This is the second part of a series investigating how the City of Johannesburg has been using loopholes in its procurement processes to award lucrative contracts amounting to more than R3.9-billion. The M&G Data Desk delves into how Avis Fleet scored a multimillion-rand contract
A self-created emergency at the City of Johannesburg’s (CoJ) supply chain management division has resulted in a R300-million largesse for Avis Fleet (AF).The city awarded a multimillion-rand contract to provide waste management equipment to Zeda Car Leasing, which trades as Avis Fleet, through an emergency deviation from normal tender processes after delays of almost two years in finalising specifications for the tender. The contract tasks Avis Fleet with the provision of waste management services, ad hoc rentals and maintenance of vehicles for Pikitup on a month-to-month basis for one year at a cost of R372-million.
Yet it has been almost two years since the previous contract, which was also held by Avis, came to an end in November 2017. Since then the city has extended Avis’s contract, but has still failed to embark on an open tender process.
According to internal documents seen by the Mail & Guardian’s Data Desk, the municipality started the procurement process only last June — seven months after the contract expired — but it was halted almost immediately after it could not agree with Pikitup on the specifications for the new contract. The documents lay out in startling detail the missteps along the way.
“On 29th June 2018, the MD [managing director] of Pikitup removed all Pikitup officials who were participating in the BSC [bid specifications committee] [and] could not continue with the finalisation of the specifications for the tender,” the report reads.
According to the internal City of Johannesburg report, as a result, the managing director then requested an external fleet specialist to represent Pikitup. This did not move the process along at all and, instead, by September, the City of Johannesburg and Pikitup were still at loggerheads about the transfer and absorption of former City employees who were now employees of the current service provider.
The City wanted to include in the bid specifications that employees working for Avis would be absorbed by the new company when the bid process had been completed.
This back and forth meant that the Avis Fleet contract had to be extended to March 2019.
Barloworld Group, the owners of Avis Fleet, confirmed they held the Pikitup contract for three years from 2014 to 2017, which was then awarded to them again.
“AF was reappointed as a service provider for Pikitup in terms of regulation 36 from 1 April 2019 to provide management services, ad hoc rentals, and maintenance of waste management vehicles, on a month-to-month basis not exceeding 12 months. The CoJ did not assign a value on the award letter.”
During this process, the director of the fleet was suspended and charged with, among other charges, the delays in finalising the Pikitup tender. Over the next three months, the city held numerous meetings yet nothing could be finalised.
The documents also show the City of Johannesburg then decided that the best way to continue the waste management service was to use regulation 36, to deviate from ordinary procurement processes because by early this year they claimed it was an emergency.
It seems from the documents that the city realised only in March this year that it was of paramount importance that Pikitup continued operating. Previous experience was cited as a warning.
“In 2014 Pikitup employees embarked on a massive strike, which brought the entire waste collection services to a standstill, … led to a pandemic of rat infestation [and] … [cost] the City millions of rands to contain and control.”
As recently as a year ago, waste collection came to a standstill again for almost a week, leading to residents dumping their waste outside the Metro building.
“During the cleanup operations, the City had to request additional capacity to deal with the waste dumped everywhere, which subsequently led to irregular and wasteful expenditure,” the document states.
To date, no tender for Pikitup waste management services has been advertised by the City, as its documents had promised almost four months ago. Instead, Avis Fleet has been handed a month-to-month contract in a deviation for R372-million.
Last week, the M&G reported how the City has awarded contracts of more than R3.9-billion over the past five years without going through standard tender processes. The City has on many occasions relied on the much-criticised deviation process, citing emergencies that seem to be self-created.
In an analysis of at least 80 contracts that were either recommended or approved to bypass the regular tender process, the M&G found that three of Johannesburg’s biggest fleet tenders — amounting to billions of rands — bypassed the process.
A list of questions was sent to Pikitup spokesperson Muzi Mkhwanazi, who referred them to the City of Johannesburg.
City spokesperson Nthatisi Modingoane did not answer questions about why the City created this emergency and why it has taken almost two years to finalise the specifications.
The Mail & Guardian Data Desk is conducting an investigation into the procurement policies of the City of Johannesburg. If you have further information related to this story, please send an email to the author at [email protected]. All correspondence will be treated in complete confidence