Does Sassa need the Concourt's approval to initiate its CPS deal?

"Sassa’s proposed interim agreement with Cash Paymaster Services will not be lawful," Pravin Gordhan said in a letter to Bathabile Dlamini dated February 1. (Delwyn Verasamy/M&G)

"Sassa’s proposed interim agreement with Cash Paymaster Services will not be lawful," Pravin Gordhan said in a letter to Bathabile Dlamini dated February 1. (Delwyn Verasamy/M&G)

The South African Social Security Agency (Sassa) has announced that the contract it is pursuing with Cash Paymaster Service (CPS) to pay grants will be a new contract instead of a renewal or extension of its existing contract. 

But will this new contract need the Constitutional Court’s approval?

Last week, Sassa filed papers to Concourt saying that it is “not necessary” for the Court to have oversight over its negotiations. Sassa said that because the court discharged of its supervisory role over the security agency in November 2015, there was no grounds for it to continue filing reports to the court on grant payments. 

“Sassa has been advised that, because it has been discharged from this court’s supervisory jurisdiction, it is no longer obliged to report to this court,” Sassa said in court papers.

The Concourt’s role in the grants issue has been discussed, and legal pundits have argued that an order from the court allowing Sassa to continue its relationship with CPS could help to ensure grants are paid. 

But in 2016, Sassa sought legal opinion from senior counsel Wim Tengrove on its plans. Initially, Sassa had told the Concourt it would pay grants itself, and the court then decided that Sassa would no longer be under its supervision.

By October 2016, it was apparent that Sassa was not in a position to pay grants itself, and Tengrove noted that “Sassa’s proposed interim agreement with CPS will not be lawful”.

At that time he agreed however that Sassa was not obliged to report to Concourt, the agency should continue to do so because it had deviated from its plan to pay grants itself.

“It is no longer under any formal duty to do so but, in our view, its radical departure from the plan placed before the court by its report of 5 November 2015 requires that Sassa disclose to the Constitutional Court that it proposes to enter into a further arrangement with CPS,”  Tengrove wrote.

Sassa, however, is negotiating with CPS without going through normal tender processes.
Tengrove commented that Sassa did not run a competitive processes due to “Sassa’s own failure to get its ducks in a row in time”.

Last week, the agency began negotiations with CPS and Business Day reported on Monday that the terms of a new contract had been agreed upon. It can only be finalised with Treasury’s approval, however. 

Finance Minister Pravin Gordhan sent a letter to Social Development Minister Bathabile Dlamini on February 1, Bloomberg reported, saying that Sassa’s contract with CPS will be unlawful. He has maintained that Treasury will only approve the contract if the Concourt authorises it. 

“Sassa’s proposed interim agreement with Cash Paymaster Services will not be lawful,” Gordhan said in a letter to Dlamini dated February 1. “The options proposed by the Sassa team cannot be supported unless the Constitutional Court were to approve such an option.”

Yolisa Tyantsi, a spokesperson for the Treasury, confirmed to Bloomberg that the letter had been sent to Dlamini.

In the meantime, civic organisation the Black Sash has filed an application in the Concourt asking it to urgently intervene and allow Sassa to sign a deal with CPS. On Monday, the Black Sash released a statement saying that it has asked the court to re-instate its oversight role of grant payments.

“The Black Sash asks that the ConCourt re-instate its oversight role to oversee SASSA’s further management of its Constitutional obligations relating to the lawful and effective payment of social grants,” the group said.

While negotiations may have concluded it remains to be seen what the exact terms are and how much money the deal will cost Sassa.

The agency has been summoned to appear before the Concourt on March 15 so that an agreement can be reached on grant payments in the Black Sash application. 

Sassa’s current contract with CPS will expire on March 31, and it will have to pay grants the very next day. But as yet, with no deal approved with CPS, it remains to be seen how Sassa will deliver grants on time and if it will be lawful.

Ra'eesa Pather

Client Media Releases

Taking Sanral to Upington
UKZN academic awarded two international fellowships
NWU takes sports development to new heights