Constitutional Court orders new grant tender process

17 April 2014 - 14:30 By Sapa

The Constitutional Court ordered Sassa on Thursday to initiate a new tender process for the payment of welfare grants, but said in the meanwhile the current contract-holder, Cash Paymaster Services (CPS), must continue to carry out its obligations.

To achieve this, the court suspended its declaration of that contract as invalid.

The court also imposed a structural interdict that the SA Social Security Agency (Sassa) appoint a new bid evaluation committee and report back on each stage of the tender process.

The ruling follows a Constitutional Court decision in November last year declaring the R10 billion contract with CPS invalid, following a long legal challenge by losing bidder AllPay Consolidated Investment Holdings.

The court then heard further argument about a suitable remedy to ensure that the payment of some 15 million welfare grants continued smoothly, with Sassa arguing that the existing contract should be allowed to run.

On Thursday, the court found that the decision on a final remedy, and the awarding of a new contract, lay with Sassa.

It said if Sassa found that it could not award a new contract for a five-year period, it would suspend the declaration of invalidity until the contract with CPS had run its course.

However, the court also held that CPS was not allowed to benefit from an unlawful contract and that its proceeds should not be beyond public scrutiny.

Sassa had argued that it intended to administer the social grant system itself from 2017, and that any new tender issued would therefore be for a short period and not profitable.

Its legal counsel argued that since all parties agreed that a new tender should run for five years, the court would be stopping Sassa from implementing its prerogative in this regard and violating the separation between the executive and the judiciary.

AllPay initially challenged the contract in the High Court, which found that the tender process had been unfair, but declined to set it aside on the basis that it would disrupt the payment of grants.

The Supreme Court of Appeal overturned the ruling, finding that a contract need not be set aside because there had been "inconsequential irregularities".

AllPay then appealed to the Constitutional Court, which found that Sassa had an obligation to investigate and confirm the empowerment credentials of the bidders before awarding a tender, and declared giving it to CPS constitutionally invalid.