The South Gauteng High Court in Johannesburg has declared Gauteng’s R526 million medical waste tender invalid and set it aside.
In a ground-breaking judgement on Thursday, November 30, Judge Ahmed Cajee found that the disputed tender awarded by the provincial Department of Health a few weeks ago had lapsed.
The provincial health department awarded Tshenolo Waste (PTY) Ltd and Phuting Medical Waste Management (PTY) Ltd the multimillion-rand contract following several extensions and questionable processes, now the subject of a legal challenge.
Buhle Medical Waste, the current service provider, had taken the matter to court, saying the tender was unlawful and riddled with irregularities. It sought an order to interdict the department from interfering with the contract, which expires at the end of November, pending the outcome of a review application.
In his four-page judgement, Judge Cajee said the tender was invalid.
“It is declared that the tender for the “Appointment of Service Providers to Render Comprehensive Healthcare Waste Management for the Department of Health institutions for a period of thirty-six months” (“the tender”) lapsed because no valid extension of the tender period occurred after the 17th of November 2022 and accordingly that the tender and RFP are of no force and effect,” read part of the order.
“The award of any tenders to the tenth (Tshenolo Waste) and fifteenth (Phuting Medical Waste Management) and any contracts entered into with them thereafter or on behalf of the first (Gauteng Health MEC Nomantu Nkomo-Ralehoko) and second (Acting head of department Arnold Malotana) pursuant to and as a result of the invalid extension of the tender periods are declared invalid and set aside.”
However, Judge Cajee suspended the order for six months to allow the department to re-advertise the tender and appoint “suitable service providers”.
On November 20, African Times reported that senior provincial health department officials had allegedly fixed the R526 million medical waste tender to benefit their preferred bidders at approximately double the price.
Acting head of department Arnold Malotana, acting director for health care risk and medical waste Edgar Motha, and Sheriff Lecholo, assistant director for contract management in the supply chain unit, had allegedly manipulated procurement processes to secure the contract for two companies in July last year.
Businessman Malusi Molewa owns Tshenolo Waste, while Daniel Melk is Phuting Medical Waste’s director. The respondents included Gauteng Health MEC Nomantu Nkomo-Ralehoko, Finance MEC Jacob Mamabolo, Malotana and the acting Chief Financial Officer Montwedi Botsane, the head of the bid adjudication committee.
Motaletale Modiba, the spokesperson of the Gauteng Department of Health, had “noted” the judgement and instructed its lawyers to appeal it. He said the department believes the court erred in setting aside the tender.
“The case before [the] court involved an application for an interdict on an urgent basis, with Buhle Waste presenting their case in two parts: Part A and Part B. Part A was argued in court on urgent basis on the 21st of November 2023, while Part B, which is the review application, was not yet argued as the court was still hearing the urgent application.”
“The department is of the view that the court made an error by ordering a review and setting aside of the tender, as the issue of reviewing and setting aside the tender was not within the scope of the court proceedings at that time. This matter was specifically to be addressed in Part B of the application, which had not been heard yet. Therefore, the court should not have ordered a review or the setting aside of the tender and contract without hearing Part B.”
“Based on these grounds, the Department’s considered position is that the Judge’s decision exceeded the appropriate scope of the judgement. As a result, the department has since filed a Notice for leave to Appeal the Judgement, which then renders this matter Sub Judicare (not yet concluded by the Court),” Modiba said.
Phuting’s director, Melk, and his Tshenolo counterpart Molewa had yet to respond to requests for comment. The contract entailed collecting and disposing medical waste in the province’s hospitals and clinics over three years. Tshenolo Waste was awarded a R314 million contract to collect and dispose of medical waste in Tshwane and Johannesburg.
At the same time, Phuting Waste scored a R211 million tender to do the same in Ekurhuleni, Sedibeng and the West Rand. Insiders had said the two companies allegedly benefitted from a flawed process engineered by Malotana, Motha and Lecholo at the expense of 15 other bidders who were eliminated for dubious reasons.
The bidders had been denied a compulsory briefing session, and access to information and were given a three-hour notice to extend the validity periods of their bids.
According to the sources, the bidders were also subjected to vague rules about subcontractors while the tender allegedly lapsed several times before being awarded. Motha, whose unit is the end user, had allegedly tailored the tender specifications to suit Tshenolo and Phuting. He had also refused to hold briefing sessions or field questions from the bidders.
Lecholo had allegedly extended a lapsed tender and excluded some bidders during evaluation on dubious administrative compliance. Malotane had allegedly appointed Tshenolo and Phuting unlawfully and implemented a fixed tender as a variable one.
Moreover, the trio had allegedly used a Covid-era National Treasury notice to justify not holding a briefing session. Malotana, Motha, and Lecholo failed to publicly announce the names of the successful bidders at a meeting with the bidders on September 15 as required by the Gauteng Finance Management Supplementary Act of 2019 and the Gauteng Open Tender Framework.
They had cited safety reasons. The Gauteng Department of Health had allegedly awarded the tender at R44 per kilogram of medical waste even though the current service provider, Buhle Medical Waste, renders the service for R21 per kilogram.
Sources familiar with the process said Malotana, Motha and Lecholo had allegedly tailored tender specifications and bent rules to suit Tshenolo and Phuting. This had included not conducting site visits and removing South African Bureau of Standards (SABS) requirements for the medical waste containers.
“It’s actually a case of individuals like Edgar Motha and them trying to push their person in at double the price. It’s essentially on a lapsed tender. This tender has lapsed multiple times,” one source previously said.
Another source said the department had awarded the contract at a fixed rate but implemented it as a variable to increase the value to approximately R1 billion through the backdoor. This had been done by instructing hospitals and clinics to buy containers separately in addition to the R21 per kilogram collection fee.
He added: “If you take the R21 and multiply it by the total amount of waste that is generated in the province, which is about 550 tons every month, you get R11 million, just to remove the waste. Now, the cost to procure the containers is going to skyrocket the price significantly. “
The third source said the department’s changes to the current medical waste tender had “fundamentally” amounted to “double payment”.
It’s not the first time Malotana, Motha and Lecholo have been accused of tender rigging. According to Amabhungane, the Hawks are investigating the trio for allegedly fixing two tenders for the benefit of medical devices company BAS Medxpress (BAS Med) in 2016 and 2017 in exchange for bribes.
The medical waste tender rigging allegations come hot on the heels of the brutal murder of whistleblower Babita Deokaram for lifting the lid on tender corruption, fraud and irregularities in the Gauteng Department of Health.
The department’s former acting chief director for financial accounting was gunned down in 2021 for exposing the multi-billion rand personal protective equipment (PPE) scandal and the theft of public funds by Thembisa Hospital officials in collusion with service providers.