Why Sunral has canceled more than R17 billion in the ‘Priority Project’ tender

I don’t like: Sunral [South African National Roads Agency] R canceled tenders worth more than Rs 17 billion, saying there were material irregularities.

Read: Sunral Roy cancels R17.47 billion in tender

Sanral’s spokesperson Bhusi Mona joined the line with me. A very good evening for you, and many thanks for your time. Nice to talk to you tonight. Just explain to us what kind of tender has been canceled and why?

Husk Mona: Good evening This is a total of five tenders.

One is a memorial bridge [Mtentu River Bridge] In the Eastern Cape we are building, there is the EB Clot interchange [improvements project] In Durban, R56 Matatiele [rehabilitation project in the Eastern Cape]You got an open road tolling tender here in Gauteng, the fifth one got me there [N3 Ashburton Interchange in Pietermaritzburg] But a total of five tenders.

Reasons why these were canceled – On January 28, 2020, the General Board decided that our design consultants who were involved in the development of design and technical features should not be involved in evaluating the submission of bidders.

Now this decision has not been implemented by the management authorities in evaluating the five damaged tenders. How did the board know that? It was established by an active assurance practice that is usually conducted by the legal department for internal audits and tenders over a certain price. Tenders above R750 million are subject to an active assurance practice so that the board can convince itself that management has done the right thing.

So it was established that we did not comply with the decision of the board.

It was also strengthened by an external legal opinion. So the board didn’t just look at Sanral’s internal audit and legal opinion. This has made the outcome of that assurance practice subject to an external legal opinion.

An important conclusion was drawn from that practice, which stated that the participation of design consultants in technical evaluations was inconsistent with the board’s resolution and therefore constituted a material irregularity.

I don’t like: All right. Did the canceled tenders fall within such a time frame and was that resolution the one you just described about the people who were part of the design for the sole reason or the resolution that was violated with these tenders?

Husk Mona: OK, in case of board resolution, a certain board resolution, yes. But there were other errors in the tender process which led to irregularities.

For example, there was a bid that was supposed to be non-responsive and should therefore be declared ineligible, as it was not submitted in the specified and required format, as given in the specification.

But that bid goes to the board for approval, when it should have been declared ineligible.

There is one more of the five that I have talked about increasing work opportunities with additional roads to meet the 30% sub-contracting requirement in Sunrail.

Just to illustrate this, we have put this project up for tender; The bidder says, look, I can’t fill 30% in this project, but if you give me extra road I will fill it. Now the scope of that work is increasing.

And, still on the 30% requirement, there is an example where, without board approval, the 30% requirement was reduced to 15% – which requires board approval.

And the board then told management, sorry, we can’t find our way out of this. You need to go back to the drawing board. And the board survives on the fact that it is going to be a push for the construction industry.

So they told the management, you do it as soon as possible. In four months, you should have revalued our debt, because we are surviving for the impact on the construction industry, but critically, to stimulate our economy, we need to provide the infrastructure for job creation.

So this instruction from the board.

I don’t like: All right. Mr. Mona, very briefly – but I’ve got a lot of points that I want to cover – just some more precision. So I read to you that in response to the kind of push you get, the alternative to not following the regime is chaos.

One of the reactions of CEOs like Concours to Lucas Seki is that this, what you have done as a general, is chaos, and the economy you are talking about and rebuilding – you are holding people back and you are doing it. [what is] In contrast to stimulating the economy. So I just want to find your response to that one.

And two, [what are] What kind of engagement did you have with the affected service providers, if any?

Husk Mona: Okay, we hear what the industry is saying – it’s chaos. But I think, with respect, it would be even more chaotic if the board’s resolution was ignored. I’m sure the so-called captain of the industry you’re referring to – of course they don’t do business in this company where the board of that company makes decisions and the management slides to ignore those decisions. That would be chaotic.

So, where we are sitting, the Sanral Board is actually avoiding situations where the regime breaks down …

I don’t like: In a nutshell – I apologize for the interjection, we have one more interview, so I apologize for the interjection. I just want clarity on some of the things you mentioned earlier.

These tenders have been canceled. Do people need to re-evaluate and discipline themselves, or do they have to start the procurement process from scratch and start bidding for these tenders?

Husk Mona: Most obviously, because the process has stopped.

I don’t like: All right. Thank you so much for your time in the SAfm Moneyweb Market Update this evening. Sunral’s spokesperson Vusi Mona was there talking to us about canceling tenders worth R17 billion and more.

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