SANRAL’s response to a Moneyweb article

SANRAL’s response to a Moneyweb article

Pretoria, 3 March 2022 – The story titled “Sanral delays awarding tenders worth at least R16bn” which appeared in Moneyweb on 3 March 2022 refers.

Before we respond to the substantive issues raised in the article, let us point out that Moneyweb had sent us a list of questions on 2 March 2022 and published the article the same day at midnight. In email exchanges between SANRAL and Moneyweb, the latter acknowledged receipt of our request to delay publication as our responses were going through internal approval processes. This was not a breaking a story and ours was a reasonable request, we thought, and to which Moneyweb did not object.

But Moneyweb could not resist the possibility of facts getting in the way of a juicy story and so it decided to go ahead and publish without a response from SANRAL, or verifying facts. One of the first things any rookie journalist learns in the profession is how important it is to be fair. Reporters must always include the other side.

Sometimes, though, there is no other side. In the case of SANRAL, the other side was there and had been in touch with Moneyweb’s journalist – not for the first time. He knows we always honour our commitment to respond to his questions. But this time around the facts might have gotten in the way of his innuendos dressed up as journalism.

Worse still, his effectiveness as a hired gun might have been blunted. This is also not the first time this journalist has published a factually incorrect statement, which after checking with SANRAL was proven to be inaccurate. We refer to the article published in November 2021 regarding SANRAL allegedly taking a loan from the New Development Bank of R7 billion.

Here are the facts responding to the substantive issues raised in the Moneyweb article.

SANRAL is dealing with a significant backlog in procurement, which is widely known and published, caused by the following:

  1. The clarification process of the 30% subcontracting between SANRAL and National Treasury took 18 months to complete, including the interpretation of “local”, which led to the stalling of 64 SANRAL projects caused by community disruptions.
  2. The rollout of the Supply Chain Management (SCM) reform to comply with the Treasury Regulations on Procurement, issued under the PFMA.
  3. COVID-19 lockdown required changes to tender procedures, which had to be considered and published.

All the above conspired to create a significant backlog which resulted in 258 projects (R31.7 billion), planned to be awarded in 2020/21, being rolled over to the current Annual Procurement Plan of 2021/22. The 2021/22 plan included a further 312 projects (R30 billion) to commence with the procurement process in this financial year.

To provide perspective on the impact the SCM reform has on the administrative processes that must be concluded, it is noteworthy that in 2020/21, 212 contracts were awarded. However, this represents 4 180 tender submissions, which had to be checked for compliance in terms of eligibility criteria and the Regulations, before they could be evaluated for functionality, price and preference.

One must bear in mind that any administrative error will result in the award being declared irregular.

We can confirm that the delay is not due to a lack of funding, as projects will not be planned until the funding is secured.

We can also confirm that the delays had nothing to do with the SANRAL Board. As a matter of good governance, the Board does not get involved in the procurement process. The Board only reviews an award, post evaluation and adjudication by Management, when a tender exceeds the threshold of R750 million, as per the SANRAL Delegation of Authority. In such instances, the Board must satisfy itself that all due processes have been followed. Otherwise, all other bids are finalised and awarded at the Management Bid Adjudication Committee (MBAC) level. The Board does not sit at MBAC.

Since 1 April 2021 to 28 February 2022, 267 contracts have been awarded, which represent R33 billion. Some 69 contracts have been evaluated, and are in various stages of adjudication/award. A further 148 projects are currently under evaluation, of which 35 closed more than 6 months ago. Of the total of 570 listed in the Annual Procurement Plan for 2021/22, 256 advertisements have closed and 16 are currently advertised.

It must also be indicated that the majority of projects are not delayed between adjudication and award, but rather between closing of advertisement and completing of the evaluations.

For 2021/22, 267 awards have already been made – Bid Adjudication Committees meet on a weekly basis to consider recommendations from the various Bid Evaluation Committees and continue to make awards. These awards are published on the SANRAL website and others, as per the requirements.

As for the suggestion or advice by WBHO Group CEO Wolfgang Neff that the SANRAL Board “may not have the correct experience to determine whether a bid is competitive or not and whether the contractor will be able to compete the work” we find such remarks unfortunate and revealing about his understanding of how SANRAL procurement works. These issues are determined through an extensive evaluation and adjudication process, which includes many specialists in engineering, procurement and legal fields. The Board merely seeks clarity where it has any concerns on the award made by MBAC.

Thus, Mr Neff’s suggestion about the role that consulting engineers must play is, unfortunately, incongruent with SANRAL’s corporate governance position on the matter of conflict of interest.