The three partners of Cash Paymaster Services (CPS) were not assessed in a R10bn social grant tender process, the constitutional court heard on Tuesday.
“Evidently, the state should not be in the business of awarding multibillion-rand tenders to persons who have no proven, or assessed, ability to implement their proposals,” said Gilbert Marcus SC, for unsuccessful bidder AllPay, part of Absa.
The tender was awarded to CPS, part of Net1 UEPS Technologies, for the administration of social grants over a five-year period.
The SA Social Security Agency (Sassa) had initiated the tender process, aiming in part to address fraud and theft problems within its system.
Marcus told the court that CPS submitted a consortium bid, and as per section 217 of the constitution, it was required to be properly assessed.
“The consortium expressly indicated that more than 74% of the execution and management of the tender would be undertaken by the consortium partners and not by CPS,” he said in his heads of argument.
“This is inherently unfair, inequitable, and anticompetitive. It is submitted that Sassa’s failure to assess the consortium partners was exacerbated by a related irregularity that was overlooked.”
SA Cilliers SC, for Sassa, disagreed, and said the assessment and abilities of every partner of a bidding consortium was not a requirement of section 217.
“Sassa relied on the proven ability of CPS to perform the tendered service,” he said in his heads of argument. “CPS had, over a period of more than a decade rendered services under Sassa’s old distribution system, and had a good and reliable track record.”
Cilliers submitted that AllPay had participated in all the steps of the tender process without objection, and had raised a litany of complaints only when it failed to win the tender.
The court heard that there were several alleged irregularities with the tender process.
David Unterhalter SC, also for AllPay, argued that the tender process was procedurally flawed, unfair and even irrational.
He said the criteria for the bidding process was not clear or transparent, and that a second bidder’s notice was designed to eliminate bidders other than CPS.
Unterhalter said “Bidders Notice Two” led to a preference being made a requirement, which had an affect on scoring and which led to AllPay being disqualified. “Only when it moved from a preference to a requirement they did not qualify.”
Bidders Notice Two required that every payment made have biometric verification, which occurs when a person is uniquely identified through biological traits based on 10 fingerprints.
At the moment, bank ATMs do not have biometric capabilities.
Cilliers said CPS won the tender because it met the requirements.
“It cannot be found that AllPay was in a position to provide the verification solution offered by CPS,” he said. “The solution required was offered by CPS and not by AllPay. AllPay disregarded the requirement for monthly verification… and this was fatal to the relative merits of its bid.”
AllPay previously approached the high court in Pretoria with concerns about the tender process. The court found in its favour and ruled that the tender process did not comply with the requirements, and was procedurally unfair.
The court declared the tender process invalid, but did not set the tender aside because this would have disrupted the delivery of social grants.
AllPay appealed to the supreme court of appeal (SCA), but it overturned the high court order and found in favour of Sassa.
The SCA held that a fair process did not demand perfection in every step, nor could a tender be set aside for inconsequential irregularities.
In the constitutional court, AllPay wants the SCA’s decision set aside. — Sapa
