MAKHADO (LOUIS TRICHARDT) - How on earth can you award a road tender to a company with very little experience, a very low bank rating and low functionality?

Questions like these are being asked more and more by the taxpayer whose money is used to finance expensive projects.

In the case of the Makhado/Madombidzha road, the tender was awarded to Ipopo Business Services. This project of rehabilitating the approximately five kilometres of existing surfaced road has been the subject of complaints, contention, investigations and huge financial losses on the side of businesses who suffered while the road was being rehabilitated. The Chief Executive Officer of Road Agency Limpopo, Mr Bohani Shibambu, said that this was a project of R6,1 million.

The Board of RAL awarded the tender for this road to Ipopo. According to documentation, Ipopo was rated as scoring 0,16 points out of 4,50 points, that is 3.6% for relevant experience. As one resident said: “If a brain surgeon has 3.6 % experience, I don’t want him to operate on my brain!”

For financial status, Ipopo scored 0%. The item for financial status is defined as access to working capital and bank rating.

Mr Shibambu said that Ipopo was the successful tenderer according to points scored in the Tender Evaluation in terms of the Preferential Procurement Policy.

“We did not go according to what the consultant said. If they go out of the policy, we ignore them,” Mr Shibambu said. The engineering consultants for this project are Africon and their recommendation was that the tender should not be awarded to this particular company.

Mr Shibambu said that RAL go strictly according to the point system. The point system is contained in regulations called the Preferential Procurement Regulations 2001 in short. According to these regulations, 18 points are awarded for functionality, 72 points for price and 10 points for status of enterprise, which includes HDI points (Historically Disadvantaged Individual).

In the case of a tender for road rehabilitation, as in case of most other tenders, functionality is crucial. The tenderer has to be functional in order to complete a road which will last and not cost the tax payer money to repair it again.

For functionality Ipopo scored 7,58 out of 18 points or 43%. The functionality score is made up by the scores for relevant experience, financial status, past performance and plant equipment. Added to the 3.6% for relevant experience, the 0% for financial status, Ipopo scored 63.6% for availability of minimum plant equipment package and 100% for past performance. A company gets 100% if a past project has been completed without penalties. The quality of the work and the references given by past engineering consultants are seemingly not taken into account.

Ipopo Business Services was not recommended to be considered for the award of the tender. Reasons included the functionality of the tenderer. Because the company had only executed a small-sized project of which the contract value was in the order of R600 000, there was uncertainty with regard to the tenderer’s ability to complete a contract of this magnitude successfully. The tenderer gave references for previous involvement in projects. Problems experienced by these references included failure of Ipopo to pay their labour force and failure to manage the plant properly.

The owner of Ipopo Business Services is said to be the 26-year old Ms WM Choshi and the manager Mr Samson Baloyi from Elim. Mr Baloyi is a Councillor of the Makhado Municipality.

Ipopo scored 9 out of 10 points for status of enterprise. They had full marks for being a local enterprise, having HDI ownership, having a woman on board, HDI’s in management and having young people on board. They only lost one point for not having a disabled person in their company.

Tenderers had to put in a tender price for the rehabilitation of the road. Mr Shibambu from RAL stated in an undated letter to the newspaper that “Ipopo was the only one that fell within the threshold of 5% and –10%, and therefore the only one evaluated. The rest were disqualified.” Tenderers quoting 5% above the consultants’ estimate and 10% below the consultants estimate were taken into account. Out of the 21 tenderers, only one managed to have a deviation of only 3,02 % from the consultants estimate. The consultants’ estimate to finance the five kilometre on the Makhado/Madombidzha road was R5,456,157.42. The amount that Ipopo tendered was R5 508 512.23 but contained calculation errors and the corrected tender amount was R5 620 951.67. For the correct tendered price, 72 points are awarded. Ipopo scored 72 points. The firm that was actually recommended by the consultant quoted above the threshold even though it could be possible that they had more experience and better references.

Questions arose about the advisability of awarding so many points to correct tendered price and so few points to functionality, since it might be possible to find out the consultants’ estimate. The question always remains, can the company actually do the job?

Ipopo, however subcontracted 100% of the project to another firm, Thiko Civils. According to the General Conditions of Contract for Road and Bridge Works for State Road Authorities, Clause 8(1), the Contractor shall not subcontract the whole of the contract. Concerning this issue, Mr Shibambu said on August 24, “Strictly speaking we should not allow 100% subcontracting of a project, but we haven’t stopped them.”

The question arises why the letter of the regulations is followed in the instance of the Preferential Procurement Regulations 2001 but not in the instance of the General Conditions of Contract.

Mr Shibambu said that in the case of a project above R5 million the Board of the RAL makes the final decision to award a tender. Members of the RAL board are Dr Sean Phillips (Chairman), MS Makgomo Kgosana, Mr Standford Mkhacane, Mr Jan Moolman, Ms Nombulele Mkhumane, Mr JN Tshokovhi and Mr Bohani R Shibambu (CEO).