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Tenderpreneurs Part II

15th February 2013

By: Terry Mackenzie-hoy

  

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Iwrote recently about ‘tenderpreneurs’, which are that South African phenomena – members of the ruling party who make money by awarding themselves or their families tenders for work they cannot do but which they then shop out and rake in money from overpricing.

I got two responses, one from David Edwards and the other from Peter Sharland. Edwards wrote: “Corruption in South Africa is rife . . . perhaps a starting point would be to adopt a similar system to some overseas countries, whereby a minimum of four to five companies are requested to tender and the lowest and highest bids are automatically discarded and the rest evaluated.

“This would not only prevent some of the ridiculous pricing we see on tenders today, but the bidders would also have to pay more attention to their offers as the outcome of the process would be far less predictable than it is at present.”

Sharland had the same idea: “As I’m sure you know, the system works on the basis that tenders are called for in the normal manner. The top and the bottom are discarded out of hand, the remaining offers are averaged and the contract awarded to the price closest to this average. Naturally, a technical assessment would also need to play a part in the process to ensure the integrity of the finished product. This system would surely go some way to making life a little more challenging for our burgeoning and cancerous tenderpreneur industry . . .”

Well, what about it, lads? I am afraid I really do not think so. Let us take two relatively recent occurrences: about ten years ago, we were in a joint venture to bid on the supply of audio equipment (microphones, amplifiers, recording equipment, design services, and so on) to Parliament.

The tender rules were that we had to employ a professional engineer, we had to have fully owned black economic-empowerment partner and we had to be associated with an international firm which had done similar work. We ticked all these boxes. We had to submit five copies of our tender to the Parliamentary office in Cape Town at a certain time. We (and others) did this. At opening time, one of the Parlia- mentary staff took all the tenders out of the box and started walking off. “Hey,” we said, “read out the tenders!” So he did. When this was done, he said: “I have another tender, in a safe. I haven’t got the key.” We started arguing with him. He went off with his cellphone and called somebody. Back he came and said: “Wait.” So we did. After 20 minutes, a man sprinted into the room with a tender document. The two disappeared to another office and then came back and read out the price of the newly arrived tender. Guess what? It was the lowest.

Further, in 2008 a number of ten- derers (26 in all) bid on supplying consultancy services to supervise the construction of public toilets for a municipality. Among them was a well known consultancy. It was stated that the success- ful tender would be the one which had the highest points, based on a set number of criteria.

The consultancy got the most points and the bid evaluation committee recommended that it be appointed. Then the municipality wrote back and said they were going to amend the criteria for award, which they did. The consultancy was still the highest. No award resulted and the consultancy was then told that the tender would be readvertised.

So it went to court while the tender was split between four firms. The judge found that the consultancy should have sought an interdict earlier on in the matter and dis- missed the appeal with costs. The simple lesson is this – no amount of rearrangement of tender style will change things if the people giving out the work have no shame at all in how they manipulate the tenders. And they clearly do not. In the consultancy’s case, the bid evaluation committee recommended its appointment but was turned aside. What could the consultancy do but go to court? It is not the system that is wrong – it is the people who shamelessly abuse it, and that’s really wrong.

Edited by Martin Zhuwakinyu
Creamer Media Magazine Managing Editor

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