Tshwane R12bn contract with GladAfrica 'flouted tender law'

The process followed in awarding a R12bn project-management tender to engineering consultants GladAfrica by the City of Tshwane was in contravention of the law.

This is the provisional finding of an investigation being conducted by law firm Bowmans, which was appointed to investigate any irregularities in the lucrative contract.

On Thursday, Tshwane city manager Moeketsi Mosola obtained an interim interdict at the labour court, barring the report from being tabled in the city council until November 9, when full arguments will be presented. In a draft interim report obtained by the Sunday Times, the law firm finds that:

• The procurement of goods and services from GladAfrica Project Managers did not comply with certain requirements of the constitution and the Municipal Finance Management Act (MFMA);
• The procurement process adopted by Tshwane was not sufficient to ensure fairness, transparency, competitiveness and cost-effectiveness; and
• The direct negotiation and conclusion of an agreement between GladAfrica and the city is contrary to MFMA requirements.

The law firm, however, said it must conduct further investigations before releasing a final report.

The Sunday Times broke the story of how rules were allegedly disregarded to award the tender to GladAfrica to manage all the city's mega building and maintenance projects. These include the bus rapid transport system, road upgrades and waste-water treatment plants. The Midrand-based consulting firm scored R250m in consultancy fees in just six months.

It was picked from a panel of service providers on the database of the Development Bank of Southern Africa (DBSA), using regulation 32 of the MFMA, which allows a state entity to piggyback on the contract of another public entity.

But Mosola allegedly ignored legal advice and warnings from city officials that it was illegal to contract GladAfrica using regulation 32 as the city had to institute its own procurement process for such an extensive and lucrative contract.

In its draft report, Bowmans says GladAfrica should not have been singled out from all the service providers on the database and awarded the contract. The city, it says, should have undertaken its own, separate tender process. It also says that communication between Mosola and the CEO of the DBSA, Patrick Dlamini, in which Mosola requested permission to invoke regulation 32 to make use of the bank's panel of service providers, did not constitute a "contract for the provision of goods and services".

GladAfrica could only be used via regulation 32 if it was providing exactly the same service to the DBSA that Tshwane was contracting it to provide. It also had to have been contracted by the development bank through competitive bidding. This was not the case, the report finds.

"We conclude that the DBSA did not consent to the procurement as required by regulation 32 (d)," the law firm writes, adding that it needs to conduct further investigations before releasing a final report.

Responding via his lawyers, Mosola protested that it was "unlawful" for the Sunday Times to be in possession of the report as the court had interdicted the council and speaker from tabling the report pending finalisation of the matter.

He did not respond to specific questions relating to the report's provisional findings.

Contacted for comment, GladAfrica said it did not have a copy of the interim report and thus could not respond to its contents.

Bowmans partner Matthew Chane said he could not comment on "matters ongoing".