Sassa's desperate bid to head off social grant crisis could spark bidding bunfight in court‚ warns expert

Sassa's desperate bid to avoid an imminent social grant crisis may backfire and land it in court‚ say experts.

Last week‚ Sassa CEO Thokozani Magwaza wrote to Post Office CEO Mark Barnes asking for assistance to help fast-track a payment deal.

But governance expert William Gumede says the letter‚ sent days after Sassa's Request for Information process closed‚ could result in court action from other potential bidders‚ which could ultimately nullify the entire process.

In a letter Sunday Times has seen from Sassa addressed to Mark Barnes‚ Magwaza asks if Sapo can assist it.

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“Given the extremely limited time available for payment in April‚ Sassa would like to inquire whether there is anything that Sapo could assist us with. Should this be possible‚ a transitional arrangement could be entered into through an intergovernmental agreement‚ which could not necessarily require a full procurement process‚” reads the letter.

This comes with the backdrop of Sassa having received requests for information submissions two weeks ago from 18 companies‚ including the post office‚ that believe they can offer a payment solution for the grants.

Although no other companies that made submissions received the letter‚ Magwaza told Sunday Times that it was all above board.

“Yes there was a letter written to the post office CEO‚ the letter was not signed by me but it was signed by one of the executive‚ I sanctioned it.

"There is absolutely nothing wrong with it‚ the advice I got from the executive was that this is part of option 6‚ the concern for the executive what happens if option 1 falls through‚ what will be an alternative‚ the post office is a government entity we had already engaged them before and we were carrying on‚ on what we have started‚” he said.

But Gumede‚ speaking only on the guidelines set by the procurement acts‚ said that in his view what Sassa was doing on the sidelines was wrong.

“If Sassa does not have the internal capacity to run this process they should bring in an independent company to advise them. This company should not be part of the tender process or be linked in any way to the final outcome of who gets the tender‚” he said.

He also warned that if the company Sassa was communicating with on the sidelines is eventually awarded the contract there is nothing stopping the losing bidders from taking Sassa back to court.

“The companies left out could go to court and state that the whole process‚ starting with the RFIs‚ was unfair and they could win. The contract could be delayed even if the payment of grants is in crisis‚” he said.

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In response to questions about the letter to Sapo‚ Magwaza explains that approaching the post office was an option Treasury presented.

Two weeks ago Sunday Times revealed that Minister Pravin Gordhan had written to minister of social development Bathabile Dlamini in February advising that approaching the Constitutional Court would “expose government to legal challenges”.

Gordhan’s letter goes on to express that options had been discussed to ensure that grants are paid after 1 April.

The options included continuing to use CPS‚ bringing in banks or procuring the services of Sapo.

This letter was followed by the department collecting requests for information submissions from 18 companies that believed they had the solution to continue paying grants to more than 17 million South Africans.

But according to Gordhan‚ Magwaza at the time preferred the option of continuing with CPS.

“I am informed that the Sassa team and in particular‚ the Chief Executive Officer have argued for option one and two to be implemented as it is perceived that this may be the only solution under the current circumstances‚” reads Gordhan’s letter.

But Magwaza’s letter to Sapo is an about turn.

It states that Sassa is looking at various options to ensure that social grants are paid beyond April 2017 while at the same time positioning itself to be the paymaster in the future.

“The short term option that Sassa is currently considering is that all those social grant beneficiaries who have bank accounts and associated PIN numbers could access their grants through the national payment system infrastructure. However the concern is with the approximately four-million beneficiaries who currently access their grants through cash pay points using biometric as an authentication method. These payments are done at approximately 10 000 cash pay points which are spread throughput the country. Sassa has considered the post office infrastructure for cash payments‚” reads the letter.

Meanwhile Dlamini’s spokesperson‚ Lumka Oliphant‚ said the minister had no idea the letter had been written and had only been made aware of it by media inquiries.

It was reported in the Star that Magwaza is facing suspension for the letter.