The tender that keeps on giving

A contract in the North West to oversee construction projects has ballooned by more than 300% and the tender is now being raised in the provincial legislature.

But it seems that the department of human settlements, the administrators and Premier Job Mokgoro would rather have the contract — which has cost the state more than R500-million so far — extended for another 18 months.

Letters have been flying between the human settlements department, the premier’s office and the provincial treasury for the past six months regarding an extension of the contract, which has lapsed. 

In 2016, the human settlements department awarded King & Associates a R122-million, three-year contract to oversee construction projects.

But records in the Mail & Guardian’s possession show that after three years more than R422-million had been invoiced by the company.

The invoice amounts fluctuate from R1 500 to more than R11-million. For instance, on June 26, 2018, King sent about 20 invoices in one day. There were at least three R1 500 invoices, several others for amounts below R5 000, and one above R500 000. In October 2018, there were two invoices for exactly R1-million, and one for R1.2-million.

According to sources in the human settlements department, the contract was meant to end in October last year. But King is still invoicing and payments are being signed off. The company has collected more than R500-million in total.

The provincial treasury spokesperson, Kesalopa Gill, said all the payments made by the human settlements department after the contract ended were in contravention of the applicable laws and should be declared irregular.

She added the department was expected to implement consequence management for the officials involved. 

“The provincial treasury did not approve any extension or deviation beyond May 2020 and any work beyond this period should be declared irregular,” said Gill.

(John McCann/M&G)

Neo Sephoti, the head of the human settlements department, said King had been paid for services it rendered to the department.

“The contract used for King & Associates is the same contract that was used for the previous PMU [project management unit] and it allowed for the department to contract the PMU for other work as shall be determined by the department.

“I am not aware of the R450-million you are referring to, and this was for professional fees or projects that they undertook on behalf of the contract.”

Sephoti added that King was appointed on a month-to-month contract and an 18-month extension had been recommended. But the 18-month extension was never approved by the provincial treasury; it granted a six-month extension from December to May this year.

In a scathing letter sent to the legislature a few days ago, the MEC of finance, Motlalepula Rosho, said Sephoti’s department had not sufficiently explained why King was paid more than their bidding price.

“During the implementation phase, the contract was varied with 34% or R34 054 741 of the contract amount without due approval of the provincial treasury,” reads the letter.

This means additional work was included in the contract, but according to regulations, the variance cannot be more than 20%.

Conditions were attached to the December to May extension, which included that there would be no further extensions of the contract, all King’s work had to be completed and its performance reports were to be shared with the treasury.

“To this date, no response was ever received from the department … other than the reminder two days before the expiry of the contract for the provincial treasury to extend the contract. The contract was not extended beyond the end of May 2020, and any contractual arrangements beyond the end of May 2020 by the department of human settlements will constitute an irregular expenditure,” Rosho said in the letter.

But this still does not explain how or why King has been paid more than 300% of their bidding price.

Kemiso Khumoeng, the sole director of the company, said he was not given sufficient time to reply to the M&G’s questions as he had to refer them to his lawyers, who also needed more time to respond.

In June this year, the premier asked the MEC of finance to “please regularise the extension of the current PMU in line with endorsements of the intervention team”.

Rosho wrote back stating that Mokgoro’s request had “financial implications, which I am of the view that it is contrary to the PFMA [Public Finance Management Act].

“Notwithstanding the deemed retraction of the purported request in the latter letter, such a request would have constituted a breach of our fiduciary responsibilities.”

In this letter, dated June 5, Rosho also stated that no further deviations would be signed off.

When Mokgoro’s spokesperson, Vuyisile Ngesi, was asked about the extension, he said the premier had not instructed the provincial treasury but was instead putting their verbal discussion in writing.

He added that the decision for an 18-month extension was recommended by the human settlements department and supported by the section 100 intervention team from the national department of human settlements. 

The province was placed under administration about two years ago. The intervention was meant to combat looting and maladministration that was prevalent in many of the provincial government departments.

But payments to King have continued, said two sources in the human settlements department.

“We have been fighting this contract for some time now, but even when the correct people do not sign the payments off, others with powers will sign them off,” said one.

This is not the first time the contract and the relationship between King and the human settlements department have come under scrutiny. In 2016, two other companies that scored higher than King were disqualified because key personnel were not registered with regulatory bodies.

Ephraim Motoko, the head of department at the time, said a bidder who misrepresented the professional status of his employee’s qualification could not deliver on the contract.

But it seems that the sole director of King, Khumoeng, was not registered either. A draft internal audit report, dated 2017, states that there was no proof that the winning bidder, King & Associates, was registered with professional bodies, the bid adjudication score sheets were inconsistent and some documents were not availed for audit purposes.

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Athandiwe Saba
Athandiwe Saba

Athandiwe Saba is a multi award-winning journalist who is passionate about data, human interest issues, governance and everything that isn’t on social media. She is an author, an avid reader and trying to find the answer to the perfect balance between investigative journalism, online audiences and the decline in newspaper sales. It’s a rough world and a rewarding profession.

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