‘Lift the cap’ - Tshwane transport tender ballooned from R88m to nearly R800m

Businessman Auswell Mashaba gained tender infamy due to Swifambo’s R3.5-billion Prasa contract.

Much less is known about the projects Mashaba’s other companies had been involved in.

We’ve done some digging into a major tender Mashaba’s A-M Consulting Engineers, or AMCE, had clinched from the City of Tshwane (CoT). The CoT tender largely provided the funds for a R10-million donation to the ANC, as detailed in this investigation.

Based on what we’ve found, it seems fair to say that Mashaba’s other activities deserve as much scrutiny as the corrupt trains deal.

Documents in our possession detail how the CoT hiked the value of one of AMCE’s tenders. The increase in AMCE’s fees was nothing short of gobsmacking — after CoT officials had motived for the tender’s “cap” to be “lifted”, the contract’s value swelled from R88.5-million to nearly R800-million.

One source, a CoT official who spoke to us on condition of anonymity, didn’t hold back in his assessment of the development: “This was an obvious, elaborate scheme to loot and fleece the coffers of the city.”

We made several efforts to contact Mashaba, but he could not be reached for comment. He did not answer his cellphone, nor did he respond to multiple text messages and emails.

AMCE did not respond to emailed queries.

The City of Tshwane stated: “If there was any wrongdoing on the matter, the city will not hesitate to institute an investigation and take appropriate action against those involved, including those that have left the institution.

“The city was candid with your media enquiry and cooperated fully because we have nothing to hide. We pride ourselves in openness and transparency.”

AMCE was first appointed in 2011 to oversee a project management unit (PMU) for the city’s Integrated Rapid Public Transport Network (IRPTN), which included Tshwane’s A Re Yeng bus service.

This was a three-year contract. In February 2014, the CoT advertised a new tender to appoint someone to run the PMU for another three years.  Initially, the city entertained nine acceptable bids. After further evaluation, only two companies remained in the race. Mashaba’s AMCE, with a bid price of R29.5-million per annum (R88.5-million over three years) was pitted against multinational engineering group Aurecon, which had a bid offering of R30-million per year.

AMCE won the tender. The CoT’s letter of appointment confirmed that the new contract period was to start on 1 June 2014.

AMCE’s website lists the Tshwane IRPTN as one of its flagship projects. (Photo: amce.co.za)

No sooner had the second contract period started when things turned strange. AMCE’s billings for a single month grew larger than the fees it should have earned in an entire year.

In July 2014 alone, AMCE submitted invoices to the city for payments totalling R57.5-million — nearly double the capped annual fee of R29.5-million. And the invoices kept rolling in. By the end of August, AMCE’s billings had climbed to over a R100-million. By all indications, the metro didn't flinch. Instead, it simply settled each invoice.

Evidently, someone within the metro realised that there might be some sort of a reckoning for this overspending. A request was therefore directed to the city’s Executive Acquisition Committee (EAC) to summarily “lift the cap on the tender amount”.

But the EAC didn’t like the idea. Minutes from a EAC meeting on 4 September 2014 confirm as much. “During the discussion on this matter . . . the Committee did not agree with the recommendation ... with regards to the lift of the capped amount. The Committee noted the [bid] evaluation done and was of the view that approval be granted per the rates (as evaluated) to a maximum amount of R29,502,190.08 per annum,” reads the document.

AMCE should have earned no more than R29.5m per annum. In the end, it earned nearly R800-million.

The EAC’s decision clearly didn't hold much weight. In the end, those city officials who had pushed for lifting the cap clearly had the final say.

On 19 September 2014, the CoT sent a new appointment letter to AMCE, one that in effect scrapped the earlier appointment letter.

According to the document, AMCE was now free to bill the metro in accordance with hourly rates, without the limitations of a pesky annual cap.

By the end of 2014, AMCE’s billings stood at R188-million. The CoT paid every single invoice.

In 2015, AMCE submitted invoices totalling R248-million. The city settled each invoice.

In the last two years of the contract period — 2016 and 2017 — AMCE’s billings were a combined R360-million. Again, the CoT paid every last invoice.

By the time the contract period came to an end, AMCE had earned R796-million from a contract that should have cost the city no more than R88.5-million.

Together with the roughly R665-million that AMCE had pocketed in the first three-year contract, the company ultimately banked R1.46-billion in fees from the city. DM