Senior Gauteng Department of Health officials have been accused of fixing a 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, allegedly manipulated procurement processes to secure the contract for two companies in July last year.
The provincial health department awarded Tshenolo Waste (PTY) Ltd and Phuting Medical Waste Management (PTY) Ltd the multimillion-rand contract late last year following several extensions and questionable processes, now the subject of a legal challenge.
Buhle Medical Waste, the current service provider, has taken the matter to court, saying the tender was unlawful and riddled with irregularities. It is seeking an order to prevent the department from interfering with the contract, which expires at the end of November, pending the outcome of a review application.
The case will be heard on Tuesday, November 21. The respondents include 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.
The R526 million contract entails collecting and disposing medical waste in the province’s hospitals and clinics over three years. Tshenolo Waste was awarded a disputed 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. Businessman Malusi Molewa owns Tshenolo Waste, while Daniel Melk is Phuting Medical Waste’s director.
Insiders 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. They said the bidders were 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, allegedly tailored the tender specifications to suit Tshenolo and Phuting. He also refused to hold briefing sessions or field questions from the bidders.
Lecholo allegedly extended a lapsed tender and excluded some bidders during evaluation on dubious administrative compliance. Malotane allegedly appointed Tshenolo and Phuting unlawfully and implemented a fixed tender as a variable one.
Moreover, the trio 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 cited safety reasons.
The Gauteng Department of Health 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 allegedly tailored tender specifications and bent rules to suit Tshenolo and Phuting.
This included not conducting site visits and removing South African Bureau of Standards (SABS) requirements for the medical waste containers.
“It’s a case of manipulation of supply chain processes, so that a tender is awarded to a specific company. The two specific companies in this case are a newcomer on the block, a crowd called Tshenolo Waste PTY Ltd, and the second crowd is relatively unknown, and called Phuting Waste. It’s of a very technical nature. It involves specific types of containers, and specific types of processes in order to incinerate it. However, the Gauteng Department of Health saw it fit at this juncture to use Covid regulations and not to have a briefing session. They relied on a Treasury Note for that process. They said a Treasury Note says we mustn’t have briefing sessions during Covid, but we are talking about July 2022, when Covid is behind us,” said one source.
“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. “
The source added that the same note obliged the provincial health department to accept electronic mail enquiries from the bidders, collate and publish responses “together for everyone’s benefit,” and “it was never done.”
Another source said the department 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 was done by instructing hospitals and clinics to buy containers separately in addition to the R21 per kilogram collection fee.
“They have awarded to these guys, at R42 a kilogram, to remove the waste, treat it, and dispose of it. Their facilities, hospitals and clinics, still need to buy from Phuting the containers. That’s why the fixed versus variable is important. Under the variable implementation in Gauteng, they have awarded Tshenolo at R21 a kilogram to remove the waste, and they are still saying to the hospitals and clinics that they must buy the containers separately. If they are paying the current service provider a fixed rate of R21 per kilogram or R8 million for everything, why are they using a fixed rate plus variables?” said the second source.
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 “fundamentally” amount to “double payment”.
The original price was inclusive of all the components of this service. Now, they have adjusted it in implementation so that all the components need to be paid separately in addition to the baseline price. It’s like saying, this airline’s price includes drinks, meals and everything. Now you turn around and say, ‘now you’re gonna pay for your meal, your water and every single extra component, whereas that’s not actually what you bid for,” said the third source.
“It’s just like a bed and breakfast owner who says, you pay for the room, and breakfast is included. When you arrive, they turn around and say, it’s no longer that. It’s still the same price, but you are now going to pay for breakfast on top of the underlying price that you paid already.”
When contacted for comment about allegations that he, Malotana and Lecholo manipulated the tender in Tshenolo and Phuting’s favour, Motha said:
“I appreciate your concerns and questions, I will however refer them to our legal department because I am told the matter is sub judice.”
Phuting’s Melk hung up the phone when asked for comment on allegations his company benefitted from a rigged tender. He did not respond to a subsequent media inquiry via WhatsApp.
Tshenolo’s Molewa did not answer his phone when contacted for comment.
He also failed to respond to a subsequent media inquiry sent via WhatsApp. Malotana could not be reached for comment.
Gauteng Department of Health spokesperson Motalatale Modiba said tender fixing allegations against Malotane, Motha and Lecholo would be “properly investigated” as a matter of principle.
“We furthermore encourage those that are alleging to actually provide specific details for the matter to be probed or even better to lay charges with law enforcement agencies.
Fortunately, we have multiple independent agencies that can be approached outside of the Department with evidence to enable them to further investigate these allegations. We hope that those that have evidence pointing to wrongdoing will take that route in the interest of justice,” Modiba said.
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.