Tickets for Aarto amid state body’s poverty plea

Just weeks after proclaiming itself ready to roll out the government’s long-delayed Aarto traffic fine management system, the big-spending Road Traffic Infringement Agency (RTIA) said it would have to outsource the project to the private sector — at a further cost believed to be about R1.2bn.

Claiming it is too cash-strapped to do the work itself, the RTIA — which operates from plush Midrand headquarters costing R52m a year to rent — missed its third deadline to implement Aarto on December 1. Seven days later, it published a tender for a private company to implement a ”turnkey project".

The agency has long been accused of extravagant spending and mismanagement. It has cost taxpayers R2bn since its inception in 2014, with little to show for it.

The Organisation Undoing Tax Abuse (Outa) watchdog group says the tender is a “potentially corrupt, deliberate money-making scheme”.

The new development also raises questions about whether the latest deadline of July 1 will be realised. The long-awaited rollout to 69 municipalities across the country is aimed at curbing high road fatalities. The new system incorporates a demerit points regime that will see repeat offenders lose their licences.

The transport department said municipalities were struggling to establish systems to enable smooth operations.

This ‘project’ has all the hallmarks of a potentially corrupt, deliberate money-making scheme. It is nothing short of a public-private partnership that involves revenue sharing of funds intended for the state

—  Wayne Duvenage, Outa CEO

The tender is for a “turnkey solution to the rollout of Aarto”. It calls for a single contractor to design, build and operate Aarto core services for 60 months.

It closed on February 13 with 47 bidders. While the RTIA, the Road Traffic Management Corporation (RTMC) — under which it falls — and the transport department could not say what the contract was worth, insiders said discussions had put the figure at about R1.2bn.

The scale of the project has raised concerns about a looming partnership deal that critics say will see the government facilitating “perverse incentives” for a private business.

“This ‘project’ has all the hallmarks of a potentially corrupt, deliberate money-making scheme,” Outa CEO Wayne Duvenage told the Sunday Times. “It is nothing short of a public-private partnership that involves revenue sharing of funds intended for the state.

“Traffic enforcement is not meant to operate as a profit-driven exercise. When private entities stand to benefit from administrative processes linked to fines, it creates perverse incentives and erodes public trust. That is exactly what Aarto does not need.”

Duvenage called for an independent evaluation of the respective roles and capacities of the RTIA and RTMC. He argued it was highly probable that no outsourcing was required and that the necessary competence already existed within the RTMC.

“The RTIA makes little money if infringers pay on time, and a lot more when the public miss the fine payment deadlines and have to pay a higher penalty. This is where the potential for system manipulation creeps in. In our view and that of Treasury, it is taboo for private companies to earn revenue from such systems.”

But the RTIA says payments to the successful bidder will “not necessarily” be linked to the number and value of fines.

The scope of the tender appears to shift key operational and system-development responsibilities — functions already housed within government — to a private entity backed by substantial capital. One of the mandatory requirements is proof that bidders have access to at least R250m in start-up funding facilities.

The core functions of adjudications, revenue collection and communications will be undertaken by internal management structures. The functions being outsourced are the operational and system development functions, which will require a lot of capital to implement

—  Emmanuel Tshehla, RTIA spokesperson

Asked why it was outsourcing the very function for which it was created, the RTIA denied it was handing over its core mandate.

Spokesperson Emmanuel Tshehla said describing the tender as turnkey may have been a misnomer but insisted there was no intention to outsource the agency’s central responsibilities.

“The core functions of adjudications, revenue collection and communications will be undertaken by internal management structures. The functions being outsourced are the operational and system development functions, which will require a lot of capital to implement,” Tshehla said.

He said the initial deadline of February 3 had been extended to February 13 after bidders complained about the tight December advertising window over the annual holiday period, when people are on leave.

Asked whether the RTIA had sought approval from the National Treasury before advertising the tender, Tshehla said the Treasury “does not get involved in turnkey projects”.

“Turnkey projects are required to be incorporated in the procurement plan,” he said.

The RTIA was established in 2015 to implement Aarto and improve road safety by streamlining the administration of traffic fines, making it easier to track offenders, enforce penalties and reduce reckless driving.

The RTIA operates under the oversight of the RTMC, which supervises the broader traffic management system and runs the national traffic information system (Natis) online platform.

Tshehla said the outsourcing drive stems from gaps in developing a crucial register that logs national road traffic offences.

“The RTMC has recently [told] the RTIA that its funding and functions on Natis do not extend to the development of the register, which is why the agency is soliciting the services of an external service provider to provide the urgently needed capital to develop and harness it,” Tshehla said.

“The RTMC has been experiencing financial challenges, which have hampered its ability to respond to the RTIA’s system development requests.”

On the claims of incapacity, RTMC spokesperson Simon Zwane said: “We note the route that the RTIA has taken. Despite the challenges we are experiencing, we had done work with the RTIA and had planned to approach the shareholder for additional funding to finalise the Aarto project. We are committed to the project and continue to engage in the Aarto steering committee.”

The contractor’s remuneration will be based on defined output and will not be necessarily linked to the number or value of fines issued. This approach aligns with National Treasury requirements and avoids perverse incentives

The RTIA maintains that without an external investor the Aarto system faces serious risk.

“In the absence of this turnkey project, the agency and the department would face serious operational and reputational risk regarding the adequacy of their systems to support the national rollout of Aarto,” Tshehla said.

He said the project would not change how law enforcement or adjudication functions are carried out, and would not introduce commercial incentives directly tied to fines. Instead, the model would share implementation risk with a private investor that fronts the capital and is reimbursed later when the RTIA begins realising revenue from infringers.

That reimbursement cycle is projected at 126 days, including an appeals tribunal and court review processes.

“The contractor’s remuneration will be based on defined output and will not be necessarily linked to the number or value of fines issued. This approach aligns with National Treasury requirements and avoids perverse incentives,” Tshehla said.

“Similar output-based service models have been utilised by municipal service providers operating under the Criminal Procedure Act for many years without any recorded ethical breaches.”

The agency declined to disclose the estimated value of the tender. Both the RTIA and the national department of transport said bid documents had not yet been opened and they were therefore “not in a position to confirm the proposed amounts and structure by the bidders”.

On the question of private profit, the department defended the use of outsourced partners. It pointed to existing arrangements with the South African Post Office and national payment platforms, where compensation is outcome-based. Post office payments depend on the number of notices validly served, while payment platforms receive a legislated fee of 3% of the value of paid notices.

Under the turnkey project, the successful bidder will charge a fee covering operational and capital expenses. A key distinction is that contractors must continue delivering services even if the RTIA faces cash-flow constraints — hence the requirement for proof of bidders’ access to substantial funding.