The Auditor General wrote a scathing report on facilities management group Bosasa’s lucrative contracts with the correctional services department as early as June 2006, the Mail & Guardian can reveal.
His spokesperson, Joreta Linde-Ferreira, said the Auditor General remained “uncomfortable, as the level of assurance sought regarding supply chain management was not forthcoming”.
The Auditor General’s office handed records and other documents to the Special Investigating Unit (SIU), which is probing the Bosasa contracts and which aims to finalise its investigation within two months.
The M&G is in possession of a report sent by the Auditor General to former prisons boss Linda Mti after an investigation found the department had not adequately managed the Bosasa contracts.
The probe also found the department set inappropriate payment conditions, committed “fiscal dumping” by making huge payments at the end of the financial year and flouted its own procurement policies.
Ironically, the department’s former chief financial officer, Patrick Gillingham, responded on Mti’s behalf. The M&G revealed two weeks ago that Gillingham handed Bosasa confidential tender documents before they were publicly available. Last week the M&G exposed how Bosasa sponsored flights and luxury hotel stays for Mti.
The Auditor General investigated four tenders awarded to Bosasa companies.
It shows he:
Suspected private suppliers were involved in drafting bid specifications, saying he could not establish “where and how the specifications originated”. Gillingham replied to the Auditor General that the department had drawn up the tender specs.
- Could find no proof that, department’s IT personnel or the State Information Technology Agency (Sita) were involved in a tender process leading to the April 2005 award of a R237-million contract to Bosasa company Sondolo IT for the supply and installation of access control systems and CCTV in 66 prisons. “This contract has major IT implications,” the Auditor General commented. Gillingham replied that the focus of the tender was more on security hardware than computer software.
- Criticised the extension of the contract to include the staffing of control rooms at the 66 prisons to Sondolo. The Auditor General found that the
staffing contract, which made Sondolo an extra R56-million a year, exceeded the limit by adding more than 20% to the original contract price. Gillingham replied that by outsourcing, the department saved R2-million a month and that the extension complied with the department’s procurement manual.
- Found that “abnormal payment terms” were included in the tender document, whereby 90% of the price was to be paid for equipment after installation and 10% after the installation was successfully commissioned and ran to the department’s satisfaction for three months. Gillingham called the terms “reasonable”.
- Found that Sondolo IT was not listed on the department’s prospective suppliers’ list. Gillingham replied that any supplier could be used in an open bidding process.
- Complained after visiting 13 prisons that no access control system was fully operational. Gillingham blamed Telkom for the delays.
The report also notes that invoices were not properly certified, that no proper project management was in place to ensure Sondolo delivered, and that the payment for control room staffing was made without an order and solely on Mti’s motivation. The Auditor General also took issue with a R487-million contract landed by Bosasa company Phezulu Fencing for security fencing at 66 prisons on December 9 2005, particularly querying its prices, which were not comparable with those of other bidders.
The M&G further showed that Bosasa had access to the fencing tender document months before it was formally published.
Gillingham responded that the department used public works department estimates, but enhanced these by including surveillance technology and detection systems.
The Auditor General found that the first payment of R56,4-million to Phezulu Fencing was made on December 14 2005 — five days after the contract was publicly awarded — contravening payment conditions.
According to Gillingham, Phezulu Fencing indicated that it needed to make “substantial manufacturing deposits” with suppliers to ensure delivery deadlines were met.
During inspections in May 2006, the Auditor General’s office found that not all fences were erected by March 17 2006, the contracted date of completion. “By allowing the delivery date to be extended, other bidders may have been unfairly discriminated against,” the report remarked.
Gillingham responded that at the compulsory briefing session for prospective bidders, the department indicated it would allow installation to continue beyond March 17 2006 but would penalise “unnecessary delays”.
On a R224-million contract won by Sondolo IT for installation of 6Â 000 television monitors on March 10 2006, the Auditor General again remarked that he could not determine who wrote the tender specifications. The M&G has reported that Bosasa sent Gillingham a section of the tender document before the tender was advertised.
Gillingham responded that the tender document was compiled in consultation with the department’s IT staff and the Council for Scientific and Industrial Research.
The report also noted late delivery on the TV tender. Gillingham stated that the majority of equipment was still “bonded in the warehouses of the suppliers”. The department this week instructed the SIU to do an urgent audit on the latest tender awarded to Bosasa Operations — a R900-million catering contract in 31 prisons.
Annexure: The Auditor General’s report on Bosasa’s correctional services contracts. (PDF)