The Durban council’s repeated failure to award a R50-million a month security contract over more than a decade has suffered yet another setback, with the latest tender process foundering amid court action and the axing of a senior official on allegations of corruption.
AmaBhungane previously reported that the Ethekwini municipality is again running behind on the award of a three-year security contract that has been repeatedly stalled since it was first advertised in 2004.
It has been almost two years since the latest tender, 1C-18381, was advertised in December 2015.
There have been persistent allegations that tender processes have been manipulated to the benefit of eight security companies that have held the contract over a 13-year period.
Thirty-seven new service providers were due to start work on the 1 October.
In the latest development, three of the previous beneficiaries, Khuselani Security and Risk Management (KSA), iMvula Quality Protection, and Secureco Metsu, filed an urgent application in the high court in Durban on 26 September seeking the suspension of the current tender process.
Justice Gregory Kruger suspended the process and instructed the municipality to find interim services providers while it investigates allegations of official misconduct.
In his affidavit, iMvula director Paul Kruger calls for a review of the process, citing fears that officials in the city’s security management and supply chain management units have acted irregularly.
Affidavits filed by all three companies refer extensively to a “whistle-blowing email” from a junior official calling himself “Muzi Khumalo”, who claims to work for the supply chain management unit.
The email, which is attached to their application, was sent to the 37 security companies, including KSA, iMvula and Secureco, on 11 September this year and copied to city manager Sipho Nzuza, security management unit head Dumisani Bhengu and head of supply chain management, Andre Petersen.
In their court papers, the companies quote the email as alleging that the city’s deputy head of supply chain management, Zandile Sithole, has a beneficial interest in up to seven of the companies that bid for the contract, and that she promised junior officials shares in those companies if they helped to rig the bidding process.
The email alleges that Sithole instructed her underlings to provide examples of winning bid documents to companies of her choice, which they could copy to ensure their success.
It also accuses her of instructing staff to destroy records, accept fraudulent BEE certification from one bidder, and accept other bids without audited financial statements.
“The manner in which the process was done has removed the element of a competitive bidding process,” reads the email.
An attachment to the email purports to show that supply chain management officials miscalculated the points allocations for the 37 successful bidders.
The document claims that three of the companies were awarded work under tender 1C-18381 at hourly wage rates below the Private Security Industry Regulatory Authority minima, while others were successful despite quoting hourly rates more than 30 times higher than those of their competitors.
The email accuses the official’s boss, whom it also names, of working with her, and ascribes her power and influence in city government to her close ties with former city manager Sbu “Nkunzi” Sithole and his wife.
The Mercury reported last week that Sithole has been suspended from duty while she and other officials are investigated for alleged corruption and maladministration.
The newspaper quoted another whistle-blowing email about Sithole, reportedly sent to mayor Zandile Gumede, which expressed fears that her juniors would become scapegoats for her irregular actions in relation to the security tender.
“She has made us (do) so many irregular things in the years we were working under her,” The Mercury quoted the email as saying.
“Some (bidders) were missing mandatory documentation like financials. Others we checked (their) BEE (documentation) and found it was fraudulent… We shared the info with her long before the the BEC report could be produced. She asked us to scrap the findings … as she really needed an award to go through for her companies”.
Numerous calls to Sithole’s cell phone went unanswered and she did not respond to an SMS inviting her to comment.
In his email, “Muzi Khumalo” claims Sithole instructed her juniors to “go for a one-on-one price negotiation with each company using section 24 of the supply chain management policy”.
The section enables the accounting officer to negotiate the final terms of a contract with preferred bidders “provided that such negotiation does not allow any preferred bidder a second or unfair opportunity (and) is not to the detriment of any other bidder”.
AmaBhungane has seen an email from the supply chain management compliance monitoring section, inviting the 37 preferred bidders to a meeting to negotiate rates on 20 April this year.
AmaBhungane has also seen an unsigned letter to KSA Security, with a supply chain management department letterhead, that reads: “After negotiation and analysis of your rates and as agreed during the aforesaid negotiations, we are writing to confirm that the following rates will be reduced from your original tendered submission as discussed.”
In court papers, KSA owner Mahomed Yacoob asserts that the rates adjustments during the adjudication stage of the bid process were irregular.
Yacoob contends that because the preferred bidders were invited to negotiate rates four months before the tender was awarded, the negotiation was prejudicial to bidders who did not attend, and to his company, because other bidders might have negotiated rates lower than KSA’s.
The city did not respond to questions about the bid process, the court action or the alleged disciplinary procedures involving Sithole.
Spokesperson Tozi Mthethwa issued a statement saying that “the city does not discuss disciplinary matters in the media“, although she added that the municipality had recently appointed a financial disciplinary board “to provide oversight on all disciplinary matters that have a financial impact”.
In response to the court ruling, the municipality issued a request for quotes (RFQ) for interim service providers on a 12-month contract on 4 October.
On 12 October, the day quotes were due to be presented, it cancelled the request, citing “a fundamental error which we are (legally) advised may be fatal to the intended RFQ process”.
The council has yet to advise bidders on when the request will be re-advertised, but the High Court set a 31 October deadline.
The court also ordered the city to allow the eight companies currently providing security services until 30 November to vacate their respective sites.