to suit CPS.

Empilweni said it would charge taxpayers R15.92 per beneficiary to pay out the social grants compared with the R16.44 that CPS tendered. AllPay said it would charge between R11.55 and R15.57 per beneficiary, depending on the province.

Empilweni said the score given to AllPay by the bid committee was "lowered" from 70% to 58% after a presentation it gave last October.

"As a result, only one bidder, CPS, progressed to the next stage ... this is significant, as AllPay's pricing is better than that of CPS."

One of the issues raised by Empilweni in its court papers is that Vuyelwa Nhlapo, the head of Sassa's bid-evaluation committee, had a business relationship with one of CPS's main shareholders, Mazwi Yako. They were co-directors of a company called Reflective Learning Solutions until 2010.

Empilweni said this was not disclosed, and its "suspicion of bias was further strengthened [by] the manner in which Ms Nhlapo had scored CPS and other bidders".

Belamant said Yako had only lent money to Reflective Learning Solutions a few years ago. "It's such a remote relationship that dates back three years. She might as well have met him at Pick n Pay," he said.

Sassa CEO Virginia Petersen said her agency would oppose Empilweni's action.

"We are confident the process was run properly," she said.