THE Mahikeng High Court has declared unlawful and set aside a R44m tender awarded by the North West Department of Public Works and Roads for constructing a road at Mmakaunyane village outside Tshwane.
African Times reported last month that the department’s adjudication committee, led by Chief Financial Officer (CFO) Peter Modika, had manipulated tender processes to favour MM Industries, which did not meet the criteria.
The controversial contract signed by the head of the department, Moss Kgantsi, in January this year is among irregular and fraudulent tenders awarded over the past few years.
In an order granted on July 27, the court also instructed the department to automatically award the same contract to Lichenry Construction, the losing bidder who took the department and MEC Saliva Gaoage Molapisi to court.
“The first respondent’s decision to award Tender No. 124/20A-FA7 styled “porthole patching and reseal of road D604 and Z607 Makaunya” to the Second Respondent [MM Industries] is declared unlawful, reviewed and set aside. The consequential Service Level Agreement concluded between the First [department] and Second Responds pertaining to the execution of the tender mentioned directly hereinabove is struck down in accordance with section 8 of the Promotion of Administrative Justice Act, 3 of 2000,” said the court order. “The First Respondent is ordered to award said tender and contract to the Applicant [Lichenry Construction].”
Moreover, the court ordered the provincial Department of Public Works and Roads and MM Industries to “immediately stop all construction work related to said tender”.
It was further instructed to measure MM Industries’ work internally or externally and pay the contractor commensurate with the calculations.
In addition, the court ordered the department to incorporate the value and remainder of the work to be done by Lichenry, record as much in its contract with the company and pay its legal costs on the attorney and client scale.
According to the adjudication committee report, Modika and his colleagues changed the functionality criteria in the second stage of the process upon receipt of the evaluation committee. They then allocated MM Industries additional points for functionality and recommended the company to Kgantsi for the appointment.
According to official documents seen by African Times, the provincial Department of Public Works and Roads paid MM Industries R6 million. The company was paid in two tranches of R1,7 million and R4,7 million in March and May.
However, sources claimed the company completed less than one of the 10-kilometre road.
Lichenry director, Henry Heathcote Junior, declined to comment, while MM Industries could not be reached.
The North West Department of Public Works and Roads confirmed the court outcome but declined to comment on the specifics of the order, saying they had not been furnished with a copy.
“We (The Department) are yet to be furnished with a copy of the court order issued in favour of Lichenry by the office of the State Attorney. We are therefore unable to confirm or deny if such details are contained in the order itself,” spokesperson Matshube Mfoloe said.
He also admitted, “R 6 289 173 [has been] paid already for work done”.
Mfoloe would not confirm or deny that MM Industries only built a fraction of the road despite the millions it pocketed, saying: “Work is still ongoing; they indeed have worked on certain portions of the roads if not at this stage. Like we always say, we pay for work done.”
Asked about the procurement process followed by the department to appoint MM Industries, Mfoloe replied: “The prospective bidders were sourced from the approved Departmental database of contractors. [An] invitation was sent to the bidders selected in line with the approved departmental sourcing strategy policy. Bids were evaluated and adjudicated in line with the bid requirements. [The] award was made.”
However, insiders and consulting engineers working with the department told African Times that MM Industries and other beneficiaries of the department’s irregular and fraudulent tenders – including Ndhuna Civil Engineering Services – were handpicked from the database for maintenance services, not the construction of new roads.
They said Kgantsi and Modika abused the panel system to bypass processes and award tenders to preferred companies without competitive bidding in exchange for kickbacks. The duo also instructed their subordinates not to advertise any contracts.
A source familiar with the modus operandi said the abuse of the panel list involved price collusion, the leaking of tender documents before the process, and choosing less experienced and struggling contractors to compete against their preferred bidder.
“They deliberately leak the [financial] estimates, choose five other lousy contractors – A, B, C, D and Ndhuna. The rest just accompany their preferred bidder because it’s not an open tender. They have got records of all these other contractors. They know these two people have no capacity to do these things. Ndhuna would be better. But it becomes difficult if you advertise. So, this modus operandi is just to make sure their horse comes up at the top,” said the source.