Sanral caves, withdraws controversial tender policy

The board of the South African National Roads Agency (Sanral) has withdrawn its new preferential procurement policy (PPP), including its new controversial tender scoring system.

The roads agency said on Tuesday it had withdrawn the policy to avoid lengthy court battles associated with the implementation of the new policy, which was adopted by its board on 23 May 2023.

Sanral said it intends to commence a process on a date soon to be announced where it seeks to engage the construction industry and all relevant stakeholders to address meaningful transformation imperatives in the sector.

New Sanral tender scorecard

Sanral’s board has proposed, as an interim measure pending the adoption of a final policy, to adjudicate all tenders in accordance with a new scorecard that contains a table it described as “Allocation of Specific Goals”.

The roads agency said it has been advised by senior counsel that in light of the change in the scoring formula, it is necessary to commence the tender process afresh – a decision that has been reached with much angst in light of the urgent need for the services to be rendered.

Sanral said it will therefore be cancelling all existing advertised tenders that have not yet closed, issuing new tender adverts, and subsequently adjudicating all tenders within the confines of the interim policy.

It said it intends to expedite the readvertisement of tenders and processing thereof within this financial year.

Legal challenges

Sanral board chair Themba Mhambi said on Tuesday the decision to withdraw the new preferential procurement policy was taken by the board after careful consideration of developments since it was adopted.

“Following our adoption in May 2023 of a new preferential procurement policy for Sanral, there have been a number of legal challenges to the policy, which were launched by construction companies in various courts across the country.”

He said the legal challenges “have regrettably resulted in Sanral being prevented from proceeding with the processing of close to 80 tenders worth billions of rands, with significant negative consequences for the fulfilment of the constitutional and statutory mandate of Sanral”.

“The board of Sanral has adopted the decision to withdraw the new preferential procurement policy because of the negative impact these court challenges have, including the fact that we anticipate that the lengthy court processes will cause significant delays to the work of Sanral.”

Commenting on future subcontracting, Sanral said it shall require, as a condition of contract, that successful bidders be required to ensure compliance with contract participation goals for targeted enterprises in targeted areas and labour in line with the formula applied by the Construction Industry Development Board in terms of Government Gazette No 4127 published in November 2017, as was applied before the introduction of the policy that is being withdrawn.

Sanral said it will be inviting representations from stakeholders on the content of the draft interim policy.

It said the date and time when such representations should be made will be announced shortly.

ALSO READ: Construction firms challenge Sanral’s award of N2 tender

Review application

Sanral’s decision to withdraw the policy comes shortly before an application by H&I Construction, which was joined by WBHO, to review and set aside Sanral’s new tender scoring system.

The review application was set to be heard next month in the High Court in Gqeberha.

In addition, the opening and adjudication of at least 68 Sanral tenders has been stopped by construction companies through interim interdicts obtained in the high court pending the outcome of the application to review and set aside the scoring system.

H&I Construction was granted an interim interdict earlier this year in the High Court in Gqeberha, stopping Sanral from proceeding with the adjudication and award of two specific tenders in accordance with the amended tender scoring system as advertised by Sanral on 19 May 2023 in an addendum to its tender document.

Nine construction companies submitted affidavits in support of H&I’s application.

The High Court in Pretoria subsequently granted construction and infrastructure company SMEC South Africa an interim interdict stopping Sanral from proceeding with and/or implementing and/or giving effect to the outcome of the tender adjudication process related to a list of 65 bids to tender invitations.

The Western Cape High Court on 16 October stopped Sanral from proceeding with the opening and adjudication of submitted bids and the awarding of another tender using its controversial new tender scoring system.

H&I Construction also lodged that application, which was to interdict Sanral from proceeding with a tender for the improvement of the N7 between Piketberg and Piekenierskloof Pass and was also granted it pending the outcome of the review hearing.

Moneyweb emailed a list of questions to Sanral on 17 October following the granting of this interdict. Among other things, we asked Sanral how it plans to address this situation because it appears that every tender that Sanral allows to close, and where it wants to open the bids submitted and adjudicate them, can potentially be interdicted if the adjudication is to be done in terms of its new tender scoring system, pending the finalisation of the review application.

Sanral had not provided a response to these questions until it released a statement on Tuesday on the withdrawal of its new PPP.

ALSO READ: Sanral’s multi-billion rand deal with Chinese firms draws flak

‘Protracted legal battle detrimental to economy’ 

Sanral CEO Reginald Demana said infrastructure development is critical to South Africa’s economic growth and, in the wake of the Covid-19 pandemic, the country cannot afford further disruptions to the expansion and maintenance of the national road network and key arteries across the country’s provinces.

“A protracted legal battle between Sanral and the construction industry would have dire consequences not only for Sanral’s projects, which run into billions of rands, but would also be detrimental to the entire economy,” he said.

“Clearly, it is not in the interest of Sanral, nor is it in the national interest, to delay our infrastructure build programme.”

Demana added that the Constitution, the Public Finance Management Act, the Preferential Procurement Policy Framework Act, the Broad-Based Black Economic Empowerment Act, and Sanral’s procurement framework, policies and procedures, combined with directives from National Treasury, form the basis of Sanral’s procurement system.

He said all relevant policies, legislation, regulations and directives shall be used to continue to champion the transformation of the construction industry in consultation with its stakeholders.

“The Sanral Board adopted in May 2023 the new Preferential Procurement Policy to advance transformation of one of the most important industries in South Africa, the construction industry.

“In taking the decision to adjudicate tenders in accordance with interim measures highlighted … Sanral hopes and trusts that all construction companies, and indeed all our stakeholders, shall work together with us to ensure that we are able to continue with the procurement of services and to meaningfully transform the construction industry,” he said.

Demana added that Sanral will continue to consult all its stakeholders to consider and work on a new procurement policy to build and transform the country’s economy.

He said this process will be undertaken as soon as possible, within a reasonable time, and will undergo a public consultation process.

ALSO READ: Another Sanral tender process stopped in its tracks

‘Sanral has capitulated’

Hein von Lieres, partner at Von Lieries, Cooper & Barlow Attorneys, and attorneys for H&I Construction, said Sanral has capitulated.

Von Lieres said Sanral claims that it withdrew its new PPP to avert lengthy court battles associated with it, but H&I sent a letter to Sanral in May 2023 to express its concern about the legality of the new PPP and scoring systems.

He said H&I proposed that Sanral urgently revisit its PPP and scoring system to remove the objectionable new scoring elements related to ownership and sub-contracting, otherwise, it would have no option but to go to court.

Von Lieress said H&I did not wish to prejudice Sanral’s procurement or the rights of the other prospective tenderers and, therefore, suggested that the new scoring regime be withdrawn and that Sanral use its previous system.

“This could be done either as a temporary measure while H&I’s review challenge proceeded, and therefore on an interim basis without Sanral’s rights to oppose the review being prejudiced, or on a permanent basis until such time as procurement measures which are indeed constitutionally compliant are introduced.

“Sanral replied to this in early June 2023, stating that it was confident that its new PPP and scoring system were constitutionally compliant and refused to, even as an interim measure, use the old scoring system.

“After spending hundreds of thousands of taxpayer rands on legal fees, Sanral has now capitulated and announced that it has withdrawn the new PPP to ‘avoid lengthy court battles’.

“This could have been done in June this year without the waste of taxpayers’ rands resisting the challenge to a clearly unconstitutional PPP,” he said.

Von Lieres added that with this waste of taxpayer’s money comes the further negative that Sanral’s refusal to concede has caused a further six-month delay to its already delayed project pipeline.

“It becomes all the more bizarre given that it [Sanral] has now re-introduced the ‘old scoring system’ as an ‘interim measure’, which is exactly what H&I had proposed some six months ago,” he said.

Von Lieres invited Sanral’s board to explain this waste of time and money to the taxpayers, who have ultimately been prejudiced by the board’s unreasonable refusal to implement the old scoring system as an interim measure and very practical solution proposed by H&I in May 2023.

This article is republished from Moneyweb under a Creative Commons licence. Read the original article.