/ 24 March 2017

Wait continues for Sassa’s invite to tender

Late again: Sassa chief executive Thokozani Magwaza said a request for tenders to replace the contract with CPS in 12 months’ time would be put out by March 17. But it wasn’t.
Late again: Sassa chief executive Thokozani Magwaza said a request for tenders to replace the contract with CPS in 12 months’ time would be put out by March 17. But it wasn’t.

The South African Social Security Agency (Sassa) this week missed a self-imposed deadline in the process of setting up a new infrastructure for the payment of social grants.

It is only the latest in a long list of missed deadlines, but it is the first to be missed since the Constitutional Court on Friday castigated the agency for its “demonstrated inability … to get its own affairs in order”.

In late February, Sassa’s chief executive officer, Thokozani Magwaza, told the Constitutional Court that the agency had already concluded a request for information (RFI) process as it worked to replace its unlawful contract with Cash Paymaster Services (CPS), which continues to handle grant payments.

“Based on the information received, Sassa will compile a Request for Proposal, which it intends to issue on March 17 2017,” Magwaza said in an affidavit.

That request for proposal (RFP) is to invite tenders for different aspects of the complex process of paying grants to 17‑million beneficiaries.

At the time of publication, the tender had not yet been published.

“It’s not ready,” said an insider to the tender process, speaking on condition of anonymity because of what he described as a “witch hunt”.

“Everyone was distracted because of the whole [Constitutional Court case], but it was never going to be ready anyway.”

Magwaza could not be reached for comment.

Sassa spokesperson Kgomoco Diseko said, because the date scheduled for the RFP to be published fell on the same day as the Constitutional Court judgment, this “impacted on the date”.

“Sassa had to await the court judgment first, before publicising the RFP. At the moment, the institution has to abide by every aspect of the judgment,” Diseko said.

He did not say when the RFP would be published.

Sassa had been due to take over the payment of grants from CPS this April. It realised in April 2016 that it would be unable to do so, but only launched the current tender process seven months later.

Although it described the process as a move towards insourcing the logistics of payment, its RFI showed that it envisaged replacing the monolithic CPS contract with an ecosystem of smaller providers, each handling a portion of what CPS does.

Taken to the Constitutional Court by civil group the Black Sash, Sassa said it needed 18 months to implement a new system. The court instead gave it 12 months and directed the auditor general to monitor the process.

Sassa and Social Development Minister Bathabile Dlamini, whom the court held responsible for causing the grants crisis, must report on their progress in creating the new system, under oath, every three months.

She will also have to submit an affidavit by March 31 explaining why she should not pay the costs of the Constitutional Court.

But they may have some difficulty in finding a range of potential suppliers for that process.

Even though the RFI process was for a tender worth more than R2‑billion a year, many household names stayed away from it, some citing the “politics” around Sassa. Among those missing were Absa AllPay, the wholly owned subsidiary of the banking company that went to war in 2012 after losing the previous tender to CPS.

The only well-known companies that submitted information, and so guaranteed the ability to respond to an RFP that could be restricted to only RFI participants, were the Post Office and Standard Bank. CPS also submitted information.

The remainder of the companies that showed interest were a mixture of unknowns and small firms. But even some of these companies have had second thoughts about any involvement since watching the Constitutional Court process.

It was eye-opening, one such potential bidder said this week, to watch the court tell CPS that it was in effect an organ of state and could not refuse to continue paying grants, and had no way of getting out of its contract even though it was unlawful.

The court also said CPS would have to ask treasury for an inflation adjustment to cover its costs in paying social grants — and that it should not be allowed to retain any profits it makes.

“I definitely do not want to be in that position,” the former potential bidder said. “I think I can live without Sassa’s business.”

After the court handed down judgment last Friday, Magwaza said Sassa would need to “regain the trust” of South Africans.

He did not say how it intended to go about achieving such a feat.