Sanral doubles down on new procurement rules despite signs of tension in its corridors

The South African National Roads Agency (Sanral) has dismissed suggestions that its new preferential procurement policy for its tenders has created tensions with bidders and within its management structures. 

Sanral ruffled feathers when its board implemented a new scoring system in May that the state-owned entity (SOE) uses when adjudicating tender bids.  

Some industry players and tender bidders argued that the new scoring system would significantly downgrade their Broad-Based Black Economic Empowerment (B-BBEE) status and leave them unable to do business with the state and its organs.

Two engineering construction companies, H&I Construction and Wilson Bayly Holmes-Ovcon (WBHO), have dragged Sanral to court to challenge the board’s new scoring system on tenders.

In the court application, H&I Construction and WBHO are supported by 11 other construction companies, including Raubex and Stefanutti Stocks.

Some Sanral managers have reportedly pushed back against the implementation of the new scoring system mandated by the board — led by chairperson Themba Mhambi — because it might contravene the Preferential Procurement Policy Framework Act and regulations on procuring goods from companies with a favourable B-BBEE status.

The tender adjudication system of government departments and state organs is based on a points system in which companies with favourable B-BBEE profiles earn more points, thus being in a better position to be awarded tenders.

Although Sanral has acknowledged that some of its staff members did not comply with the new scoring system, the SOE said the new system caused no tensions between its board and senior management.

“There is and never has been any dispute between the chairperson of the Sanral board and its management,” Sanral said in a statement to Daily Maverick on Monday.

“The Sanral board has clearly communicated its position that Sanral takes positions as an organisation and expects its staff members to be disciplined in the implementation of board resolutions.”

However, News24 Business reported that Sanral chief financial officer, Inge Mulder, and Inba Thumbiran, the head of supply chain management, have been suspended while the kerfuffle over the board’s new procurement policy rages.

The reasons behind the reported suspension of Mulder and Thumbiran are not known, but the two senior Sanral officials would have been closely involved in overseeing the implementation of the board’s new scoring system on procurement.

Asked about the employment status of Mulder and Thumbiran, Sanral said it was “not aware of any dispute between itself and any employee in relation to the procurement policy issues currently serving before the courts”.

In the past, Sanral used a bidder’s (or company’s) B-BBEE rating to allocate 10 or 20 points regarding compliance with the SOE’s preferential procurement requirements. Companies with a Level 1 B-BBEE rating (the highest and most coveted empowerment status) could automatically receive the full amount of points. In May, Sanral changed the weighting of the 10 and 20 points for preferential procurement, which has angered players such as H&I Construction and others.

H&I Construction said Sanral’s changes would relegate a bidder’s B-BBEE level rating to a mere one point, in the case of a 90/10 tender (where the tender is valued at more than R50-million), or two points in the case of an 80/20 tender (where the tender has a value equal to or above R30,000 and up to R50-million).

“[As a result of amendments to the tender scoring system] Sanral has elevated black ownership and sub-contracting to targeted enterprises to respectively five points (10 points in the case of 80/20) and four points (eight points in the case of 80/20) of the scoring of tenders that use the 90/10 scoring regime,” argued H&I Construction.

Construction companies have spent billions of rands over the past decade to boost their empowerment profiles so that they can do business with the state.

Sanral has defended its new tender scoring system, saying it is “committed to the constitutionally enshrined imperatives of economic transformation and will continue to pursue the government’s transformation objectives accordingly”. DM