Court declares R10bn social grant tender invalid

After a lengthy trial, Judge Elias Matojane ruled on Tuesday that the tender was illegal and invalid, but did not set it aside, which means social grant payments will not be disrupted.

The tender is for the payment of social grants, including child and old-age grants, of about R100-billion a year. The South African Social Security Agency (Sassa) is a state agency that reports to the department of social development.

The contract was tendered for and awarded to Cash Paymaster Services, a subsidiary of Net1 Universal Electronic Payment Systems Technologies, in January. Cash Paymaster Systems had begun to implement the new system to pay out grants to recipients, but Absa subsidiary AllPay cried foul. AllPay accused Sassa of an irregular tender process, wherein the AllPay's score was "inexplicably" lowered so that its competitor would win the R10-billion contract.

The Absa division responsible for paying out social grants filed a founding affidavit in February in an attempt to halt all service-level agreements and have the tender reviewed and set aside.

AllPay also said specifications for the mega grant payments tender were changed at the last minute so that Cash Paymaster Services could win.

Need for change
Three cash service providers, AllPay, Empilweni and Cash Paymaster Services, have been contracted to administer the grants since 2007. But this created a platform of abuse, and it was decided a national approach was needed to instil uniformity and address an urgent need for an overhaul of the social-grant system.

The Mail & Guardian reported earlier this year that top advocate Norman Arendse had alleged that, while he was deliberating as part of an adjudication committee whether to cancel the previous tender in favour of a national approach, he was offered an "open chequebook" bribe by an individual claiming to represent Cash Paymaster Services.

The M&G also reported that President Jacob Zuma's lawyer, Michael Hulley, played a major behind-the-scenes role in the controversial awarding of the tender to Cash Paymaster Services.

Of 21 bidders, only AllPay and Cash Paymaster Services met the minimum score of 70% for their written proposals. But after the two had made oral presentations to the bid evaluation committee, AllPay dropped below the minimum threshold and Cash Paymaster Services was the only bidder that qualified for financial and preference evaluation.

According to AllPay, the bid evaluation committee said the reason AllPay did not get the tender was noncompliance with a bidding notice. The notice was received by AllPay on June 10 2011, five days before the bid submission deadline, and noted that "biometric verification must be performed when a beneficiary receives his grant regardless of the payment method". – Additional reporting by Lisa Steyn.

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