A black empowerment contractor was financially ruined after he won the contract to refurbish Mahlamba Ndlopfu, the presidential residence in Pretoria, in 1999. He says the government never paid him in full for work he had done on the residence.
Joseph Manonga lost his business after the supposedly sweet deal turned sour for him.
His company, Neat and Fast, was liquidated and he was declared bankrupt when the Department of Public Works failed to pay him in full. He claims that after four years he still has not received the R1,8-million the government owes him.
Late payment from the government to businesses has become a ”phenomenon”, says German Mphahlele, director of the emerging contractor development programme at the Department of Public Works.
Making it clear that he was talking generally and not about the specifics of Manonga’s complaint, Mphahlele said: ”The delay in payment is a big problem, but we have now taken it up to ensure small contractors are not paid late.”
Mphahlele’s unit provides help to contractors in securing tenders and negotiates problems they will experience during their contract. He says small contractors often do not have the management skills to handle big contracts and need mentors to help them through difficult phases. One of the tasks of the emerging contractor development programme is to fix the late payment cycle.
Manonga’s company had been running for 20 years when he won the contract. He believed the government contract was his big break. ”It was a dream come true for me to receive the Mahlamba Ndlopfu contract,” he told the Mail & Guardian. ”But it became a nightmare. It was supposed to make me in life, but it reduced me to zero.”
Manonga’s family has moved away from their community in Soshanguve because he could not face his neighbours any more. ”They do not understand,” he said. ”I am no longer successful and they will think I did something terribly wrong.” His wife is supporting him until he can access financial credit to restart his business.
”We were a well-established construction company with a good track record and with numerous projects behind our name completed in time and with a very high standard,” he said. ”I believe that it was this track record of ours that won us the tender.”
But Lucky Mochalibane, director of communications for the Department of Public Works, said the liquidation of the company had nothing to do with the Mahlamba Ndlopfu contract. ”We paid Manonga 86% of what he was owed. His financial troubles were not our fault.”
The Mahlamba Ndlopfu project was fast-tracked; the house had to be ready for occupation less than four months after the tender was awarded. As a result, the architectural drawings, contract documentation, bills of quantities and designing of specific projects were rushed.
”We had to be on the site more or less 24 hours a day to finish the project. We started in September and the president moved in during December,” Manonga said.
”Because it was so fast not only we as contractors, but the professional team had to be on site all the time. But most of the time we were the only ones present.”
He said the mistakes of the professionals who designed the project were directly carried over to his company, the contractors.
”We ended up paying for those mistakes,” he said. ”Air-conditioning installation resulted in being a major disaster due to those wrong designs by the engineers. We were also underpaid during progress payments.”
A payment of R167 083 was never made to Manonga, even though the amount had been approved in writing by the Department of Public Works.
The department penalised Manonga R120 000 for the delay in the completion of the air-conditioning system —penalties, he said, that should not have been attributed to the contractors, but to the designers. ”But public works did not want to hear us out.” Neat and Fast was penalised for delivering the project late as well as for failure to complete the job.
Mochalibane said: ”Manonga knew what the conditions were and he had to deliver.”
Mphahlele says penalties have a negative impact on small business like Manonga’s. ”Often the small guys cannot pay the huge penalties and they end up with financial problems.”
The financial problems Manonga was left with after his contract finished at the end of 1999 led to the ruin of his business. He had no funds left to pay off his creditors and, despite having two projects in the pipeline, he was declared bankrupt in 2000.
But he says that with the outstanding R1,8-million that public works owes him, he will be able to restart his business and try to build it up to where it was before he began the Mahlamba Ndlopfu project.
In 1996, when the government established procurement policies, a 10-point plan was drawn up to help implement the policies, said Sharda Naidoo, a development economist who deals with procurement policy.
One point of the plan was for the government to have a shorter payment cycle to pay small businesses, to ensure these businesses do not have a cash flow problem. She said in this case it seems the policy was not properly implemented.
”The General Conditions of Contract used in government contracts, stipulates that payments must be done within 30 days after delivery of goods or services,” said Thoraya Pandy, director of communications at National Treasury.
She said contractors should approach the public protector if any dispute arises with the government about a contract.
Mochalibane said that the public works department has prioritised timeous payments as one of its strategic considerations.
Wawa Damane, chief director of enterprise development at the Department of Trade and Industry, says her department is aware of the problems small businesses have with late payments from the government and is looking for solutions.