Sanral suspends R1.57bn contract award pending an investigation

The South African National Roads Agency (Sanral) has suspended a R1.57 billion contract awarded to Chinese joint venture contractor Base Major Construction-CSCEC in terms of an agreement reached with Hillary Construction, the second lowest bidder for the contract.

The implementation and execution of the contract has been suspended by Sanral pending the completion of an investigation by the roads agency.

The agreement was made an order of court by the High Court in Pretoria on Friday.

In terms of the agreement, Sanral has undertaken to:

• Investigate the adjudication procedure followed in the award of the Masekwaspoort tender to Base Major Construction-CSCEC and inform the parties of the outcome of that investigation; and
• Give the parties 14 days’ notice of any plans to lift the suspension of the contract award.

The agreement follows Hillary Construction launching an urgent high court application to interdict Sanral from allowing the Base Major Construction-CSCEC joint venture from implementing and executing the contract pending the finalisation of Part B of Hillary Construction’s application.

Part B of the application is to review and set aside the contract award to the joint venture.

Hillary Construction on Friday declined to comment on the agreement reached with Sanral or its legal challenge of the project award.

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Disputes ‘to be expected’

Sanral said on Monday that tender debriefing is part of the tender process – bidders may request a debriefing from Sanral, which they can use as a platform to be taken through their bids and the reasons why their bids may have been unsuccessful.

Sanral said it is to be expected that disputes will arise from time to time in the contested terrain of multi-million and multi-billion rand tenders, and any unsuccessful bidder has the right to approach a court to have the dispute ventilated.

“In this case, an unsuccessful bidder challenged the awarding of the Masekwaspoort tender in court.

“This bidder has made allegations relating to the evaluation, adjudication and awarding of the tender,” it said.

“Without conceding the truthfulness of the allegations, Sanral’s board decided that an investigation must be conducted by Sanral and that, pending the outcome of such investigation, the implementation of the contract should be suspended.

“Sanral and the unsuccessful bidder reached an agreement along these lines and this resulted in the order handed down in court.”

Sanral added that its board “acted expeditiously and responsibly” to ensure that an investigation is conducted by Sanral.

It said the fact that there is now an investigation, and the matter is still before the court, makes it sub judice and Sanral does not intend to comment further on the matter to allow space and time for the completion of these processes.

“Suffice it to assure the public that the investigation will be conducted with the necessary alacrity,” it said.

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JV’s CIDB registration status

In a response on Thursday to Moneyweb’s initial query related to the registration status of Base Major Construction on the Construction Industry Development Board (CIDB) register of contractors at the time the tender award was made, Sanral confirmed there had been a legal challenge to its Masekwaspoort tender award to the Base Major Construction-CSCEC joint venture.

The 42-month project is for the improvement of a section of National Route 1 from Masekwaspoort in Limpopo.

Moneyweb independently received confirmation on Tuesday last week from the CIDB that Base Major Construction’s registration on the CIDB’s register of contractors was suspended at the time Sanral made this contract award.

CIDB corporate legal advisor Thembokuhle Khumalo confirmed that:

• The contractor was suspended on 24 November 2024 for failure to submit its annual update, which includes the payment of annual registration fees; and
• The contractor’s suspension was uplifted on 9 January 2025 following the submission of the annual update and payment of annual registration fees via the CIDB’s registration of contractors online registrations portal.

Sanral’s website reveals that the contract was awarded to the Base Major Construction-CSCEC joint venture on 27 November 2024.

The CIDB’s website states: “Suspended means you are still registered but cannot trade with government until your suspension is lifted.”

The Base Major Construction-CSCEC joint venture submitted a bid of R1 571 608 239.15 for the project.

Hillary Construction submitted a bid of R1 749 600.00 and Raubex Construction a bid of R2 386 851 000.65.

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Second contract awarded to the JV

The Base Major Construction-CSCEC was awarded a second contract by Sanral during the period in which Base Major Construction’s CIDB registration was suspended.

This contract – valued at R1 566 656 758.20 – was awarded on 28 November 2024 for the upgrade of National Route R61 from Section 6 All Saints to Section 7 Baziya in the Eastern Cape.

The joint venture was also the lowest bidder for this tender.

The other bidders were Unik JV, which submitted a bid of R1 818 669 983.69, and WBHO with a bid of R2 189 240 000.00.

Sanral said in a response to Moneyweb’s initial query and request for comment about Base Major Construction’s CIDB registration that it awarded these two tenders to the joint venture in November 2024 after undertaking its internal procurement processes.

“There is no legal challenge to the awarding of the R61 Tender to the JV,” it said.

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Procurement process highlights

Sanral said its procurement processes have various stages.

These include the evaluation of tenderers’ bids by the Bid Evaluation Committee (BEC) and, thereafter, the adjudication of responsive tenders by the Bid Adjudication Committee (BAC) – with the latter making a decision regarding the awarding of a tender to a successful bidder.

“No member of the [Sanral] Board, including the Chief Executive Officer, is a member of the BEC or BAC and Board members do not evaluate and adjudicate tenders,” it said.

“The bids for the R61 Tenders were evaluated by the BEC in February 2024.

“At [that] stage, the legal obligation to ascertain Base Major Construction’s CIDB status arose,” it added.

“Base Major Construction’s status with CIDB at that time was active and, after confirming this to be the case as part of the procurement process as legally required at evaluation stage, Sanral proceeded with the evaluation.

“The responsive bids for the R61 Tender were adjudicated by the BAC on 7 November 2024.

“On [that] day, the BAC made a decision regarding the awarding of the tender to the JV.

“Base Major Construction’s status with CIDB was active at that time.”

It adds: “In light of the relevant and applicable legal prescripts, such as the CIDB Act, Standards and Regulations relating to CIDB registration, the evaluation of the R61 Tender to the JV was permissible, as was the award, and the procurement processes followed by Sanral were above board.

“Currently, Base Major Construction’s status with CIDB is active, and there is no impediment to the JV undertaking the construction work arising from the R61 tender.

“There is no reason for Sanral to suspend the R61 contract pending an investigation and, likewise, no need has arisen for Sanral to investigate the matter on account of an irregularity, of which there is none, and Sanral sees no reason to cancel, re-advertise and re-award the R61 tender.”

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‘No indication’ of improper conduct on the Sanral side

Sanral added that: “There is no information that has come to light that is indicative of any member of the BEC or BAC or member of the Board having conducted themselves in an improper manner in relation to the R61 Tender on account of Base Major Construction’s CIDB registration.

“Such allegations are harmful and defamatory to the people concerned and should not be lightly made.

“Sanral follows stringent and comprehensive procurement processes, with several layers where duties are segregated, and there are multiple checks and balances,” it said.

“Where irregularities occur, these are investigated and appropriate steps taken, the nature of which is determined on a case-by-case basis depending on the relevant facts and circumstances.”

This article was republished from Moneyweb. Read the original here.