Business News 6.8.2016 01:07 pm

DA, EFF to review existing council contracts

DA leader Mmusi Maimane outside Capital Park Primary School voting station, 3 August 2016, Pretoria. Picture: Jacques Nelles

DA leader Mmusi Maimane outside Capital Park Primary School voting station, 3 August 2016, Pretoria. Picture: Jacques Nelles

Vow to cancel flawed contracts where taking over from ANC.

Both the Democratic Alliance (DA) and the Economic Freedom Fighters (EFF) have vowed to clean out municipalities that they take over from the ANC, from unlawful, corrupt and fraudulent contracts.

In Tshwane the controversial PEU smart metering contract, the public private partnership (PPP) for the building and management of its new headquarters Tshwane House and the multi-year, multi-million broadband contract have been earmarked for cancellation.

The ANC has already conceded defeat in Nelson Mandela Bay, with Tshwane and Johannesburg still hanging in the balance by midday on Friday.

With more than 70% of the votes counted in Tshwane and Johannesburg, it seems probable that even if the ANC got the most votes, it won’t have an outright majority, which means a coalition between the DA and EFF could take control of the two metros.

The EFF has stated publicly that it won’t enter into a coalition with the ANC and Moneyweb has learnt that the DA and EFF are in talks about a countrywide coalition package deal.

Speaking to Moneyweb at the Independent Electoral Commission’s (IEC’s) National Results Operations Centre, DA Federal Executive Chair James Selfe told Moneyweb his party’s governance unit has been preparing for the possibility of taking over some ANC-led municipalities through a series of ‘ready to govern’ seminars.

During these seminars, the DA tried to determine what is problematic in a specific council by reviewing, among other things, staff and contracts. On the presumption of office it determined risks. “If a contract is problematic, it will be cancelled,” he said. That includes instances where the procurement process was non-compliant; it was entered into fraudulently or unlawfully, he said.

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The business community however has nothing to fear if everything is above board, Selfe said.

He said in the municipalities it manages, the DA runs an open tender system and open bid adjudication. It has functioning compliance units and internal audit units as well a municipal public accounts committee chaired by the opposition.

When it took office in Cape Town, the DA cancelled three or four contracts concluded just before the election, Selfe said.

It went to court to cancel the contract for the Chapman’s Peak toll road, which was very costly for the Cape Town municipality. The court accepted the party’s argument that the contract was awarded irrationally and set it aside, Selfe said. This paved the way for a new and proper procurement process.

Selfe said the DA would also focus on the very high debt levels in some municipalities and determine what can be cut without affecting service levels. The party would improve the rate of collection of consumer debtors. It has for example increased the collection rate at the Theewaterskloof municipality, from way below 50% when it took control in 2006, to close to 100%, Selfe said.

DA-controlled councils would ensure more stringent budgeting with minimal cost variations and improved capital spending, which would result in more business for contractors, he said.

Selfe said in negotiating coalition agreements, the DA would “give away” as much as necessary to attract coalitions partners while still being able to provide services to the people, but it won’t form coalitions that don’t make sense just for the sake of being in government.

Also speaking at the IEC results centre, EFF chairperson Advocate Dali Mpofu told Moneyweb that the party intends building on its anti-corruption stance where it assumes office with coalition partners.

“We brought Nkandla to a head,” he said, adding that the party will approach court to have questionable contracts cancelled or set aside if necessary.

“We won’t just step into the shoes of a corrupt government,” Mpofu said. The EFF will set as a coalition condition an audit and proper hand-over process to the new council.

Mpofu said with regard to procurement, the EFF will insist on transparency, no jobs for pals or political favours and independent adjudication of tenders.

In principle, the EFF is however in favour of building capacity within municipalities to enable it to do service delivery itself and limit outsourcing, Mpofu said.

DA spokesperson for finance in the previous Tshwane council Lex Middelberg – who participate in the party’s ‘ready to govern’ seminar for the City of Tshwane – told Moneyweb the controversial smart metering contract with PEU Capital Partners, the PPP for the construction and management of Tshwane House – with a consortium led by listed construction group Group Five – and the 18-year build-operate-transfer broadband contract with a newly-formed company, have been targeted for review and possible cancellation.

He said the feasibility study for Tshwane House was based on the value of rental contracts for office space, currently occupied by city officials, that were inflated to multiples of current market value. The construction process has progressed quite far already, which means some kind of financial settlement would be negotiated in cancelling the contract, Middelberg said.

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