Anatomy of a ‘rigged’ contract: Digital Vibes tender deeply flawed, unlawful and invalid, says SIU

MISA Mkhize Dec 2018

By Pieter-Louis Myburgh for Scorpio

25 Jul 2021

New filings from the Special Investigating Unit concerning the Department of Health’s Digital Vibes contract illustrate how the tender process was allegedly ‘rigged’ to favour the connected communications firm.

Digital Vibes secured its R150-million communications contract from the Department of Health (DoH) as a result of alleged tender-rigging and other irregularities in the bidding process.

The Special Investigating Unit’s (SIU’s) latest filings at the Special Tribunal has laid bare the role DoH officials played in an allegedly crooked tender process.

The firm was appointed for a National Health Insurance (NHI) communications strategy in November 2019, but the scope of work was later changed to include Covid-19.

Daily Maverick Scorpio’s months-long investigation has so far revealed that the health minister currently on special leave, Zweli Mkhize, and his family have benefited financially from monies disbursed by Digital Vibes.

In its latest filings, the SIU is severely critical of the manner in which Digital Vibes clinched the deal.

“The procurement process undertaken to award the NHI contract was deeply flawed, unlawful and invalid and appears to have been rigged to ensure the appointment of Digital Vibes,” according to the unit.

By all appearances, Digital Vibes seems to have been irregularly favoured in the bidding process.

This while Digital Vibes’ main rival “was irregularly and incorrectly disqualified from the NHI tender evaluation process”, according to the documents.

Perhaps most shocking is the fact that the DoH picked Digital Vibes over one of its vastly more experienced rival bidders, which offered a significantly lower bid price of R69-million.

At R141-million, Digital Vibes’ bid price was more than double that of its rival’s.

The firm ultimately pocketed R150-million from the department.

The SIU filings are severely critical of the Tender Evaluation Committee’s (TEC’s) conduct during the bidding process.

The panel included senior DoH official Dr Anban Pillay, who at the time served as the department’s acting director-general, and Popo Maja, the department’s spokesperson.

It is the SIU’s view that “the members of the TEC did not evaluate and score the bid proposals fairly and consistently . . . in order to ensure an outcome where Digital Vibes had to be awarded the contract.”

Pillay and Maja strongly denied any impropriety.

“I merely scored the bids based on the bid documents in front of me. I was never part of any improper discussions regarding the scoring, and I won’t be in a position to say whether others on the panel had had such discussions,” said Maja.

“In order that I respond comprehensively to your questions regarding the information presented in bid documents and my assessment thereof would require a detailed and comprehensive explanation,” said Pillay.

“I do not believe that I will do justice to my response through the media. Nevertheless, I can state that I dispute the facts stated by the SIU in their papers and I deny that I am guilty of any wrongdoing.”

The SIU’s latest submissions also directly implicate Mkhize in an earlier attempt in 2019 to have Tahera Mather, the alleged mastermind behind the Digital Vibes scheme, appointed as a consultant to the department at a rate of R800 per hour.

One step behind… Tahera Mather with then health minister Zweli Mkhize outside Parliament in Cape Town in June 2019. (Photo: Supplied)

A WhatsApp message obtained by the SIU suggests that Mkhize had allegedly instructed the department’s former director-general, Malebona Matsoso, to appoint Mather.

“Kindly sort out contractual arrangement,” the then minister had allegedly told Matsoso, according to the SIU’s filings.

Mkhize, who was placed on special leave in June by President Cyril Ramaphosa, did not respond to queries for this article. Previously he has denied any wrongdoing.

This plan was not successful, seeing as the department’s supply chain management (SCM) officials were adamant that an individual could not be appointed for the intended NHI communications project.

They insisted that the work needed to be done by a company.

Such a service provider had to be appointed through an open tender process, the SCM officials maintained. But the tender process that followed was anything but open and fair, the SIU documents suggest.

Through that process, the “NDoH then allegedly proceeded irregularly and unlawfully to appoint Digital Vibes, who then brought in Ms Mather and Ms Naadhira Mitha [Mkhize’s former personal assistant] as contractors/consultants”, contends the SIU.

Devious deviation

In July 2019, shortly after the SCM staffers thwarted the attempt to have Mather appointed as a consultant, the DoH requested permission from the National Treasury to deviate from an open tender process.

This was to appoint Digital Vibes for the NHI project, at a cost of R133-million.

“The National Treasury did not approve the request for a SCM deviation but requested the NDoH to advertise an open public tender process for a shortened period of 14 days,” reads the SIU filings.

The DoH, by all appearances, ignored the Treasury’s instructions and decided to send out a request for proposals (RFP) to a “closed group of 10 communications companies”.

This was apparently done “without keeping any relevant records to show how these specific communication companies were identified and selected”.

From this point onwards, things only got dodgier.

Dr Anban Pillay took over as the Department of Health’s acting director-general in late 2019 and formed part of the Tender Evaluation Committee for the Digital Vibes contract. (Photo: Gallo Images / Financial Mail / Russell Roberts)

The original RFP was sent to the 10 potential service providers, including Digital Vibes, on 23 September 2019.

However, on 24 October, after the closing date for the first RFP, the DoH decided to send out a second RFP to the bidders.

This was supposedly done to include a revised terms of reference and new evaluation criteria. It essentially meant that the bid process had started all over again.

However, “the NDoH did not send out any formal notice of withdrawal or cancellation of the process started with the first RFP”, reads the SIU papers.

In other words, the original group of bidders weren’t expressly told that they needed to submit new responses to the bid. The SIU suspects this may have been done in order to deliberately eliminate the majority of the bidders from the process.

According to the SIU, “the second RFP was only sent out after the closing date of the first RFP”.

This “could easily have resulted in the service providers erroneously thinking or assuming that the two RFPs related to one and the same RFP (ie the first RFP), and they may have erroneously assumed that their first set of proposals would still be evaluated even under the second RFP”.

This may have been done to “try to create the false impression of a legitimate procurement process, where the NDoH clearly had a predetermined outcome in mind”, according to the filings.

“Digital Vibes would in all likelihood not be the successful bidder if the bid proposals that had been received in respect of the first RFP would have been evaluated,” the SIU maintains.

Head to head

If the department’s actions had been a planned effort to shrink the pool of competitors, it worked.

In the end, only two bidders made it past the second RFP.

They were the comparatively obscure Digital Vibes, which had no visible footprint in the communications space, and Brandswell, a business with 15 years’ experience.

According to its website, Brandswell is a “78% black woman-owned” business.

It has in its bag of clients the likes of Coca-Cola, Unilever, Nando’s and the eThekwini and City of Tshwane metros.

Brandswell did not respond to our queries.

Besides Pillay and Maja, the TEC tasked with assessing the two bids included Shireen Pardesi, a chief director at the DoH, Senzi Ngubane from the Government Communications and Information System and Reggie Ngcobo, the department of agriculture’s spokesperson.

Popo Maja, a spokesperson for the Department of Health, was a member of the Tender Evaluation Committee for the Digital Vibes contract. (Photo: Twitter)

The latter two government officials were brought in as outside TEC members.

Pardesi and Ngubane appeared to have read queries sent on WhatsApp, but they did not respond. Ngcobo said the DoH would respond on his behalf, but we received no such response.

The SIU alleges that the TEC “were wilful or at least grossly negligent in performing their functions” while assessing the two bids.

The alleged impropriety largely centred on particular scores the TEC awarded to Digital Vibes and Brandswell.

The evaluation criteria provided for past experience, and each bidder received scores in accordance with the following points system: A bidder with between one and three years’ experience would earn three points; between three and five years’ experience unlocked four points; and five points were to be allocated for more than five years’ experience.

The bidders had to submit at least two reference letters as proof of previous experience.

Digital Vibes, however, only submitted one legitimate letter for the company’s own work.

This was for a contract in 2018, presumably the one it scored from the Municipal Infrastructure Support Agent (MISA), an entity of the Department of Cooperative Governance and Traditional Affairs (Cogta).

As we have previously reported, Mkhize led Cogta when Digital Vibes bagged this deal.

The second reference letter in its bid package was for the work experience of would-be consultants Digital Vibes claimed it would include in its team after it won the contract.

“Clearly, the individual experience of the manpower, staff and/or consultants do not qualify for evaluation when considering the relevant previous experience of Digital Vibes itself.

“As such, the TEC should have disqualified Digital Vibes for having failed to submit two compliant reference letters,” maintains the SIU.

But the TEC instead “irregularly and irrationally awarded full points to Digital Vibes,” the SIU found.

Déjà vu

Regarding one of the reference letters in Digital Vibes’ bid bundle, the company may very well have ventured into the terrain of clear-cut tender fraud.

One of its supposed consultants did not even work on the DoH contract after Digital Vibes landed the deal.

According to the SIU, this person’s CV “was merely used or abused by Digital Vibes to prepare the business proposal, whereafter he was completely sidelined and was never used by Digital Vibes in rendering any services to the NDoH”.

This seems remarkably similar to what Scorpio uncovered when we examined the 2018 MISA contract — back then, Digital Vibes’ bid submission also included the CVs of “consultants” who ultimately did not form part of the company’s project team.

This was ostensibly done in order to beef up Digital Vibes’ resumé to meet the tender’s requirements for past experience.

Dr Zweli Mkhize (centre) in 2018, when he was Minister of Cooperative Governance and Traditional Affairs.

While Digital Vibes scored top marks from the DoH TEC, Brandswell received less favourable treatment.

Despite the company having been in operation since 2005, each of the TEC members “irregularly and irrationally” failed to give Brandswell the full five marks for this requirement.

As a result, Brandswell was “irregularly and incorrectly” disqualified for failing to meet the bid’s minimum threshold for functionality.

“If the TEC evaluated and scored Brandswell fairly and correctly, then Brandswell would not have been disqualified and it would have been entitled to be awarded the contract,” the SIU found.

Brandswell’s bid offer of R69-million was less than half of the R141-million Digital Vibes had submitted.

If Brandswell hadn’t been disqualified before the price evaluation phase, it would easily have beaten Digital Vibes’ bid offer.

The TEC’s recommendation that Digital Vibes be awarded the contract had been “manipulated, unlawful and invalid”, the SIU concluded. DM

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