Open subcontracting causes row in City of Joburg

A young boy rests against a rock during a protest in Finetown, Johannesburg. Residents burnt tyres, blocked roads and threw rocks at police during protests today against a lack of formal housing in the area. 10 May 2017. Picture: Yeshiel Panchia

It is alleged legal firms are awarded non-legal work that is subcontracted to companies that should have tendered.

Hot on the heels of Herman Mashaba using a business associate to advise the city, it is alleged that the DA-led administration is abusing a provision that allows open subcontracting to companies awarded tenders.

What aggravates whistle-blowers in the city is a claim that in most instances the companies awarding subcontracting work allegedly do not go through any tender process. And they appear at first glance to be mainly legal firms.

The Citizen has been tipped off that a large tender to “assist the City with developing a revised housing plan and delivery model” potentially worth millions of rands has been awarded in this way to a company called Kite Capital.

City of Johannesburg mayor Herman Mashaba and Housing MMC Mzobanzi Ntuli brief media on illegal land occupations in the city.

City of Johannesburg mayor Herman Mashaba and Housing MMC Mzobanzi Ntuli brief media on illegal land occupations in the city.

The Citizen has seen a letter written by executive director of housing Moses Metileni to the CEO of Johannesburg Social Housing Company (Joshco) Anthony Ngcezula on 15 January explaining that “the ten-year strategy will form part of the revised 2018/19 Integrated Development Plan (IDP) and the next five-year IDP.”

“The plan is made urgent by the Mayor of Johannesburg’s recent request to develop a Housing Study based on sound empirical research and strategic thinking that will address the current housing backlog in the city of Johannesburg”, Metileni tells Ngcezula as he requests him to elect a “champion/representative” to liase with the consultant, Kite Capital.

Metileni’s information to Ngcezula that Kite Capital “has been appointed” was reiterated by Zaheer Bhaila, a project manager for Kite Capital in the email he wrote to Sanjay Khadula, an assistant director of building development management in the city’s housing department.

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“We have been appointed by the CoJ Housing Department to develop the 2030 Housing Strategy for the City of Johannesburg. Part of our work involves understanding how many units were built in the city of Johannesburg over the last ten years,” Bhaila informed Khadula and requested access to “Occupation Certificate Data”.

Concerned stakeholders within and outside the city are upset at this decision and say there should have been an open and competitive bidding process as they allege Mashaba’s administration is abusing the open subcontracting system to give work to companies with tender values that require them to have been put out to the market.

One source told The Citizen Mashaba’s administration has resolved to hiring legal firms for tenders and projects whose substantive work is non-legal in nature to circumvent an open tendering process.

Luyanda Mfeka, Herman Mashaba's director of mayoral communications. Facebook.

Luyanda Mfeka, Herman Mashaba’s director of mayoral communications. Facebook.

On receiving a set of questions on the issue from The Citizen, mayoral director of communications Luyanda Mfeka wrote to Thabo Maisela, Michael Beaumont (chief of staff in Mashaba’s office) and Tony Taverna Turisan (Mashaba’s legal adviser) and said: “A rather oppositional journalist is pursuing this story so we need you to help us formulate the response to the below. Further, to flag any risks which we may need to be aware of.”

Buntukazi Xaba, communications officer for the housing department, told The Citizen that, “Given that such a review involves extensive legislative and policy review, the City has appointed Padi Attorneys, a service provider appointed to the panel of service providers approved and accepted by the Executive Adjudication Committee (30th October 2015) following a competitive bidding process”.

Xaba said the letter “is not deemed an appointment letter for supply chain purposes” and that Mashaba “has no knowledge of any previous business relations with either Padi Attroneys or Kite Capital”.

Bhaila told The Citizen that, as a subcontractor to the city, his company did not need to include Padi Attorneys in their correspondence with internal stakeholders. He said Padi Attorneys were duly appointed and are in possession of an appointment letter. He also added that the relationship between Kite Capital began in 2016.

Thabo Padi of Padi Attorneys referred The Citizen to the City of Johannesburg’s communications department.

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